20111129Motion for Summary Judgment.pdf

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2011 NOV 29 Pl1 4: I ì~r.QJi:JB~
ATTOR.NEYS AT LAW
.1j.,
Peter Richardson
Tel: [phone] Fax: [phone]
pete r ~ rich ardso nan do 1 ea ry. com
P.O. Box 1218 Boise, 1D 83707 - 515 N. 27th Sr. Boise, 1D 83702
29 November 2011
Ms. Jean Jewell
Commission Secretary
Idaho Public Utilties Commission
PO Box 83720
Boise ID 83720-0074
RE: Case No.lPC-E-11-15
Dear Ms. Jewell:
Enclosed please find an original and (7) copies of the MOTION FOR SUMMARY
JUDGMENT OF GRAND VIEW SOLAR PV II, LLC in the above case.
An additional copy is included to be date stamped and returned to our offce.
Sincerely,~
Nina Curtis
Administrative Assistant to Peter Richardson
Richardson & O'Leary, PLLC
enc!.
Peter J. Richardson (ISB # 3195)
Gregory M. Adams (ISB # 7454)
Richardson & O'Lear, PLLC
515 N. 27th Street
P.O. Box 7218
Boise, Idaho 83702
Telephone: [phone]
Fax: [phone]
peteraYnchardsonandolear.com
gregaYnchardsonandolear.com
FlE(~E!\JE
iun NOV 29 Prj 4: I ì
Attorneys for Complainant
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
GRADVIEW SOLAR PV II, LLC,
Complainant,
)
) Case No. IPC-E-1l-15
)
) MOTION FOR SUMMARY
) JUDGMENT
)
)
)
vs.
IDAHO POWER COMPANY,
Defendant.
COMES NOW Grand View Solar PV II, LLC ("Grand View"), and respectfuly moves
the Idaho Public Utilities Commission (the "Commission"), pursuant to Idaho Administrative
Rules 31.01.01.56 and Idaho Rule of Civil Procedure 56(a) and (c), to grant sumar judgment
in its favor. Grand View has requested a stadard Public Utility Regulatory Policies Act of 1978
("PURP A") power purchase agreement ("PP A") with Idaho Power Company contaning
Integrated Resource Plan Methodology ("IRP Methodology") rates valuing only the energy and
capacity to be sold from Grand View's solar power generating facility. Idaho Power has
uneasonably and ilegally refused to execute a PPA wherein Idaho Power disclaims ownership
of the environmental attnbutes for which it will pay nothing in a contract containing the IRP
Methodology rates. As explained in more detail below, the Commission's authorization ofIdao
Power's proposed contract language regarding environmental attbutes would violate Section
Page 1 - MOTION FOR SUMMARY JUDGMENT
21O(e) ofPURPA1, the Takngs Clauses of the U.S. and Idao Constitutions, and the Dormant
Commerce Clause ofthe U.S. Constitution. Grand View therefore requests that the Commission
issue a declaratory judgment that Grand View is entitled to a standard PURP A PP A wherein
Idaho Power disclaims ownership of all environmental attbutes of Grand View's solar project,
and order that Idaho Power enter into such a PP A with rates calculated under the methodology in
effect on the date of the fiing of Grand View's complait.
I. STATEMENT OF THE CASE
A. Background on Environmental Attributes and Renewable Energy Credits
This case involves a dispute over the ownership of valuable environmental attibutes of
renewable electric energy generation. "To promote the constrction of renewable resources, a
system was created that separates renewable generation into two pars: (l) the electrical energy
produced by a renewable resource and (2) the renewable attributes of that generation." Idaho
Power's Renewable Energy Credit Management Plan (hereinafter "ipca REC Plan"), IPUC
Case No. IPC-E-08-24, p. 1 (Dec. 30, 2009). Paul Affidavit, Exhbit 2. The "renewable
attibutes are referred to as renewable energy credits ('RECs') or green tags." ipCa REC Plan
at 1. "One REC is issued for each megawatt-hour ('MWh') of electncity generated by a
quaified resource." ipca REC Plan at 1. Twenty-five states and the Distnct of Columbia now
have some form of renewable portfolio stadard that requires utilties to purchase a certn
percentage of overall electnc generation from renewable energy sources or alternatively
purchase unbundled RECs from renewable generators located in-state or out-of-state. Steven
Ferrey, Chad Laurent, Cameron Ferrey, "Fire and Ice: World Renewable Energy and Carbon
i 16 U.S.C.A. § 824a-3(e).
Page 2 - MOTION FOR SUMMAY JUDGMENT
Control Mechansms Confront Constitutional Bariers," 20 Duke EnvtL. L. and Pol'y F. 125, at
pp. 146-56 (Winter 2010).
"A Green Tag is a tradeable environmental commodity attbutable to renewable energy
generation." Idaho PUC Order No. 30868, p. i? "The same REC may not be claimed by more
than one entity. . . ." IPCO REC Plan at 1. "An active market exists for the purchase and sale
of Green Tags." Idaho PUC Order No. 30720, p. 1; see also Idaho Power Company's
Application Requesting Approval of Sale of Renewable Energy Credits (hereinafter "IPCO OR
REC Application"), Oregon PUC Docket No. UP 269, p. 3 (October 22, 2010) Paul Affdavit,
Exhibit 3. ("Because utilities may buy and sell RECs, a market has developed. . . . "). For an
entity sellng RECs from projects in this region, "counterparies consist pnmarly of investor-
owned utilties ('IOU') that are subject to renewable energy standards and make up what is
referred to as the 'compliance market.'" Idaho Power's Letter Filng Regarding Modifcation of
REC Plan (hereinafter "IPCO REC Plan Modifcation Letter"), Oregon PUC Docket No. UP
269, p. 1 (June 6, 2011). Paul Affdavit, Exhbit 4. And "(t)he other main segment of the REC
market is the 'voluntar market' which consists ofIOUs that purchase RECs as par of volunta
'green power' programs or businesses that wish to purchase renewable attnbutes as a voluntar
business practice." Id. at 1.
RECs are valuable. "As of September 30,2010, (Idaho Power) has received
approximately $3.1 milion in net proceeds from these sales. . . ." IPCO OR REC Application,
at 6. In some areas of the United States, RECs have sold in excess of $50 per REC (or MWh of
electncity produced). Ferrey et al., 20 Duke EnvtL. L. and Pol'y F. 125, at n. 166 and
2 Case No. IPC-E-08-04.
Page 3 - MOTION FOR SUMMARY JUDGMENT
accompanying text. Idaho Power's initial plan was to sell its RECs in the wholesale spot market.
¡PCO REC Plan Modifcation Letter at 1. But "the Company has found that most REC buyers in
the compliance market have moved toward purchasing the majonty of their RECs under longer-
term agreements though requests for proposals ('RFP')." ¡d. The Company now plans to bid
into these REC RFPs for multi-year stnps ofRECs that will be produced in the future, which
"may require the Company to commit to sellng a portion of its available RECs for up to a five-
year period." ¡PCO REC Plan Modifcation Letter at 1-2.
Finally, although RECs are valuable, by Idaho Power's own admission, "they are not
necessar or usefu to Idaho Power's provision of utilty services to the public. Idao Power's
ownership, or lack thereof, of RECs has no bearng on its abilty to provide safe, reliable, and
efficient power to customers at just and reasonable rates." ¡PCO OR REC Application, at 8.
(Emphasis provided.)
B. Grand View's Negotiations with Idaho Power for a PURP A PP A
Grand View is a self-certified qualifying facility ("QF") under the Federal Energy
Regulatory Commission's ("FERC's") regulations implementing PURPA's mandatory purchase
provisions. FERC Docket No. QFII-405. Grand View wil utilze photovoltaic solar panels
installed at a site near Grand View, Idaho, to convert solar energy into clean renewable electric
energy, which it plans to sell to Idaho Power. ¡d. Grand View has been in contact with Idaho
Power for several months discussing contract terms and conditions, including that the project
will have a nameplate capacity of20 megawatts ("MW"). Complaint at irir 5, 7; Answer at irir 5,
7. The draft PPA provided by Idaho Power, which includes all matenal terms to which it would
have agreed but for inclusion of a clause clouding Grand View's title to the environmental
attibutes is attched as Exhibit 1 to the Paul Affdavit.
Page 4 - MOTION FOR SUMMARY JUDGMENT
Pursuant to applicable Commission orders, Idao Power offered Grand View avoided
cost rates calculated using the IRP Methodology for calculating the value of the energy and
capacity from QFs sized above the eligibility cap for published avoided cost rates. Complaint at
p. 1; Answer at pp. 1_2.3 Idaho Power does not assert that its avoided cost rates offered to Grand
View included an estimated avoided cost for anyting other than the value of the energy and
capacity Grand View would deliver. Nor has Idaho Power asserted as a defense that the avoided
cost rates offered to Grand View included the avoided cost of purchasing environmental
attbutes from another source, or the avoided cost of building Idaho Power's own solar facilty.
Idaho Power admits that the Idao Legislatue has not legislatively created RECs, and has
not imposed a renewable portfolio standard on utilties operating in Idaho. Answer at irir 21, 22,
and 23. Additionally, Idaho Power has denied "the factual insinuation that RECs are neither
created nor exist in the state of Idaho," id., and Idaho Power therefore acknowledges that
valuable RECs are created by projects in Idaho despite the lack of an RPS in Idaho. Idaho Power
admits that it has disclaimed ownership of environmental attributes in PURP A PP As in the past,
and that the Commission has approved contracts wherein Idaho Power waived (disclaimed)
ownership of environmental attnbutes. ¡d. at ir 10.
But Idaho Power has refused to disclaim ownership of environmental attributes for Grand
View's solar project. Complaint at ir 9; Answer at ir 9. Instead, Idaho Power required a clause in
the PURP A PPA stating:
Under this Agreement, ownership of Green Tags and Renewable Energy
Certificates (RECs), or the equivalent environmental attbutes, directly associated
with the production of energy from the Seller's Facilty sold to Idaho Power wil
be governed by any and all applicable Federal or State laws and/or any regulatory
3 Although Idaho Power has not expressly admitted or denied Grand View's allegation that
its solar project will have IRP Methodology rates, the PP A attached to the Paul Affdavit sets
fort the IRP methodology rates in Section 7. See Paul Affdavit at Exhibit 1 § 7.
Page 5 - MOTION FOR SUMMARY JUDGMENT
body or agency deemed to have authority to regulate these Environmental
Attributes or to implement Federal and/or State laws regarding same.
Answer at irir 11, 12, and 14. See Paul Affdavit, Exhbit 1 at § 8.
Idaho Power asserts in its Answer that "Idaho Power does not believe that PURP A, nor this
state's implementation thereof, requires it to disclaim any possible legal claim that it may have to
the environmental attibutes associated with its purchase of power from a PURP A Qualifying
Facilty ('QF') for the next 20 yeas." Answer at p. 2. Idao Power is concerned of the
"potentially costly consequences for Idaho Power's customers should the Legislatue or other
legal body determine some time during the proposed 20-year term of the contract that the
environmental attributes from the purchase ofQF power in Idaho are in fact owned by the
purchasing utilty and its customers." ¡d. The Company is also concerned that acquiring QF
power without ownership of the environmental attributes "could have large and costly
consequences for customers should the Company come under future federal and/or state
renewable portfolio standards that require such environmental attbutes for compliance." ¡d. at
p.3.
But, rather than offer to purchase such environmental attributes to mitigate its risk of
incurng this future compliance cost, Idaho Power proposed PURP A contract language that
states the ownership of environmental attibutes will be determined by the applicable federal or
state laws. ¡d. at p. 2. In other words, Idaho Power proposes a clause in this PURP A contract
that will allow for the environmental attribute ownership to change if the law changes afer
execution and Commission approval of the contract.
On August 2, 2011, Grand View fied a complaint against Idaho Power for its failure to
disclaim the ownership of the environmental attbutes for which Idaho Power will provide no
compensation. Idaho Power fied its answer on September 6, 2011, and A vista Corporation has
Page 6 - MOTION FOR SUMMARY JUDGMENT
subsequently intervened in this matter. Grand View now files this dispositive Motion for
Sumar Judgment relying on the admissions in the pleadings and the limited facts contained in
the attached Affdavit and Exhibits. The Affidavit and Exhibits include Idaho Power's own
statements in its regulatory filings and very limited factual assertions regarding Grand View's
project which Grand View expects to be undisputed. In short, the disputed issues before the
Commission are purely legal, and expeditious resolution of the case at this stage of the
proceedings would be in the interests of Idaho's qualifying facility developers, its utilties, and
its retail electric customers.
II. LEGAL BACKGROUND
The mandatory purchase provisions of PURP A require 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). PURPA instructs FERC to promulgate implementing regulations, and directs the
state public utilties commissions to implement FERC's regulations. 16 U.S.C. § 824a-3(a)(2),
(t). 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 electric utility of the
electric energy which, but for the purchase from such cogenerator or small power producer, such
utility would generate or purchase from another source." 16 U.S.C. § 824a-3(d).
Subsequent to the enactment ofPURPA and FERC's regulations, several states have
enacted renewable energy portfolio stadards ("RPSs"), and mandatory and volunta markets
for tradable RECs have emerged to create a commodity separate from electncity and capacity
produced by QFs. See American Ref Fuel Co., 105 FERC ir 61,004 (2003). In American Ref
Fuel, Co., FERC found that "the avoided cost that a utilty pays a QF does not depend on the
tye of QF, i.e., whether it is a fossil-fuel-cogeneration facility or a renewable-energy small
Page 7 - MOTION FOR SUMMAY JUDGMENT
power production facilty." fd. at ir 22. FERC stated, "(t)he avoided cost rates, in short, are not
intended to compensate the QF for more than capacity and energy." fd. FERC declared "that
contracts for the sale of QF capacity and energy entered into pursuat to PURP A do not convey
RECs to the purchasing utility (absent an express provision in (the relevant) contract)" or a rule
or state law to the contrar. fd. at ir 24. FERC clarified, however, that "(A) state may decide that
a sale of power at wholesale automatically transfers ownership ofthe state-created RECs, (but)
that requirement must find its authonty in state law, not PURPA." fd. (emphasis added).
FERC subsequently denied rehearing, and stated, "As those seeking rehearing recognize,
only renewable energy small power production facilities have renewable attibutes, yet the
energy from a cogeneration facility is priced the same as the energy from a small power
production facility." American Ref-Fuel Co., 107 FERC ir 61,016, ir15 (2004). "If avoided cost
rates are not intended to compensate a QF for more than capacity and energy, it follows that
other attibutes associated with the facilties are separate from, and may be sold separately from,
the capacity and energy." fd. at ir 16 (emphasis added). FERC additionally reasoned that
cogeneration QFs are entitled to sell the thermal output from their projects as par of a separate
transaction from sale of the electricity and capacity to the utilty, and thus "If the thermal output
of a cogeneration QF is separately saleable, the renewable attributes of a small power production
QF are similarly separate." fd. at ir 16 n. 9; appeal dismissed sub. nom., Xcel Energy Services
fnc. v. FERC, 407 F.3d 1242 (D.C. Cir. 2005).
More recently, FERC ruled that a state utilty commission has the authority to require a
utilty to pay a separate, higher avoided cost rate stream for QFs providing the utilty with
environmental attibutes that will help the utilty avoid real costs of environmental compliance.
Cal. Pub. Uti!. Commn., 133 FERC ir 61,059 (2010) (order granting clarification and dismissing
Page ~ - MOTION FOR SUMMAY JUDGMENT
rehearng), rehearing denied, 134 FERC ir 61,044 (2011). California had enacted a state law,
titled AB 1613, that required utilties to procure a specified amount of energy and capacity from
combined heat and power facilties that met stringent efficiency stadards. FERC declared that
the state commission could implement a two-tiered rate strcture, where AB 1613-compliant
QFs receive rates based on higher, long-ru avoided cost rates reflecting more stnngent
efficiency standards, and non-AB 1613 compliant QFs continue to receive rates based on lower
short-ru avoided costs. 133 FERC ir 61,059, at ir 26.
Even more recently, FERC again re-emphasized its prior rulings by rejecting an attempt
by an Idao utilty - A vista - to obtain ownership of environmenta attbutes without additional
compensation. See fdaho Wind Partners 1, LLC, 136 FERC ir 61,174 (Sept. 15,2011) (order
dismissing rehearing). There, Avista requested FERC rule that the QF owns the RECs in a
PURP A contract only if it is expressly allowed under state law or under the terms of a PURP A
contract. fd. at ir 7. FERC dismissed Avista's request on the ground that Avista filed it afer the
applicable deadline. fd. at ir 9. But FERC stated, "We also reiterate our holding in American
Ref-Fuel, specifically, that under PURPA the sale and trading ofRECs are for the states to
determine, and that this is not an issue that PURPA controls." fd. at ir 10. FERC therefore
rejected Avista's attempt to secure a ruling that - absent a state law or contract provision to the
contrar - the utility is the default owner of environmental attibutes in a PURP A contract.
III. LEGAL STANDAR
In ruling on a motion for sumar judgment, the Commission uses the same stadard
contained in the Idaho Rules of Civil Procedure. See Idaho PUC Order No. 28888, p. 12.
"Sumar judgment under I.R.C.P. 56(c) is proper only when there is no genuine issue of
material fact and the moving par is entitled to judgment as a matter oflaw." Ackerman v.
Page 9 - MOTION FOR SUMMARY JUDGMENT
Bonnevile County, 140 Idaho 307, 310, 92 P.3d 557,560 (Ct. App. 2004). "When ruling on a
motion for sumar judgment, the tnal cour must determine whether the evidence, when
construed in the light most favorable to the nonmoving pary, presents a genuine issue of
matenal fact or shows that the moving par is not entitled to judgment as a matter oflaw."
Chandler v. Hayden, 147 Idao 765, 769, 215 P.3d 485,489 (2009). "(T)he moving par bears
the burden of proving the absence ofmatenal facts." fd.
iv. ARGUMENT
A. Idaho Power wil not compensate Grand View for more than energy and capacity in
the IRP Methodology contract, and no Idaho law transfers the RECs to Idaho
Power without payment. Thus, Grand View owns the RECs under existig law.
1. Idaho QF contracts only compensate QFs for energy and capacity.
The Commission calculates the published avoided cost rates using a methodology "based
on the estimated costs that a utilty would incur in constrcting a natual gas-fired combine cycle
combustion turbine ('CCCT') power plant." Idaho PUC, Order No. 30873, at p. 3. The
Commission publishes a "non-fueled" rate stream calculated with a forward gas price forecast
for QFs not using fossil fuels. Idaho PUC Order No. 28945, at p. 7. This avoided cost rate
stream is available to QFs regardless of whether they qualify for any paricular state's RPS, and
is available even to old co-generation or hydropower facilities unable to qualify to create RECs.
See Idaho PUC Order No. 28945, at p. 7.4
The Commission has also approved the IRP Methodology for QFs - such as Grand View
- which are over the size limitation for published rates. See Idaho PUC Order No. 26576
4 Older QFs often canot create RECs of any marketable value because most REC-creating
statutes include limitations on the initial in-service date of the renewable energy facilty. See,
e.g,. Ferrey et aI., 20 Duke EnvtI. L. and Pol'y F. 125, at pp. 153-155; Ore. Rev. Stat. §
469A.020 (generally excluding facilities in service prior to 1995 as facilties that may generate
Oregon RECs); Rev. Code Wash. § 19.285.030(10) (same for facilities in service prior to March
31, 1999 for Washington RECs).
Page 10 - MOTION FOR SUMMARY JUDGMENT
(approving Stipulation to adopt methodology contained in Direct Testimony of Rick Sterling,
Case No. IPC-E-95-09, Exhbit 101). The IRP Methodology compares the present value of the
revenue requirements of the base case with one that includes the utilty's system including the
QF to estimate the value of both capacity and energy delivered by the QF. Direct Testimony of
Rick Sterling, IPC-E-95-09, Exhibit 101, p. 8. The IRP Methodology itself values all of the
utilty's resources and therefore does not provide a value for the avoided cost of acquiring a
renewable-specific resource, or otherwse include any adder for the value ofthe RECs a QF may
convey. fd.
Thus, the IRP Methodology - like the SAR methodology for published rates -
compensates QFs for the estimated value of the energy and capacity alone, not for the avoided
costs a utility may otherwse incur in acquiring any non-energy environmental attributes such as
RECs. Indeed, the Idaho Commission vigilantly ensures that the avoided cost rates do not
exceed the cost of energy and capacity alone. Idaho PUC Order No. 31057, at pp. 6-7 (stating,
"It is well established that a utility canot be required to pay more for QF power than its avoided
cost," and therefore a "delay in changing avoided cost rates. . . ultimately means that ratepayers
are saddled with rates that are too high and therefore uneasonable"); see also Idaho PUC Order
No. 31092, at p. 11.
The same is true for the IRP Methodology rates. In the recent Interconnect Solar QF
docket, Commission Staf identified a mathematical error in Idaho Power's calculation of the
IRP Methodology rates for the Interconnect Solar QF, and argued the Commission should
require a reduction of approximately $1 O/MWh in the contract rates corresponding to the amount
of the error. See Idaho PUC Order No. 32361, at p. 1. Interconnect Solar argued that it had
provided Idaho Power with other non-energy concessions - such as 50% of the QF's RECs for
Page 11 - MOTION FOR SUMMARY JUDGMENT
no additional charge - which would more than compensate for the mathematical error. fd. at pp.
1-2. But the Commission stated, "this Commission would not be fufilling its role of ensuring
just and reasonable rates if it approved an Agreement that contained a known computation error.
Idaho Code §§ 61-301, 61-502. In other words, we are unable to approve the Agreement that is
presently filed with the Commission due to a mathematical error." fd. at p. 2. The Commission
therefore refused to compensate Interconnect Solar for the value of anything other than the
estimated value of the energy and capacity. See Idao PUC Order No. 32384 (approving the
Interconnect Solar PPA only with lower rates after correcting the calculation error).
There is no question therefore that neither Idaho avoided cost model considers the costs
of building or procuring a renewable-specific resource, and neither model explicitly or implicitly
includes compensation to the QF for RECs or any other valuable environmenta attributes.
2. Because QFs are not compensated for environmental attributes and no law
conveys them to Idaho utilties free of additional charge, QFs retain legal title
to their project's environmental attributes.
The Commission itself twce addressed ownership of environmental attibutes shortly
after FERC's American Ref-Fuel, Co. orders. First, Idaho Power petitioned the Commission for
an order declaring that QFs generating green tags must grant Idaho Power "a 'right of first
refusal' to purchase those tags." Idaho PUC Order No. 29480, at p. 5. The other two investor-
owned utilities in Idaho - PacifiCorp and Avista - both intervened and requested that the
Commission determine the utilties own the environmental attbutes associated with QF
generation. fd. at pp. 5-8. The Idaho PUC found that Idaho Power's petition did "not present an
actual or justiciable controversy in Idaho and (wa)s not ripe for a declaratory judgment(.)" fd. at
p. 16. The Commission noted the American Ref-Fuel, Co. orders and noted that the State of
Idaho does not have a green tag program or an RPS. It stated:
Page 12 - MOTION FOR SUMMAY JUDGMENT
Whle this Commission wil not permit ffdaho Power J in its contracting
practice to condition QF contracts on inclusion of such a right-of-frst refusal
term, neither do we preclude the paries from voluntarily negotiating the sale and
purchase of such a green tag should it be perceived to have value. The price of
same we find, however, is not a PURP A cost and is not recoverable as such by the
Company.
fd. at pp. 16-17 (emphasis added).
Shortly thereafter, Idaho Power fied for approval of a PURP A contract containg the
published rates for a non-fueled co-generation project, wherein Idaho Power expressly waived
any claim to ownership of environmental attibutes. Idaho Power requested the Commission
provide it with assurance that it would not be penalized in a futue ratemakng proceeding for
waiving ownership of the environmental attributes. Idaho PUC Order No. 29577, at pp. 2-3.
The Commission stated, "The State of Idaho stil has not created a green tag program, has not
established a trading market for green tags, nor does it require a renewable portfolio standard."
fd. at pp. 5-6. It again stated that the QF and the utility were free to separately negotiate for the
sale of environmental attributes, but that the costs associated with the sale could not be recovered
by the utility as a PURPA cost. The Commission ruled, "(a)s qualified above, the Commission
finds it reasonable to approve the submitted Agreement and fuher finds it reasonable to allow
payments made under the Agreement as prudently incured expenses for ratemakng puroses."
fd. at p. 6. Thus, the Commission found it reasonable for the utilties to waive ownership of
environmental attbutes because Idaho law did not convey them to the utilty.
Decisions in neighboring states using similar avoided cost calculation mechanisms are
also instrctive. For example, like the Idao Commission, the Public Utilty Commission of
Oregon ("Oregon PUC") calculates the published avoided cost rates available to QFs under 10
megawatts with a surogate combined cycle combustion gas plant modeL. See fn Re Staff's
fnvestigation Relating to Electric Utilty Purchases from Qualifing Facilties, Oregon PUC,
Page 13 - MOTION FOR SUMMARY JUDGMENT
Case No. UM 1129, Order No. 05-584, at pp. 26-27. The Oregon PUC ruled that the QFs retain
the RECs because the "rates based on avoided costs do not include compensation for any social
or environmental benefits that may be associated with a paricular facilty's generation of
electricity." See fn Re Rulemaking to Adopt and Amend Rules Related to Ownership of
the Non-
energy Attributes of Renewable Energy (Green Tags), Energy Service Supplier Certifcation
Requirements, and Use of Terms "Electric Utilty" and "Electric Company," Oregon PUC Case
No. AR 495, Order No. 05-1229, at p. 8; see also Oregon Administrative Regulation 860-022-
0075 (2011) (codifying the same). Accordingly, Idaho Power's Oregon stadard QF contract on
file with the Oregon PUC as par of its Schedule 85 contains an express waiver by Idaho Power
ofRECs.
The Montana Public Service Commission ("Montana PSC"), too, has determined that
QFs retain ownership of environmental attibutes if they are compensated only for the energy
and capacity. See fn the Matter of the NorthWestern Energy's Application for Approval of
Avoided Cost Tarif For New Qualifing Facilties, Montaa PSC, Docket No. D2008.12.146,
Order No. 6973d, p. 58 ir 136 (May 6, 2010). Montana QF Option 1 and Option 2 rates estimate
the avoided cost of energy and capacity from non-renewable resources possessing no valuable
environmental attbutes.
5 The Montaa PSC stated QF Option 1 and 2 rate contracts "must
include provisions that explicitly address the disposition of RECs for the entire length of the
contract." fd. p. 58, ir 136 and p. 60, ir 143. If the QF decides to convey the RECs to the utilty
Option 1 rates previously estimated the value of Northwestern Energy's Coalstrip 4
(referenced as C4 or CU4) coal plant contract, Montana PSC Order No. 6973d, p. 57 ir 133, but
recently the Montana PSC switched Option 1 rates to the estimated cost of energy and capacity
from a blended market and new combined cycle gas-fired plant. fn the Matter of
Northwestern
Energy's Applicationfor Approval of Avoided Cost Tariffor New Qualifing Facilities, Docket
No. D2010.7.77, Order No. 7108e, p. 16 ir 51 to p. 25 ir 70 (Oct. 19,2011). QF Option 2 rates
use a market price index, and the October 19th order did not alter that approach. Montaa PSC
Order No. 6973d, p. 59-60 ir 139; Montaa PSC Order No. 7108e.
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5
under the PP A, the utility "must adjust the . . . rates at the time a state or federal law or
regulation results in actual costs to (Northwestern Energy) for C02 emissions." fd. at ir 136
Alternatively, "(n)on-C02-emmitting QFs that do not convey RECs to (Northwestern Energy)
in a contract. . . may stil separately attempt to negotiate for the sale of RECs to (Northwestern
Energy) or other interested entities at any time." fd. 6 Thus, Montana Q F s paid for the estimated
value of non-renewable energy and capacity retain ownership of the RECs, and the QF PPA
expressly addresses that ownership.
These Oregon and Montana rulings are correct applications ofFERC's PURA
framework. American Re.fFuel Co., 107 FERC ir 61,016, ir15 (2004). "If avoided costs are not
intended to compensate a QF for more than capacity and energy, it follows that other attibutes
associated with the facilities are separate from, and may be sold separately from, the capacity
and energy." fd. at ir 16 (emphasis added). Just as the cogeneration QFs are entitled to sell the
thermal output from their projects as part of a separate transaction from sale of the electricity and
capacity to the utilty, "the renewable attibutes of a small power production QF are similarly
separate." fd. at ir 16 n. 9; see also fdaho Wind Partners 1, LLC, 136 FERC ir 61,174 (Sept. 15,
2011) (order dismissing rehearng) (rejecting Avista's attempt to have FERC deem the utilty the
default owner ofRECs in PURPA contracts entered into in state's without an express ownership
rule).
As in Oregon and Montana, no Idaho law curently vests ownership of environmenta
6 In QF "Option 3," the Montaa Commission allowed wind QFs to choose to take a
levelized rate calculated based on the costs to the utilty to build and operate a wind plant.
Montaa PSC Order No. 6973d, p. 61 ir 147. Wind QFs choosing this option, which provided a
higher rate, had to agree to convey the RECs to the utility. fd. at p. 62, ir 148; see also Montana
PSC Order No. 7108e, pp. 28-29 ir 77 (recent order terminating the Option 3 wind rate but
reiterating the utilty should purchase RECs in Option 1 and 2 contracts to the extent it needs
them).
Page 15 - MOTION FOR SUMMARY JUDGMENT
attibutes to a utilty in an Idao QF contract. Thus, just as in Oregon and Montaa, under any
reasonable interpretation of the curent QF rate mechansms and existing Idaho Commission
orders implementing PURP A, Idaho QFs are the default owners the environmental attibutes.
There is no question that RECs exist and have value. fPCO OR REC Application, at 6 (noting
Idaho Power had sold $3.1 millon worth ofRECs from projects conveying it RECs). Yet the
rate provided to QFs under both of the Idaho Commission's approved methodologies includes no
express or implicit compensation for the value ofRECs. The rate in renewable QF contracts is
the same rate that would be included in a contract for a fossil-fueled cogeneration QF too old to
produce RECs. Just as an Idaho cogeneration QF retains and may separately sell the thermal
output from its QF, a renewable QF retains and may separately sell the environmental attibutes.
American Ref-Fuel Co., 107 FERC ir 61,016, ir 16 n. 9.
The Commission has ruled it ''wll not permit (Idaho Power) in its contracting practice to
condition QF contracts on inclusion of such a right-of-first refusal term (regarding RECs)."
Idaho PUC Order No. 29480, p. 16. This ruling can be read as nothg other than an implicit
rejection of the request by PacifiCorp and A vista in that case for a determination that they own
the environmental attibutes. The circumstaces are no different today, and the rule remains that
Idaho QFs being paid the SAR or IRP Methodology rates own and may separately convey their
environmental attbutes and RECs for compensation in addition to the estimated value of the
electric energy and capacity in the Idaho avoided cost rates.
B. Idaho Power's environmental attributes clause is a reopener clause that would
subject Grand View's QF to ongoing regulation and changed circumstances, and
Section 210(e) ofPURPA therefore preempts its approvaL.
In general, cours will recognize a contract reopener clause in a utilty contract - if agreed
to by the contracting paries - as being effective and subjecting the contract to ongoing
Page 16 - MOTION FOR SUMMAY JUDGMENT
regulation. See Energy Reserves Group, fnc. v. Kan. Power & Light Co., 459 U.S. 400, 416
(1983) (holding that such a "provision could be interpreted to incorporate all futue price
regulation, and thus dispose of the Contract Clause claim"). Thus, the reopener clause proposed
by Idaho Power - if agreed to by Grand View and approved by the Commission - would subject
Grand View's QF to ongoing changes in regulatory conditions regarding REC ownership of its
project.
The problem with Idaho Power's contract clause is that Congress expressly intended that
Section 210(e) ofPURPA prevent this tye of ongoing uncertainty in PURPA contracts. U.S.C.
824a-3(e); 18 C.F.R. § 292.602. "Congress did not intend to impose traditional ratemakng
concepts on sales by qualifying facilties to utilties." American Paper fnstitute, fnc. .v. American
Elec. Power Service Corp., 461 U.S. 402, 414 (1983) (citing legislative history). Congress
recognized " 'that cogenerators and small power producers are different from electric utilties,
not being guaanteed a rate of retu on their activities generally or on the activities vis-a vis the
sale of power to the utilty and whose risk in proceeding forward in the cogeneration or small
power production enterprise is not guaranteed to be recoverable.'" fd. (quoting the H.R. Conf.
Rep. No. 95-1750).
Federal law - such as Section 21 O( e) of PURP A - preempts any state action that "stands
as an obstacle to the accomplishment and execution of the full objectives of Congress."
Freehold Cogeneration Associates, L.P. v. Board of Regulatory Com'rs of State of NJ., 44 F.3d
1178, 1190 (3rd Cir. 1995). The Freehold cour held Section 21O(e) pre-empted a state
commission order relying on a contract re-opener provision, and stated "we canot disregard the
impact on cogeneration financing if a purchase power agreement is at any time in the futue
subject to the arbitrary reconsideration by a state utility regulatory body." fd. at 1193; see also
Page 17 - MOTION FOR SUMMARY JUDGMENT
fndependent Energy Producers Ass'n, fnc. v. CaL. Pub. Util. Commn., 36 F.3d 848,858 (9th Cir.
1994); New York State Electric & Gas Corp., 71 FERC ir 61,027, at pp. 24-26 (1995) (stating, "If
we were to . .. allow the reopenig of QF contracts that had not been challenged at the time of
their execution, financeabilty of such projects would be severely hampered. Such a result is not
. . . consistent with Congress's directive that we encourage the development ofQFs.").
Indeed, the Idaho Supreme Cour has so held. See Afton Energy, fnc. v. fdaho Power Co.
("Afton l'), 107 Idaho 781, 786-88, 693 P.2d 427,432-34 (1984). Idaho Power had proposed a
PP A provision stating the "terms and conditions under this agreement are subject to change and
revision by order of the Commission. . . ." fd., 107 Idao at 786,693 P.2d at 432 (emphasis
added). But the Idaho Supreme Cour agreed with the Commission that this provision violated
PURP A. fd., 107 Idaho at 788, 693 P.2d at 434. The Cour reasoned, "It is clear that both
Congress and FERC, though its implementing regulations, intended that (QFs) should not be
subjected to the pervasive utility-tye regulation which would result if the contract language
proposed by Idaho Power were approved by the Commission." fd.; see also Idaho PUC Order
No. 29632, p. 7 (rejecting a contract re-opener clause that could have allowed for termination of
contract if Congress repealed PURP A).
Other states have reached the same conclusion. See Smith Cogeneration Mgt. v. Corp.
Commn., 863 P.2d 1227, 1240 (Okla. 1993) (PURPA prohibited state utilty commission from
requiring a modification term in PURPA PPAs); Oregon Trail Elec. Consumers Co-op, fnc. v.
Co-Gen Co., 7 P.3d 594, 605 (Or. App. 2000) (finding that "cours have uniformly held that state
regulators canot intervene in the public interest and modify the prices fixed by a cogeneration
contract because PURP A does not provide for such authority (typically termed 'utilty-type'
regulation)"). The Oregon cour stated, "The flaw in this contract is that it sought to use a state
Page 18 - MOTION FOR SUMMARY JUDGMENT
regulator, exercising utility-type authority, as the mechanism for modifying the prices set by the
contract. PURPA bars that." fd.
Here, Idaho Power's attempt to include a term in Grand View's contract purorting to
allow the ownership of environmental attibutes to change throughout the term of the agreement
is no different in any matenal regard from the similar provisions rejected by every state and
federal authority to address the issue. The only difference is that, rather than being "at any time
in the future subject to the arbitrar reconsideration by a utilty regulatory body," Freehold
Cogeneration Associates, L.P., 44 F.3d at 1193, Idaho Power's new clause would leave Grand
View subject to the ongoing arbitrary whims of futue Idaho legislatues. Much like the term
rejected in Afton Energy, fnc., Smith Cogeneration Mgt., and Idaho PUC Order No. 29632, Idaho
Power's PP A term would call for constant re-opening of environmental attibute ownership in
the QF contract, and destroy the ability to rely on a projected revenue stream in financing the
project.
Indeed, FERC's recent ruling allowing Californa to require utilities to compensate QFs
for actual avoided environmental costs - analogous to RECs - fuher underscores the
applicability of Section 210(e) ofPURPA to RECs. CaL. Pub. Uti!. Commn., 133 FERC ir
61,059, irir 21,26. Although valuable environmental attributes such as RECs were not in
existence when FERC promulgated its QF rules in 1980, FERC has now endorsed the use of
environmental attributes as an additional revenue stream in PURP A contracts to QFs providing
those attibutes to utilities. fd. A QF contract term regarding RECs must therefore comply with
Section 210(e) ofPURPA and FERC's reguations, 18 C.F.R. § 292.602, by providing a QF with
a lock in of long-term prices and terms based upon conditions in existence at the time the QF
obligates itselfto the legally enforceable obligation. See also JD Wind 1, LLC, 130 FERC ir
Page 19 - MOTION FOR SUMMARY JUDGMENT
61,127, irir 16,23 (Februar 19,2010), denying r'hg (citing 18 C.F.R. § 292.304(d)); JD Wind 1,
LLC, 129 FERC ir 61,148, irir 25-29 (November 19,2009). The value to the utilty of the
environmental attributes of the QF projects in the Cal. Pub. Uti!. Commn.case would be
calculated on the date the QF incured its obligation just as any other component ofthe rates.
The utilty in that case could not reduce its payments to the QF if at some future time the costs of
environmental compliance tu out to be substantially less than estimated at the time of the QF
contract any more than it could reduce payments if its alternative fuel or energy costs decreased.
It follows that QFs choosing not to provide their environmental attbutes to the utilty-
such as Grand View - are entitled to lock in avoided energy and capacity costs alone without
being subject to a re-opener clause regarding ownership of the environmental attributes. Grand
View simply wishes to obtain what FERC's rules intended to provide QFs like it from the
beginnng - certinty regarding the avoided cost rates and terms of its contract that will allow it
to calculate its revenue stream for puroses of financing its project. Idaho Power's re-opener
clause does not allow that, and it therefore violates Section 21 O( e) of PURP A and FERC's
implementing regulations and orders.
C. The Commission's requirement of inclusion of Idaho Power's proposed
environmental attributes clause would constitute a taking of Grand View's propert
without just compensation in violation of the Takigs Clauses of the Idaho and U.S.
Constitutions.
The Fift Amendment of the U.S. Constitution and the Aricle 1 Section 14 of the Idaho
Constitution each provide that private property shall not be taken for public use without just
compensation. U.S. Const. amend. V, cl. 4; Idaho Const. ar. 1 § 14. The purose of the takngs
clause is to prohibit the "Governent from forcing some people alone to bear public burdens
which, in all fairness and justice, should be borne by the public as a whole." Armstrong v. United
States, 364 U.S. 40, 49 (1960). Cours first examine whether the claimant possesses a property
Page 20 - MOTION FOR SUMMARY JUDGMENT
interest that is protected by the Fifth Amendment. Ruckelshaus v. Monsanto Co., 467 U.S. 986,
1003-04 (1984). If such an interest is established, cours then examine whether the governent's
action amounts to a compensable tang of that interest. fd. at 1005-06. When such a takng
occurs, an aggrieved individual may fie a claim for "inverse condemnation," which is a
shorthand description of the maner in which a property owner recovers just compensation for a
taking of his property when condemnation proceedings have not been instituted. United States v.
Clarke, 445 U.S. 253, 257 (1980).
1. Grand View's RECs and its going concern business value are compensable
propert rights.
In analyzing whether a claimant possess a propert interest, cours describe the term
"property" as referring to "the group of rights inhering in the citizen's relation to the physical
thing, as the right to possess, use and dispose of it." United States v. General Motors Corp., 323
u.s. 373, 377-378 (1945); see also Lingle v. Chevron u.s.A. fnc., 544 U.S. 528,539 (2005);
Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 435 (1982). Propert interests
"are about as diverse as the human mind can conceive," Florida Rock fndustries v. United States,
18 F.3d 1560, 1572 n. 32 (Fed.Cir.1994), and the Takings Clause "is addressed tô every sort of
interest the citizen may possess." General Motors, 323 U.S. at 378; see also Lucas v. South
Carolina Coastal Council, 505 U.S. 1003, 1019 (1992) (real property); Monsanto Co., 467 U.S.
at 1003-04 (intagible trade secret property); United States Trust Co. v. New Jersey, 431 U.S. 1,
19 n.16 (1977) (contract rights); Roth v. Pritikin, 710 F.2d 934, 939 (2d Cir.1983) (copyright);
Leesona Corp. v. United States, 599 F.2d 958,964 (Fed. Cir. 1979).
Transferrable propert created by governent programs is compensable propert under
the Takngs Clause. See e.g. Redevelopment Authority of Philadelphia v. Lieberman, 336 A.2d
249,257-59 (Pa. 1975) (collecting cases and awarding compensation for lost value ofliquor
Page 21 - MOTION FOR SUMMARY JUDGMENT
license associated with condemnation of liquor store premises); see also Members of the Peanut
Quota Holders Ass'n v. United States, 421 F. 3d 1323, 1332 (Fed. Cir. 2005) (finding property
right existed in governent issued peanut quota and stating the "right to transfer is a traditional
hallmark of property.").
Grand View's interest in the transferrable environmenta attbutes of its solar QF is a
compensable property interest. As the Commission and Idaho Power have acknowledged in
prior orders and filings, RECs are indeed valuable and transferrable. Grand View clearly owns
the RECs for which Idaho Power wil not pay and which no law transfers to Idao Power. Grand
View agrees with Idaho Power that in the current REC market a sale of a forward stnp of RECs
up to five years is more valuable than sellng RECs on the spot market, and like Idao Power,
Grand View wishes to sell its RECs in that maner. See fPCO REC Plan Modifcation Letter at
1, Paul Affidavit at irir 18-23. There can be no doubt that Grand View's right to transfer a five-
year forward strip of RECs through the interstate market that exists today is a compensable
property interest. See Andrus v. Allard, 444 U.S. 51, 65-66 (1979) (labeling the right to dispose
of property-e.g., through commercial transactions-as "one traditional property right" and one
"strand" of the "bundle" of property rights an owner possesses).
Likewise, another strand in the bundle of property rights possessed by Grand View is the
going concern value ofits QF business. See Kimball Laundry Co. v. United States, 338 U.S. 1,
8-13 (1949) (holding going concern value oflaundr was compensable property right); Coeur
d'Alene Garbage Service v. Coeur d'Alene, 114 Idaho 588, 591, 759 P.2d 879,881 (1988)
(collecting cases and applying Idaho Constitution to find property interest in trash collection
company); State v. Saugen, 169 N.W.2d 37, 42-46 (Minn. 1969) (liquor store). The going
concern value of Grand View's development efforts to date include items such as its real
Page 22 - MOTION FOR SUMMARY JUDGMENT
property lease, its efforts and expenditues in evaluating the solar capability and feasibility of the
project, and its good wil obtained in negotiations with the landowner, possible REC purchasers,
and others. All of these items make up the going concern value of Grand View's QF, which
Grand View could transfer today in exchange for moneta compensation. This going concern
value is a compensable propert interest separate and distinct from the RECs. Kimball Laundry
Co., 338 U.S. at 8-13.
2. Commission approval of Idaho Power's environmental attributes clause
would constitute a taking.
Where the governent requires an owner to suffer a permanent physical invasion of her
property - however minor - it must provide just compensation. See Loretto, 458 U.S. at 435
(state law requiring landlords to permit cable companies to install cable facilties in aparent
buildings effected a taking). A second categorical rule applies to regulations that completely
depnve an owner of all economically beneficial use of her property. Lucas, 505 U.S., at 1019;
Boise Tower Associates, LLC v. Hogland, 147 Idaho 774, 773, 215 P.3d 494,503 (2009); Coeur
d'Alene Garbage Service, 114 Idaho at 591, 759 P.2d at 881 (collecting Idaho cases and
applying Idaho Constitution to find taing of garbage collection business by City action
curiling its business).7 Since what the owner had was transferable value, ''the question is, What
has the owner lost? not, What has the taker gained?" Kimball Laundry Co., 338 U.S.at 12-13
(finding compensable taing when governent took temporar possession of a laundr); Yancey
7
Even when the claimant stil retains economic value of its property, just compensation
may be required by weighing relevant factors set forth in Penn Central Transp. Co. v. New York
City, 438 U.S. 104, 124 (1978). Grand View maintains that Idao Power's environmental
attibutes clause would effect a direct appropnation of private property required for a categorical
taking, thus precluding the need to engage in balancing the Penn Central factors. Grand View
nevertheless submits that Idaho Power's PPA clause would also constitute a tang under
application of the factors set forth in Penn Central. See Ruckelshaus, 467 U.S. at 1005-1016;
Cienega Gardens v. United States, 331 F.3d 1319, 1337-53 (Fed. Cir. 2003); NRG Co. v. United
States., 24 CI.Ct. 51, 56-63 (1991).
Page 23 - MOTION FOR SUMMAY JUDGMENT
v. United States, 915 F.2d 1534, 1541-42 (Fed. Cir. 1990) (finding a compensable tang where
''the Yanceys had no choice but to sell their birds for substatially less than their value").
In Armstrong, the Cour found a compensable tang of the claimants' liens on
uncompleted boat hulls seized by the Governent pursuat to a contract. Armstrong, 364 U.S. at
48-49. "Since ths acquisition was for public use, however accomplished, whether with an intent
and purose of extinguishing the liens or not, the Governent's action did destroy them and in
the circumstances of this case did thereby take the property value of those liens within the
meaning of the Fifth Amendment." fd. "And it matters not whether (the propert was) taen
over by the governent or destroyed, since, as has been said, destrction is tantaount to
tang." General Motors, 323 U.S. at 384.
Because authorizing Idaho Power's proposed environmental attbutes clause would
cloud Grand View's clear title to valuable environmental attbutes without any compensation,
Commission approval of the clause over Grand View's objection would constitute a categorical
taking. As noted above, Idaho Power itself recognizes that RECs are most valuable right now
sold as a long-term forward stnp of up to 5 years. See fPCO REC Plan Modifcation Letter at 1.
But Grand View canot sell such a forward stnp for any time period beyond the next sitting of
the Idao legislature because Idaho Power's proposed contract clause clouds title beyond that
time. Paul Affdavit at irir 18-23.
Inclusion of such clauses in QF PPAs would leave the QFs with no choice but to cut a
deal sellng their RECs for "substantially less than their value," Yancey, 915 F.2d at 1542, or to
retain RECs with a title so clouded they could not be sold at alL. That this is, in fact, the case is
highlighted by the recently approved Clark Canyon power purchase agreement with Idaho
Power. See Case No. IPC-E-II-09. In the Clark Canyon PPA, Idaho Power and Clark Canyon
Page 24 - MOTION FOR SUMMARY JUDGMENT
recite that they had agreed to address REC ownership in a separate agreement not filed for
approval with the Commission: "Ownership of Environmental Attibutes associated with the
Facility is determined in a separate agreement between Idaho Power and the Seller." See Case
No. IPC-E-II-09, Idaho Power Application at p. 3. Paul Affdavit, Exhibit 5.1. In response to
Commission Staff discovery requests, (Paul Affidavit, Exhibt 5.4) Idaho Power explained that it
reached an agreement with Clark Canyon to split ownership of the RECs in half - with the Seller
retaining ownership in the first ten years of the 20 year PP A and Idaho Power retaning
ownership in the last ten years of the agreement. Idaho Power admitted that it did not
compensate Clark Canyon for that transfer. In other words, Clark Canyon gave away half of its
RECs, simply to obtain clear title to any RECs. See Staff and Cark Canyon Comments, Paul
Affidavit, Exhbits 5.2 and 5.3. Idao Power offered the same 50/50 spllt to Grand View. Paul
Affdavit at ir ir 27-28. Idaho Power's clause simply destroys the value of the RECs. Furher, the
impact of such a clause would undermine Grand View's entire going concern business by
removing RECs to be produced by the solar QF as a futue revenue stream. Paul Affdavit at ir ir
25-29.
Idaho Power's stated purose for the clause is to protect its ratepayers from a futue
change in the law that may require it to obtain its own RECs, not that Idaho Power intends to pay
for the RECs. Answer at pp. 2-3. To authorize such the clause under ths reasoning would be a
classic case of requiring an individua (Grand View) to forfeit its propert (valuable
environmental attibutes and going concern value of its QF business) for public benefit (reduced
regulatory risk for Idaho Power's customers) without any compensation. The Commission
would therefore be subject to an inverse condemnation proceeding whereby a cour would order
it to compensate Grand View for (1) the value of its environmental attbutes impaired by Idaho
Page 25 - MOTION FOR SUMMAY JUDGMENT
Power's contract clause, and (2) the going concern value of Grand View's business impaired by
taking of the environmental attibutes.
The Idaho PUC Staff has concured with Grand View's position on ownership of
environmental attbutes on at least two occasions.8 In Case No. IPC-E-04-02 Idao Power
sought a declaratory order from the Commission approving a PP A clause that granted Idaho
Power a nght of first refusal to purchase green tags from PURP A developers. In that case the
Commission Staff took a position essentially identical to Grand View's argument on the takngs
issue: The PUC's Staf stated:
Arguably what Idaho Power proposes is an impermissible "taking" of propert.
The Fift Amendment of the U.S. Constitution states, "nor shall private property
be taken for public use without just compensation." This provision is called the
"taings clause." Idaho Power requests a Commission Order granting the utilty
by regulatory fiat a "right of first refusaL." It proposes no compensation to the QF
for that right. Electric utilty purchases of energy and capacity from PURPA QFsare mandatory. 18 C.F.
R. § 292.303(a). The environmental attributes associated with renewable QF
projects are curently separate from the capacity and energy sold to Idaho utilties.
They are not bundled together as a matter of law. Nor is the cost to purchase
environmenta attibutes included in an Idaho utilty' avoided cost. To the extent
those attibutes have value and provide additional developer incentive. Staff
believes they should remain with the developer. . . . no argument has been
advanced nor authority cited to justify or require placing any regulatory restriction
by this Commission on their ownership.
Staf Comments IPC-E-04-02, March 19,2004 at p. 7. (Emphasis provided).
II
II
II
II
II
8 Case No. IPC-E-04-02 in which Idaho Power sought a right of first refusal for RECs it
acknowledged belonged to the developer. Case No. IPC-E-04-16 referenced above.
Page 26 - MOTION FOR SUMMARY JUDGMENT
D. Any action by the IPUC in this case to cloud a QF's title to RECs created by
neighboring states' RPS laws would unduly burden interstate commerce for
protectionist purposes and therefore violate the Dormant Commerce Clause of the
United States Constitution.
The Commerce Clause of the United States Constitution provides that "Congress shall
have Power. . . To regulate Commerce. . . among the several States. . . ." U.S. Const., Ar. I, §
8, ci. 3. The Dormant Commerce Clause, however, also imposes limitations on states in the
absence of congressional action. "It is well settled that actions are within the domain of the
Commerce Clause if they burden interstate commerce, or impede itsfreeflow." C&A Carbone,
fnc. v. Town of Clarkstown, New York, 511 U.S. 383, 389 (1994) (emphasis added). "The central
rationale for the rule against discrimination is to prohibit state or muncipal laws whose object is
local economic protectionism." fd. at 390. State laws requinng that goods be processed in-state
prior to entering interstate commerce are per se invalid because such laws block the flow of
interstate commerce at the state's borders. See, e.g., id. at 390 (striking down town ordinance
requiring non-recylable solid waste to be processed at designated facility within municipality
before shipping); South Central Timber Development, fnc. v. Wunnicke, 467 U.S. 82, 100 (1984)
(striking down Alaska regulation that required all Alaska timber to be processed within the state
before export); New England Power v. New Hampshire, 455 U.S. 331, 339 (1982) (holding that
law restncting exports of hydropower violated commerce clause by hoarding resources for
State's economic benefit).
In c.A. Carbone, fnc., the Cour specifically noted the ordinance requiring local
processing of solid waste favored only a "single local proprietor," rather a class of in-state
processors, and held "ths difference just mar de) the protectionist effect of the ordinance more
acute." C&A Carbone, fnc., 511 U.S. at 392. "Discrimination against interstate commerce in
favor of local business or investment is per se invalid, save in a narow class of cases in which
Page 27 - MOTION FOR SUMMARY JUDGMENT
the muncipality can demonstrate under rigorous scrutiny, that it has no other means to advance a
legitimate local interest." fd. at 392. (distinguishing Maine v. Taylor, 477 U.S. 131 (1986),
where the Court upheld a restnction on importtion of baitfish because Maine had no other way
to prevent spread of parasites and local economic interests were not that state's justification for
the ban).
Here, Idaho Power proposes that the Commission authorize a clause in Grand View's
PP A - over Grand View's objection - that will cloud Grand View's title to an interstate
commodity created by other states' RPS laws - RECs. Because RECs are most valuable sold in
forward strips up to at least five years into the futue, fPCO REC Plan Modifcation Letter at 1,
Idaho Power's proposed language will burden the flow of an interstate commodity - a forward
strip ofRECs. Nobody will purchase Grand View's five-year stnp ofRECs if the Commission
approves a PPA that clouds title to Grand View's ownership of those RECs. See Paul Affdavit
at ir ir 18 - 23. Indeed, with Idaho Power's proposed contract clause, it is unikely any buyer
would purchase RECs from Grand View to be generated any later than the next session of the
Idaho legislatue. The burden on interstate commerce is undeniable.
Idaho Power's stated purose for its PPA clause clouding ownership and impairing the
free flow of this interstate commodity is for the local economic protection of Idaho Power and its
customers by reducing Idaho Power's regulatory risk solely at Grand View's expense. See
Answer at pp. 2-3. Idaho Power's hope that it wil someday retroactively own the RECs under
Idaho or federal law, without paying for them, is not a legitimate local basis unelated to
economic protectionism. Instead, it would be local protectionism of Idao's invester-owned
electnc utilties that would burden the interstate flow of goods created by neighboring states'
Page 28 - MOTION FOR SUMMARY JUDGMENT
RPS laws, and it would therefore violate the Dormant Commerce Clause. C&A Carbone, fnc.,
511 U.S. at 390.
Furhermore, the practical effect of Idaho Power's proposed clause clouding ownership to
RECs is analogous to the ilegal in-state processing requirements. Idaho does not have an RPS
law that creates "Idaho RECs," and the Idaho legislatue has stated no purose whatsoever - let
alone a legitimate purose - to require QFs to sell any RECs to the utility.9 Thus, requiring QFs
to sell RECs to an Idaho utility prior to allowing the RECs to enter interstate commerce would
unlawfly require the RECs to be processed in-state prior to entering interstate commerce. See
C&A Carbone, fnc., 511 U.S. at 390; South Central Timber Development, fnc., 467 U.S. at 100;
New England Power, 455 U.S. at 339. Idao Power's proposed PPA clause has the same effect
on the interstate flow of RECs as the other per se invalid in-state processing laws because in
order to obtain clear, marketable title to a long-term strip ofRECs a QF must agree to gift some
RECs to Idaho Power.
The practical effect of the PP A clause is to stop the flow of the RECs at the border, so
that Idao Power can obtain substantial value from a commodity for which it refuses to pay.
That the goods may then enter interstate commerce after passing though Idaho Power's hands is
of no moment because local protectionist motive would stop the original owner - Grand View-
from sellng its RECs to the buyer of its choice in interstate commerce. See C&A Carbone, fnc.,
511 U.S. at 390-93. Likewise, Idaho Power's proposed PPA clause is not saved by the fact that-
if adopted as a stadard QF contract clause - it would treat in-state QFs and out-of-state QFs the
9 Indeed, just the opposite is tre. The Idaho Legislatue has affrmatively declared that it is the
policy ofthe State ofIdaho to not adopt a renewable portfolio standard. 2007 fdaho Energy Plan
Januar 26, 2007 at p. 44. The proposed 2012 Idaho Energy Plan also contains a policy
statement against the adoption of any sort of a renewable portfolio standard. 2012 Draft Energy
Plan at. p. 94.
Page 29 - MOTION FOR SUMMARY JUDGMENT
same. The Supreme Cour directly rejected the same argument in C&A Carbone, fnc. and noted
that the obvious protectionist motive for a "single local propnetor" only makes the protectionist
effect "more acute." fd. at 392.
E. Clearly Grand View is being Coerced into Giving Idaho Power its RECs -- Or
Where is the Consideration Being Offered to Grand View for Clear Legal Title to
Grand View's RECs?
Idaho Power seeks to place a condition on the execution of PURP A contacts that gives it
ownership of one half of the RECs generated by the Grand View project. See Paul Affdavit. It
is axiomatic that every contract to be valid must be supported by consideration, see Sirius v.
Erickson 144 Idaho 38, 42, 156 P.3d 539 (2007), and a contract that is based on ilegal
consideration is not enforceable. See Trees v. Kersey 138 Idaho 3, 6, 56 P.3d 765, 769 (Idaho
2002). Here, Idaho Power is not offering "good and valuable" consideration for Grand View's
RECs. Instead, Idaho Power is coercing Grand View to surender ownership of half of the RECs
in exchange for its forbearance from insisting on a clause in the agreement that destroys the
value of the RECs for both paries - even though Idaho Power admits it has no use for RECs in
its provision of utilty serivce. As discussed above, Idaho Power has no legal right to Grand
View's RECs. Hence, not only is Idaho Power failing to offer consideration, it is actually
insisting on a clause that is not legally sustanable. Even if forbearance from insisting on the
reopener clause constitutes a proper form of consideration, the coercive (and arguably ilegal)
maner in which it is obtained does not constitute adequate consideration to support a contract
transferrng REC ownership to Idaho Power.
Idaho Power's actions are akin to the situation in Nolan v. California Coastal Commn
483 U.S. 825, 107 S.Ct. 3141 (1987). There, the Supreme Cour overted a ruling by the
Californa Coastal Commission that conditioned a building permit on the landowner's grant to
Page 30 - MOTION FOR SUMMAY JUDGMENT
the state of an access easement across his propert. The Supreme Cour found that there was no
relationship between the conditions necessar for a building permit and an access easement for
the public to access a beach. Like here, there is absolutely no relationship between Idaho
Power's reach for Grand View's RECs and the rates, terms and conditions in the PURPA
mandated power purchase agreement that is approved by the Idaho PUC. As the Supreme Cour
observed:
The evident constitutional propriety disappears, however, if the condition
substituted for the prohibition utterly fails to fuher the end advanced as the
justification for the prohibition. When that essential nexus is eliminated, the
situation becomes the same as if Californa law forbade shouting fire in a crowded
theater, but granted dispensations to those willng to contnbute $100 to the state
treasury. While a ban on shouting fire can be a core exercise of the State's police
power to protect the public safety, and can thus meet even our stnngent standards
for regulation of speech, adding the unelated condition alters the purose to one
which, while it may be legitimate, is inadequate to sustain the ban. ... Whatever
may be the outer limits of "legitimate state interests" in the tangs and land use
context, this is not one of them. In short, uness the permit condition serves the
same governental purose as the development ban, the building restriction is not
a valid regulation ofland use but "an out-and-out plan of extortion." JE.D.
Associates, fnc. v. Atkinson
fd. at 837. Likewise, uness Idaho Power's insistence on one half of Grand View's RECs -- or
else it wil impose a reopener clause in the PP A -- serves some purose under PURP A , it is not a
valid contract clause but "an out-and-out plan of extortion." The New Hampshire Supreme
Cour was even more direct under similar facts:
Muncipal officials having authority to adopt ordinances and regulations have a
constitutional duty to observe these (private property) protections. They may not
attempt to extort from a citizen a surender of his right to just compensation for
any part of his propert that is taen from him for public use as a price for
permission to exercise his right to put his property to whatever legitimate use he
desires subject only to reasonable regulation.
Page 31 - MOTION FOR SUMMARY JUDGMENT
J.E.D. Associates, fnc. v. Atkinson 121 N. H. 581, 584,432 A.2d 12, 15 (1981). It would not be
appropriate for this Commission to become complicit in Idaho Power's out-and-out plan to
coerce Grand View into giving its RECs up without compensation.
Idaho Power has established a pattern of preying on developers who are anious to move
their projects forward, thereby forcing them to agree to the ilegal extraction of their RECs in
exchange for a clause in the power purchase agreement giving clear title to the remaining RECs
to the developer. A recent case in which the Commission approved a power purchase agreement
between Clark Canyon Hydro and Idaho Power provides a good example.IO In its application for
approval of the Clark Canyon PP A, Idaho Power recited that "Ownership of Environmental
Attributes associated with the Facility is determined in a separated (sic) agreement between
Idaho Power and the Seller."ii
In response to Staff s inquiry in the Clark Canyon Application Docket as to why the
paries negotiated a separate contract addressing environmenta attibutes, Idaho Power
explained:
Idaho Power initially proposed reservation of rights language for the contract that
would preserve for Idaho Power and its customers the right in this contract should
the rules, regulations, laws or legal status as to the ownership of RECs in PURP A
contracts be clarified or changed to abide by such change in law.12 As an
alternative to this reservation of rights, the paries saw a mutu value to both the
project and to Idaho Power and its customers in clarifying the ownership ofRECs
and negotiated the separate agreement whereby the project retans all RECs for
the first ten years of the contract and Idaho Power owns all RECs for the last ten
10 fn the Mater of the Application of fdaho Power Company for a Determination Regarding the
Firm Energy Sales Agreement with Clark Canyon, LLC, for the Sale and Purchase of Electricity
IPUC Docket No. IPC-E-II-09
11 Idaho Power Application, Case No. IPC-E-09-11, at p. 3. Paul Affdavit, Exhibit 5.1.
12 This is identical to the language Grand View is challenging in the instant proceeding.
Page 32 - MOTION FOR SUMMARY JUDGMENT
years of the contract. There is no monetar payment for RECs in the agreement.
The project receives clarfication as to ownership and retains RECs for the first
13ten years...
It is clear from Idaho Power's own explanation that by insisting on a clause that neither par can
live with due to the uncertinty surounding title should law or regulations affecting RECs
change at some point in the future, that it is forcing the developer to surender half of the RECs
in exchange for Idaho Power willingness to drop that clause. This is a classic case of "The act or
practice of obtaining something or compellng some action by ilegal means, as by force or
coercion." Extortion, Blacks Law Dictionary 9th ed. (West 1999). Here Idaho Power is coercing
the developer to give Idaho Power half of its RECs by insisting on inserting an clause in the PPA
that destroys the value of the RECs.
F. The Commission should reject any reliance by Idaho Power on distinguishable cases
regarding REC ownership in other states.
Idaho Power and A vista will no doubt rely on decisions from some other states
determining that a utility owned RECs under PURP A contracts pre-dating any creation of any
mandatory or volunta REC markets. See fn Re Ownership of Renewable Energy Certifcates,
913 A.2d 825, 828 (N.J. Super. App. Div., 2007) (citing Edward A. Holt et al., Who Owns
Renewable Energy Certifcates? An Exploration of Policy Options and Practice, at xiv (Ernest
Orlando Lawrence Berkeley National Laboratory 2006), available at
http://eetd.lbI.gov/ea/emp/reports/59965.pdf)). These cases are distinguishable from the sitution
in the present case for several reasons, and the Commission should not rely upon them.
First, those cases relied upon a factual scenario where the PURP A contracts pre-dated the
existence of RECs. The leading case followed by others arose in Connecticut. See
13 fd. Idaho Power Response to the third question in Staffs First Production Request, emphasis
provided. Paul Affidavit, Exhbit 5.4.
Page 33 - MOTION FOR SUMMARY JUDGMENT
Wheelabrator Lisbon, fnc. v. Connecticut Dept. of Pub. Uti!. Control, 531 F.3d 183 (2nd Cir.
2008). There, the waste-to-energy QF at issue entered into a power purchase agreement pursuat
to PURPA in 1991. fd. at 186. "In 2002, the specific credits at issue. . . became marketable by
the creation of a market for such credits pursuant to the laws of several states, including
Connecticut." fd.
The Connecticut Supreme Cour held that the Connecticut state commission had
reasonably concluded the term "electricity" in the applicable state statute implementing PURP A
and in the contract "necessarily included the renewable attbute that later was 'unbundled' from
the energy and represented by the certificates." Wheelabrator Lisbon, fnc. v. Dept. of Pub. Uti!.
Control, 931 A.2d 159, 176 (Conn. 2007). The Connecticut Supreme Cour concluded that
because the 1991 contract assigned ownership to the utilty, the state commission's decision did
not constitute a taking in violation of the state constitution. fd. at 177. The federal distnct cour
likewise rejected a challenge under the tangs clause on the ground that the RECs "were created
after the paries entered into the (contract)." Wheelabrator Lisbon, fnc. v. Connecticut Dept. of
Pub. Uti!. Control, 526 F.Supp.2d 295,306 (D. Conn. 2006).14 The Second Circuit held that the
Connecticut state commission did not violate Section 210(e) ofPURPA by modifying the
original agreement because it "did not order the renegotiation of the terms of the Agreement but
simply exercised its authority to interpret the Agreement's provisions." Wheelabrator Lisbon,
fnc, 531 F.3d at 189.
Second, unike the Idaho Commission which vigilantly ensures that PURP A contracts do
not contain rates above the avoided cost of energy and capacity, some of the states to find RECs
passed to the utilty relied upon a finding that the PURPA contracts compensated the QFs for
14 The QF did not appeal to the Second Circuit with the takng argument.
Page 34 - MOTION FOR SUMMARY JUDGMENT
more than the energy and capacity alone. fn Re Ownership of Renewable Energy Certifcates,
913 A.2d at 830 ("when it approved the contracts at issue, (the state commission) required the
utilities to pay and allowed appellants to receive substantially more than the mere value of the
electncity, and that it did so specifically because the electricity was produced with renewable
resources") .
These cases are distinguishable and inapplicable to the circumstaces here because at the
time of contracting in this case the paries clearly recognize the QF projects will generate RECs
marketable in mandatory and volunta markets outside of Idaho. Indeed, the Grand View
contract directly contemplates creation ofRECs by defining them. To pretend they do not exist
and are not valuable is indefensible. Furer, because of the RECs obviously exist and Idaho
Power wil not pay for more than the mere value of the electricity, destrction of the value of the
RECs to Grand View without any compensation would clearly constitute a tag. Compare to
fn Re Ownership of Renewable Energy Certifcates, 913 A.2d at 830 (addressing contracts
containing compensation for "substantially more than the mere value of the electncity");
Wheelabrator Lisbon, fnc, 526 F.Supp.2d 295,306 (D. Conn. 2006) (finding no taking because
RECs "were created afer the paries entered into the (contract)"). Unlike in the Connecticut
case, Grand View's challenge under Section 210(e) ofPURPA argues that Idaho Power's REC
clause is itself an impermissible contract modifier or reopener, not a subsequent modification of
the terms of the contract. See Wheelabrator Lisbon, fnc, 531 F.3d at 189. Finally, those cases
did not even address the question of whether the Dormant Commerce Clause allows the Idaho
Commission to impose a protectionist policy requiring the RECs to pass though Idaho Power's
hands before entering interstate commerce.
V. CONCLUSION
Page 35 - MOTION FOR SUMMAY JUDGMENT
The Commission's authorization of Idao Power's proposed contract languae regarding
environmenta attbutes would violate Section 210(e) ofPURPA, the Takngs Clauses of
the
U.S. and Idaho Constitutions, and the Dormant Commerce Clause of the U.S. Constitution.
Grand View therefore requests that the Commission issue a declaratory judgment that Grand
View is entitled to a standard PURP A PP A wherein Idaho Power disclaims ownership of all
environmental attbutes of Grand View's solar project, and order that Idaho Power enter into
such a PP A with rates calculated under the methodology in effect on the date of the fiing of
Grand View's complaint.
Respectfully submitted this 29th day of November 2010.
RICHASON AND O'LEARY, PLLCxl /J.. ;f"'-'""i:¿ 'Q,¡íuJJ
Peter 1. Richardson (lSB No: 3195)
Gregory M. Adams (ISB No. 7454)
Attorneys for Complainant
..
Page 36 - MOTION FOR SUMMARY JUDGMENT
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 29th day of December, 2011, a tre and correct copy of the
with and foregoing MOTION FOR SUMMAY JUDGMENT in Case No. IPC-E-II-15 was served
in the maner shown to:
Ms. Jean Jewell
Commsion Secreta
Idao Public Utiities Commssion
POBox83720
Boise, il 83720-0074
X Hand Delivery
~ U.S. Mail, postage pre-paid
Facsimile
Electronic Mail
Kns Sasser
Deputy Attorney General
Idaho Public Utilties Commssion
472 W. Washington St.
Boise, ID 83702
X Hand Delivery
~ U.S. Mail, postage pre-paid
Facsimile
Electronic Mail
Donovan E. Walker
Jason B Wiliams
Idaho Power Company
POBox 70
Boise, Idaho 83707-0070
dwaler§idahopower.com
jwillamsaYidahopower.com
-X Hand Delivery
_U.S. Mail, postage pre-paid
Facsimile
Electronic Mail
Clint Kalich
A vista Corporation
1411 E Mission Ave., MSC-7
Spokane W A 99202
clint.kalichaYavistacorp.com
_ Hand Delivery
XU.S. Mail, postage pre-paid
Facsimile
Electronic Mail
Michael G. Andrea
Avista Corporation
1411 E. Mission Ave., MSC-23
Spokane W A 99202
michael.andreaaYavistacoro.com
_ Hand Delivery
XU.S. Mail, postage pre-paid
Facsimile
Electronic Mail
~~~
Nina Curis
Administrative Assistat
REr.'- !\/C". ..' t: ,\" .,:
Peter J. Richardson (lSB # 3195)
Gregory M. Adams (ISB # 7454)
Richardson & O'Lear, PLLC
515 N. 27th Street
P.O. Box 7218
Boise, Idaho 83702
Telephone: [phone]
Fax: [phone]
peteraYrichardsonandolear.com
gregaYnchardsonandolear.com
2011 NOV 29 PH 4: l ì
Attorneys for Complainant
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
GRA VIEW PV SOLAR II, LLC,
Complainant,
)
) Case No. IPC-E-II-15
)
) AFFIDAVIT OF ROBERT A. PAUL
)
)
)
)
vs.
IDAHO POWER COMPANY,
Defendant.
I, Robert A. Paul, 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 have personal knowledge of each of the facts set
fort in this affdavit.
2. I have been involved in development of renewable energy projects, including
wid and solar projects, for over thrty years.
3. Curently, I am the manager of Alternative Power Development, Northwest, LLC,
which is an Idaho limited liability company.
4. I have directly worked on the development of the Grand View PV Solar Two
project since its inception.
AFFIDAVIT OF ROBERT PAUL
PAGE 1
5. Grand View PV Solar Two, LLC is an Idaho limited liability company formed for
the purose of developing a 20 MW solar project near Grand View, Idaho.
6. Alternative Power Development, Northwest, LLC is the managing member of
Grand View PV Solar Two.
7. I actively paricipated in the negotiations with Idaho Power Company for a power
purchase agreement for the Grand View PV Solar Two project as a qualifying facilty under the
Public Utility Regulatory Policy Act of 1978.
8. I have attached as Exhibit 1 a copy of the draft power purchase agreement
provided to Grand View PV Solar Two by Idaho Power along with the transmittl email from
Mr. Randy Allphin of Idaho Power.
9. The contract contains stadard Idaho .Power PURPA contract provisions with
which I am familar from my work on past projects, with the exception of the clause regarding
ownership of RECs.
10. In past PURA contracts, I understood Idaho Power affirmatively waived
ownership of the environmental attbutes of the generation.
11. I also understood that the Idaho Public Utilties Commission routinely approved,
without expressing any concern, those PURP A contracts in which Idaho Power affirmatively
waived the ownership of the environmental attbutes of the generation.
12. Grand View PV Solar Two had no objections to Idaho Power's draft contract
other than the clause clouding ownership of the RECs. But for that clause, I would have signed
the power purchase agreement on behalf of Grand View PV Solar Two.
13. I authorized attorneys at Richardson and O'Lear to file the complaint in this
proceeding.
AFFIDAVIT OF ROBERT PAUL
PAGE 2
14. I understand the factual assertions in the complaint to be tre and correct based on
my own personal knowledge, and I hereby incorporate the factual allegations therein by
reference.
15. I have experience in negotiating the sale of renewable energy credits ("RECs")
generated from renewable energy projects, including another solar quaifying facility currently
being developed near Grand View, Idaho.
16. I have reviewed several documents Idao Power has fied before regulatory
regarding its REC Management Plan.
17. I have attached as exhibits the following Idaho Power filings which I have reviewed:
(Exhibit 2) Idao Power's Renewable Energy Credit Management Plan IPUC Case No. IPC-E-
08-24 dated December 30,2009; (Exhibit 3) Idao Power's Application Requesting Approval of
Sale of Renewable Energy Credits, Oregon PUC Docket No. UP 269 dated October 22, 2010;
(Exhibit 4) Idao Power's Letter Filng Regarding Modification of REC Plan filed in Oregon
Docket No. UM 269, dated June 6, 2011; (Exhibits 5.1 - 5.4) the Application, Staff Comments
and the Reply Comments of Clark Canyon and IPCo responses to Staff discovery in Docket No.
IPC-E-II-09.
18. I know that there curently exists a market for RECs and that the market includes both
forward stnps of varing lengths of time as well as wholesale spot markets.
19. To effect such sales I must provide the buyer certainty that I own and will own the RECs
I sell from the project over the term of the contract.
20. If I had clean title to the RECs I would attempt to sell them from the Grand View
PV Solar Two project in a forward stnp of at least five years.
21.
RECs.
22.
All forward sales of RECs require that the seller be able to prove ownership of the
Idaho Power's proposed contract provision in the Grand View PV Solar Two
AFFIDAVIT OF ROBERT PAUL
PAGE 3
project states that REC ownership will be determined by applicable state or federal laws.
23. I canot sell Grand View PV Solar Two's RECs with Idaho Power's REC clause
in the PP A because ownership of the RECs is dependent upon a subsequent change in state or
federal law. That lack of certinty places a cloud over the title of the RECs.
24. The business plan for the Grand View PV Solar Two project includes an
additional revenue stream for the sale of the RECs.
25. Without fair compensation from Idaho Power for the RECs at their ful market
value, and without the ability to sell the RECs to another purchaser at their full market value, the
Grand View PV Solar Two project's financial viabilty will be compromised.
26. I also expect that the project's profitabilty would be compromised at the power
purchase rates offered by Idaho Power if we are unable to sell the RECs, and therefore my abilty
to raise the capital necessar to build and operate the project would also be compromised.
27. Idaho Power offered to eliminate the cloud on title to the
RECs in exchange for my giving it, without compensation, one half of the RECs generated by
the project.
28. The abilty to sell only one half of the RECs from the project compromises the
financial viabilty of the project.
29. The ability to sell only one half of the RECs from the project likewise
compromises my abilty to raise the capital necessar to build and operate the project.
I declare under penalty of perjur under the laws of the United States and under laws of the state
of Idaho that the foregoing is tre and correct.
DATED this ~,~Rob~
day of November 2011.
AFFIDAVIT OF ROBERT PAUL
PAGE 4
STATE OF IDAHO )
) ss.
COUNTY OF C?)
On this q/!! day of November 2011, before me, a Notar Public in and for the
State of Idaho, personally appeared Robert Paul, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person who executed this instrent and acknowledged
it to be his free and voluntar act and deed for the uses and puroses mentioned in the
instrent.
IN WITNESS WHREOF, I have hereunto set my hand and offcial seal the day and year
first above wntten.
".'",',; t;'¡:rt! IJill".
~.~ 0' LE #4"##~.. "t A h #,,," \J ....... 'rr "....:-.. .. ,~ c... ...-=
$ ~: 01 AR Y ~ :.s :~ _ i~:.. . .... . ., 1".. :... ",v...lI. .)0...:. ic ~ PuB'" : 0 ::.- -. ..,::,~.. .. "' :-" dl' ........ ~~'....
''''#R A 'FE or \: ."....#l'~d.,.f!_.., ...~,;~"...
Residing ate ff í ~ /cI~)
My Commission expires 03", /0.. CYO/6-
AFFIDAVIT OF ROBERT PAUL
PAGE 5
Peter J. Richardson (ISB # 3195)
Gregory M. Adams (ISB # 7454)
Richardson & O'Lear, PLLC
515 N. 27th Street
P.O. Box 7218
Boise, Idaho 83702
Telephone: [phone]
Fax: [phone]
peteraYrichardsonandolear .com
gregaYrichardsonandolear.com
Attorneys for Complainant
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
GRAD VIEW PV SOLAR II, LLC,
Complainant,)
) Case No. IPC-E-II-15
)
~ AFFIDAVIT OF ROBERT A. PAUL
)
)
)
vs.
IDAHO POWER COMPANY,
Defendant.
EXHIBIT 1
TRASMITTAL EMAIL AND DRAFT
POWER PURCHASE AGREEMENT
Peter Richardson
From:
Sent:
To:
Cc:
Subject:
Attachments:
Allphin, Randy (RAllphin~idahopower.coml
Thursday, March 10,2011 2:00 PM
'robertapauI08~gmail.com'
Peter Richardson; Walker, Donovan
Draft Grand View Solar II purchase power agreement
Grand View Solar II draft PPA 3-10-2011.doc
Mr. Paul,
As you requested attached is a draft PURPA purchase power agreement for your proposed Grand View II 20 MW solar
project.
The pricing contained within this proposed agreement is based upon the energy shape you provided that we then used
to execute the IRP pricing modeL.
This draft agreement is for discussion purposes only and Idaho Power reserves the right to modify this agreement at any
time until both parties have executed an agreed upon document.
Only after agreement by both parties, execution of an agreement by both parties and approval of th e Agreement by the
Commission shall a binding commitment exist.
Please review and contact me with any questions you may have.
Randy
-..
.... r 1
Th tron may conta inormon th is prvieged, confdenô anor exem¡í frm disclos un aplicable Jaw. If you ar not th innded reipen you ar heby notied tht an dilos. copy diution orus of th inormtion criihein (inlud an reli thn) is STRCTY PROHIIT. If you reeive ths tron in er, plea immly contt th seer an desty th mari in its entty, whethr in elecc or ba co formt Th you.
!SIG:4d793bcf3341693223914!
1
Aricle
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Draft for Discussion Purposes Only
FIRM ENERGY SALES AGREEMENT
BETWEEN
IDAHO POWER COMPANY
AND
TABLE OF CONTENTS
TITLE
Definitions
No Reliance on Idaho Power
Waranties
Conditions to Acceptance of Energy
Term and Operation Date
Purchase and Sale of Net Energy
Purchase Price and Method of Payment
Environmental Attbutes
Facility and Interconnection
Metering and Telemetr
Records
Operations
Indemnification and Insurance
Force Majeure
Liabilty; Dedication
Several Obligations
Waiver
Choice of Laws and Venue
Disputes and Default
Governental Authorization
Commission Order
Successors and Assigns
Modification
Taxes
Notices
Additional Terms and Conditions
Severabilty
Counterpars
Entire Agreement Signatues
Appendix A
AppendixB
AppendixC
AppendixD
Draft for Discussion Purposes Only
Draft for Discussion Purposes Only
FIRM ENERGY SALES AGREEMENT
(Solar Project - Greater than 100 kW)
Project Name: Grand View Solar II
Project Number:
TilS AGREEMENT, entered into on this _ day of 2011. between
Paries agree as follows:
ANY, an Idaho corporation (Idaho
Power), hereinafter sometimes referred to collectively as "Parie '
WHREAS, Seller wil design, constrct, 0
WHREAS, Seller wishes to sell,. c energy produced
by the Seller's Facility.
THEREFORE, I nts hereinafter set forth, the
pendices attched hereto, the following terms
1.1 ergy less than i 10% of the monthly Net Energy Amount as specified
ent less any Net Energy that is determined to be Surplus Energy as
specified within this Agreement.
1.2 "Commission" - The Idaho Public Utilties Commission.
i.3 "Contract Year" - The period commencing each calendar year on the same calendar date as the
Operation Date and ending 364 days thereafter.
-1-
Draft for Discussion Purposes Only
Draft for Discussion Purposes Only
1.4 "Delay Liquidated Damages" - Damages payable to Idaho Power as calculated in paragraph 5.3, 5.4,
5.5, 5.6 and 5.8.
1.5 "Delay Period" - All days past the Scheduled Operation Date until the Seller's Facility achieves the
Operation Date.
1.6 "Delay Price" - The current month's Mid-Columbia Market Energy Cost minus the curent month's All
Hours Energy Price specified in paragraph 7.2 of this Agreemen If this calculation results in a value
less than 0, the result of this calculation wil be O.
1.7 "Designated Dispatch Facilty" - Idaho Power's Syste Group, or any subsequent group
designated by Idaho Power.
1.8 "Facilty" - That electric generation facilty
1.9 "First Energy Date" - The day co the day that
1.10 t 11:00 pm Mountain Time, (16
1.11 ours from hour beginning at 3 :00 pm through hour
1.12
1.13 equipment specified in Schedule 72.
1.14 "Light Load Hours" -y hours beginning atll:OO pm, ending at 7:00 am Mountain Time (8
hours), plus all other hours on all Sundays, New Years Day, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas.
1.15 "Losses" - The loss of electrcal energy expressed in kilowatt hours (kWh) occuring as a result of the
transformation and transmission of energy between the point where the Facilty's energy is metered and
-2-
Draft for Discussion Purposes Only
Draft for Discussion Purposes Only
the point the Facilty's energy is delivered to the Idaho Power electrical system. The loss calculation
formula wil be as specified in Appendix B of this Agreement.
1.16 "Market Energy Reference Price" - Eighty-five percent (85%) of the Mid-Columbia Market Energy
Cost.
1.17 "Material Breach" - A Default (paragraph 19.2.1) subject to paragraph 19.2.2.
1.18 "Maximum Capacity Amount' - The maximum capacity (MW) the Facilty wil be as specified in
accurate measurement of the Test
. s Agreement and any additional
Appendix B of this Agreement.
1.19 "Metering Equipment" - All equipment specified in S
equipment specified in Appendix B required to
flows between the Seller's electrc generation
1.20 "Metering Point" - The physical p at enables
1.21 "Mid-Columbia e of the daily on-peak and off-
prices for non-firm energy. If the Dow
e reporting agency, both Paries wil mutually
the Dow Jones Mid-Columbia Index. The selected
other similar agreements and a commonly used index by the
1.22 oad electrical quantities assigned by the designer to a generator and its
electrical equipment, such as transformers and circuit breakers, under
standadized conditions, expressed in amperes, kilovolt-amperes, kilowats, volts or other appropriate
units. Usually indicated on a nameplate attched to the individual machine or device.
1.23 "Net Energy" - All of the electric energy produced by the Facilty, less Station Use, less Losses,
expressed in kilowatt hours (kWh) delivered to Idaho Power at the Point of Delivery. Subject to the
-3-
Draft for Discussion Purposes Only
Draft for Discussion Purposes Only
terms of this Agreement, Seller commits to deliver all Net Energy to Idaho Power at the Point of
Delivery for the full term of the Agreement.
1.24 "Operation Date" - The day commencing at 00:01 hours, Mountain Time, following the day that all
requirements of paragraph 5.2 have been completed.
1.25 "Point of Delivery" - The location specified in Appendix B, where Idaho Power's and the Seller's
electrcal facilities are interconnected and the energy from this F cility is delivered to the Idaho Power
Operation Date.
"Prudent Electrcal Practices" - Those practices, me ment that are commonly and
electrical system.
1.26
ordinarily used in electrical engineering and 0
dependably, effciently and economically.
1.27 tes achieving the
Operation Date. It is expected that
1.28 "Schedule 72" - I ule 72 or its successor schedules as approved by
all costs of interconnection and integration of
s specified within Schedule 72 and this Agreement.
1.29 . paragraph 6.2.1 of this Agreement.
1.30 r alterations of transmission and/or distribution lines and transformers
as described in
1.31 that is used to operate equipment that is auxilar or otherwise related to
the production of electrcity by the Facilty.
1.32 "Surplus Energy" - Is (1) Net Energy produced by the Seller's Facilty and delivered to the Idaho Power
electrical system during the month which exceeds 110% of the monthly Net Energy Amount for the
corresponding month specified in paragraph 6.2. or (2) All Net Energy produced by the Seller's Facilty
and delivered to the Idaho Power electrical system in any month where the Net Energy delivered for
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that month is less than 90% ofthe monthly Net Energy Amount for the corresponding month specifed
in paragraph 6.2. or (3) All Net Energy produced by the Seller's Facility and delivered by the Facilty to
the Idaho Power electrical system prior to the Operation Date.
1.33 "Total Cost of the Facilty" - The total cost of strctures, equipment and appurtenances.
ARTICLE II: NO RELIACE ON IDAHO POWER
3.1 or failure to review Seller's design,
Seller Independent Investigation - Seller warants and repre Idaho Power that in entering into2.1
this Agreement and the underting by Seller of the 0 t fort herein, Seller has investigated
and determined that it is capable of performing
experience or expertise of Idaho Power in c
Agreement.
2.2 Seller Independent Experts - All
endorsement or a confiration by Idaho Power and
d or implied, regarding any aspect of Seller's design,
'ties, including, but not limited to, safety, durabilty, reliability,
strength, capacity,conomic feasibility.
3.2 Seller warants that the Facility is a "Qualifying Facilty," as that term is
used and defined in 18 CFR 292.201 et seq. After initial qualification, Seller wil take such steps as may
be required to maintain the Facilty's Qualifying Facilty status during the term of this Agreement and
Seller's failure to maintan Qualifying Facility status wil be a Material Breach of this Agreement.
Idaho Power reserves the right to review the Facilty's Qualifying Facility status and associated support
and compliance documents at anytime during the term of this Agreement.
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ARTICLE IV: CONDITIONS TO ACCEPTANCE OF ENERGY
4.1 Prior to the First Energy Date and as a condition ofIdaho Power's acceptance of delivenes of energy
from the Seller under this Agreement, Seller shall:
4.1.1 Submit proof to Idaho Power that all licenses, permits or approvals necessar for Seller's
operations have been obtained from applicable federal, state or local authorities, including, but
4. 1.2 Opinion of Counsel - Submit to Idaho Pow
Qualifying Facilty.
not limited to, evidence of compliance with Subpar B,
er signed by an attorney admitted
to practice and in good standing in th
permits and approvals as set forth in p
held in the name of the Se counsel is of the
o Power is relying on said opinion.
t be unreasonably withheld. The Opinion Letter
accordance with the legal opinion accord of the
daho Power manufacturer's and engineenng documentation
plate Capacity of each individual generation unit that is included
and also the total ofthese components to determine the Facilty
rating. Upon receipt of this data, Idaho Power shall review the provided
data and determine if the Nameplate Capacity specified is reasonable based upon the
manufactuer's specified generation ratings for the specific generation units.
4.1.4 Engineer's Certifications - Submit an executed Engineer's Certification of Design &
Constrction Adequacy and an Engineer's Certification of Operations and Maintenance (O&M)
Policy as described in Commission Order No. 21690. These certificates wil be in the form
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specified in Appendix C but may be modified to the extent necessar to recognize the different
engineering disciplines providing the certificates.
4.1.5 Insurance - Submit written proof to Idaho Power of all insurance required in Aricle XIII.
4.1.6 Interconnection - Provide written confination from Idaho Power's delivery business unit that
Seller has satisfied all interconnection requirements.
4.1.7 Network Resource Designation - The Seller's Facilty h been designated as a network
4.1.8 Written Acceptance - Request and obtain wri
resource capable of delivering firm energy up to t t of the Maximum Capacity.
. on from Idaho Power that all
conditions to acceptace of energy hav n confirmation shall be
provided within a commercially re
5.1 t shall become effective on the
date first written riod of twenty (20) Contract Years
5.2 fter the Facilty has achieved all of the following:
Agreement in a form acceptable to Idaho Power has been
c)ated to Idaho Power's satisfaction that the Facilty is complete and able
to provide energy in a consistent, reliable and safe maner.
d) Seller has requested an Operation Date from Idaho Power in a wrtten format.
e) Seller has received written confination from Idaho Power of the Operation Date. This
confiration wil not be unreasonably withheld by Idaho Power.
5.3 Operation Date Delay - Seller shall cause the Faciltytxe "Facility"l to achieve the Operationtxe
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"Commercial Operation"l Date on or before the Scheduled Operation Datetxe "Commercial Operation
Date"l. Delays in the interconnection and transmission network upgrade study, design and constrction
process that are not Force Majeure events accepted by both Parties, shall not prevent Delay Liquidated
Damages from being due and owing as calculated in accordance with this Agreement.
5.3.1 If the Operation Date occurs after the Scheduled Operation Date but on or prior to ninety (90)
days following the Scheduled Operation Date, Seller s ii pay Idaho Power Delay Liquidated
5.4
Damages calculated at the end of each calendar er the Scheduled Operation Date as
follows:
Delay Liquidated Damages th's Initial Year Net Energy
Amount as specified in par r of days in the curent
the curent month)
5.3.2 following the Scheduled Operation
Damages in addition to those
by the Maximum Capacity with the Maximum
"Delay Liquidated Damages"l
ate within ninety (90) days following the Scheduled Operation
ial Breach and Idaho Power may terminate this Agreement at any time
rial Breach. Additional Delay Liquidated Damages beyond those
calculated in 5.3 .1 wil be calculated and payable using the Delay Liquidated Damage
calculation described in 5.3.1 above for all days exceeding 90 days past the Scheduled Operation Date
until such time as the Seller cures this Material Breach or Idaho Power terminates this Agreement.
5.5 Seller shall pay Idaho Power any calculated Delay Damages or Delay Liquidated Damages within seven
(7) days of when Idaho Power calculates and presents any Delay Damages or Delay Liquidated
Damages bilings to the Seller. Seller's failure to pay these damages within the specified time wil be a
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Material Breach of this Agreement and Idaho Power shall draw funds from the Delay Security provided
by the Seller in an amount equal to the calculated Delay Damages or Delay Liquidated Damages.
5.6 The Paries agree that the damages Idaho Power would incur due to delay in the Facility achieving the
Operation Date on or before the Scheduled Operation Date would be diffcult or impossible to predict
with certinty, and that the Delay Liquidated Damages are an appropriate approximation of such
damages.
a) Filed for interconnection and is .with all payments and requirements
5.7 Prior to the Seller executing this Agreement, the Seller sha
b) Received and accepted
c)to fie an initial
transmission
d)
on costs and any costs associated
ansmission capacity to enable the project to be
network resource. If final interconnection or
complete at the time the Seller executes this
r understands that the Seller's obligations to pay Damages and
amages associated with the projects failure to achieve the Operation
cheduled Operation Date as specified in this Agreement is not relieved
terconnection or transmission processes and schedules.
5.8 Within thir (30) days of the date of a final non-appealable Commission Order as specified in Aricle
XX approving this Agreement, the Seller shall post liquid security ("Delay Security") in a form as
described in Appendix D equal to or exceeding the amount calculated in paragraph 5.8.1. Failure to
post this Delay Security in the time specified above wil be a Material Breach of this Agreement and
Idaho Power may terminate this Agreement.
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5.8.1 Delay Security The greater of fort five ($45) multiplied by the Maximum Capacity with the
Maximum Capacity being measured in kW or the sum of three month's estimated revenue.
Where the estimated thee months of revenue is the estimated revenue associated with the first
three full months following the estimated Scheduled Operation Date, the estimated kWh of
energy production as specified in paragraph 6.2.1 for those three months multiplied by the All
Hours Energy Price specified in pargraph 7.2 for each
5.8.1.1 In the event (a) Seller provides Idaho P ith certification that (1) a generation
interconnection agreement specifyin at wil enable this Facility to achieve
the Operation Date no later th Date has been completed and ,
the Seller has paid all requir
in compliance with all terms and
ent, the Delay Security calculated
ten percent (10%).
tly (1) at Seller's request, the generation
in paragraph 5.8.1.1 is revised and as a result the
its Operation Date by the Scheduled Operation Date or (2) if
ot maintain compliance with the generation interconnection agreement,
fthe Delay Security as calculated in paragraph 5.8.1 wil be subject to
and wil be due and owing within five (5) business days from the date
Idaho Power requests reinstatement. Failure to timely reinstate the Delay Security wil
be a Material Breach of this Agreement.
5.8.2 Idaho Power shall release any remaining secunty posted hereunder after all calculated Delay Damages
and/or Delay Liquidated Damages are paid in full to Idaho Power and the earlier of, 1) thirt (30) days
after the Operation Date has been achieved, or 2) sixty (60) days after the Agreement has been
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terminated.
ARTICLE VI: PURCHASE AND SALE OF NET ENERGY
6.1 Delivery and Acceptace of Net Energy - Except when either Par's performance is excused as
provided herein, Idaho Power wil purchase and Seller wil sell all of the Net Energy to Idaho Power at
the Point of Delivery. Net Energy produced by the Facilty and delivered by the Seller at any moment in
6.2.1
Amount wil be a Material Breach oftime to the Point of Delivery that exceeds the Maximum C
this Agreement.
6.2 Net Energy Amounts - Seller intends to produ
amounts:
6.2.2 Ongoing Monthly Net Energy Amounts - Seller shall initially provide Idaho Power with one
year of monthly generation estimates (Initial Year Monthly Net Energy Amounts) and
beginning at the end of month nine and every thee months thereafter provide Idaho Power with
an additional three months of forward generation estimates beyond those generation estimates
previously provided. This information wil be provided to Idaho Power by written notice in
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accordance with paragraph 25.1, no later than 5:00 PM of the 5th day following the end of the
previous month. If the Seller does not provide the Ongoing Monthly Net Energy Amounts in a
timely maner, Idaho Power wil use the most recently provided 3 matching months of the
Initial Year Monthly Net Energy Amounts specified in paragraph 6.2.1 for the next 3 months of
monthly Net Energy amounts.
6.2.3 Seller's Adjustment of Net Energy Amount
6
6.2.3.1 No later than the Operation Date, by wri e given to Idaho Power in accordance
6.2.3.2 Beginning with the end of
mediate next thee
o later than 5:00 PM of the 5th day
may revise all other previously
'lure to provide timely written notice of changed
ount - If Idaho Power is excused from accepting the
in paragraph 12.2.1 or if the Seller declares a Suspension of
ecified in paragraph 12.3.1 and the Seller's declared Suspension of
t unreasonably rejected accepted by Idaho Power, the Net Energy
in paragraph 6.2 for the specific month in which the reduction or
suspension under paragraph 12.2.1 or 12.3.1 occurs wil be reduced in accordance with the
following:
Where:
NEA Current Month's Net Energy Amount (Paragraph 6.2)
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SGU a.) IfIdaho Power is excused from accepting the Seller's Net
Energy as specified in paragraph 12.2.1 this value will be
equal to the percentage of curtilment as specified by
Idaho Power multiplied by the TGU as defined below.
6.3
b.) If the Seller declares a Suspension of Energy Deliveries as
specified in paragraph 12.3.1 this value will be the sum of
the individual generation units size ratings as specified in
Appendix B that are impacted by the circumstances
causing the Seller to declare a Suspension of Energy
Deliveries.
TGU Sum of all of the individual
units at this Facility as sp i
agreement.
ings of the generation
ix B of this
RSH Actual hours the F
reduced or suspende
TH
A ) X (RSH ) .)
TH
licable Surplus Energy calculations for only the
as excused from accepting the Seller's Net Energy or the Seller
orce Majeure, Seller's failure to deliver Net Energy in any Contract
t least ten percent (l 0%) of the sum of the Initial Year Net Energy
Amounts as specified in paragraph 6.2 shall constitute an event of default.
ARTICLE VII: PURCHASE PRICE AND METHOD OF PAYMNT
7.1 Base Energy Purchase Price
7.1.1 During the months of March, April and May Idaho Power shall pay the non-Ievelized Heavy
Load Energy Price for all Base Energy received during Heavy Load Hours and the Light Load
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Energy Price for all Base Energy received during Light Load hours for each year as specified
below:
Year
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
203
2031
below:
Year
2012
2013
2014
2015
2016
2017
2018
Heayy Load Energy Price
Mils/kWh
67.16
70.61
71.93
73.26
74.63
76.03
77.45
78.89
80.37
81.88
83.41
84.97
6.57
Light Load Energy Price
Mils/kWh
61.81
65.26
66.58
67.91
69.28
70.68
72.10
.54
r and December, Idaho Power shall pay the non-Ievelized Heavy
ergy received during Heavy Load Hours and the Light Load
Energy received during Light Load hours as for each year as specified
Heavy Load Energy Price
Mils/kWh
109.64
115.28
117.43
119.62
121.85
124.13
126.44
Light Load Energy Price
Mils/kWh
100.91
106.55
108.70
110.88
113.1 1
115.39
117.71
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2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
128.81
131.22
133.68
136.19
138.73
141.34
143.99
146.69
149.45
152.26
155.11
158.04
161.00
120.07
122.48
124.94
127.45
130.00
132.60
135.25
137.95
140.71
143.52
146.38
149.30
152.27
7.1.3 During the months of July and Augus
Standard Energy Price fì
201
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
10 .
112.9
115.08
117.23
119.41
121.65
123.91
126.23
128.60
131.01
133.47
135.96
138.51
141.11
143.76
tandard Hours, the
uring Light Load Hours for each
Heavy Load Peak
Energy Price Light Load Energy Price
MilslkWh
115.12
121.04
123.30
125.60
127.94
130.34
132.76
135.25
137.78
140.36
143.00
145.67
148.41
151.19
154.02
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MilslkWh
100.91
106.55
108.70
110.88
113.11
115.39
117.71
120.07
122.48
124.94
127.45
130.00
132.60
135.25
137.95
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2027
2028
2029
2030
2031
146.46
149.21
152.01
154.88
157.78
156.92
159.87
162.87
165.94
169.05
140.71
143.52
146.38
149.30
152.27
7.1.4 During the months of June, September, October, Januar and Februar, Idaho Power shall
pay the non-Ievelized Heavy Load Energy Price fì Base Energy received during Heavy
Load Hours and the Light Load Energy P .Base Energy received during Light
Load hours as specified below:
Year
2012
2013
2014
2015
2016
2017
201
201
2020
21
7.2 All Hours Energy Price - The price to be used in the calculation of the Surlus Energy Price and Delay
Damage Price shall be the non-Ievelized energy price for each year as specified below:
March, April and
May
July, August,
November and
December
June, September,
October, Januar and
Februar
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7.4
Year
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
MilslkWh
64.78
68.23
69.55
70.88
72.25
73.65
75.07
76.51
77.99
79.50
81.03
82.59
84.19
85.81
87.47
89.16
90.88
MilslkWh
105.76
11 1.40
113.54
115.73
117.96
120.24
122.56
124.92
127.3
1
MilslkWh
88.13
92.83
94.62
96.44
98.30
100.20
102.13
104.10
106.11
108.16
110.25
112.37
114.54
116.75
119.00
121.30
123.64
6.02
128.46
130.93
7.3 to the Seller the lower of the
s, less any payments due to Idaho Power wil be
s of the date which Idaho Power receives and accepts the
nergy actually delivered to Idaho Power as specified in
7.5 Commission. This Agreement is a special contract and, as such, the rates,
terms and conditions contained in this Agreement wil be constred in accordance with Idaho Power
Company v. Idaho Public Utilties Commission and Afton Energy Inc., 107 Idaho 781, 693 P.2d 427
(1984), Idaho Power Company v. Idaho Public Utilties Commission, 107 Idaho 1122,695 P.2d 1 261
(1985), Afton Energy Inc. v. Idaho Power Company, 111 Idaho 925, 729 P.2d 400 (1986), Section 210
of the Public Utilty Regulatory Policies Act of 1978 and 18 CFR §292.303-308
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ARTICLE VII: ENVIRONMNTAL ATTRIBUTES
8.1 Under this Agreement, ownership of Green Tags and Renewable Energy Certificate (RECs), or the
equivalent environmental attibutes, directly associated with the production of energy from the Seller's
Facilty sold to Idaho Power wil be governed by any and all applicable Federal or State laws and/or any
regulatory body or agency deemed to have authority to regulate these Environmental Attibutes or to
Seller-owned Interconnection Facilities so as
maintain the Facility and any
implement Federal and/or State laws regarding the same.
9.1 Design of Facility - Seller wil design, cons
Energy to the Idaho Power Point 0
9.2 Interconnection Facilties - Exce the required
2, the Generation Interconnection
ection Process, including but not limited to initial
tallation costs and ongoing monthly Idaho Power
o
10.1 the account of Seller, provide, install, and maintain Metering
utually agreed upon location to record and measure power flows to Idaho
Power in accordance with this Agreement and Schedule 72. The Metering Equipment wil be at the
location and the type required to measure, record and report the Facilty's Net Energy, Station Use, and
maximum energy deliveries (kW) at the Point of Delivery in a manner to provide Idaho Power adequate
energy measurement data to administer this Agreement and to integrate this Facility's energy production
into the Idaho Power electrical system.
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10.2 Telemetr - Idaho Power will install, operate and maintain at Seller's expense communications and
telemetr equipment which wil be capable of providing Idaho Power with continuous instantaeous
telemetr of Seller's Net Energy produced and delivered to the Idaho Power Point of Delivery to Idaho
Power's Designated Dispatch Facility.
ARTICLE XI - RECORDS
records in a form and content acceptable to Idah
h other location mutually acceptable11.1 Maintenance of Records - Seller shall maintan at the Facil
to the Parties adequate total generation, Net Ener se, and maximum generation (kW)
11.2 Inspection - Either Par, after reasonable n
business hours, to inspect and audit any or all Use, and maximum
generation (kW) records pertainin
12.1
in accordance with Appendix A of this Agreement.
12.2
ting and paying for Net Energy which would have
ilty and delivered by the Seller to the Point of Delivery, if it
so by an event of Force Majeure, or temporary disconnection of the
'th Schedule 72. If, for reasons other than an event of Force Majeure, a
ection under Schedule 72 exceeds twenty (20) days, beginning with the
twenty-first day of such interrption, curtilment or reduction, Seller wil be deemed to be
delivering Net Energy at a rate equivalent to the pro rata daily average of the amounts specified
for the applicable month in paragraph 6.2. Idaho Power wil notify Seller when the interrption,
curtilment or reduction is terminated.
12.2.2 If, in the reasonable opinion ofIdaho Power, Seller's operation of the Facilty or Interconnection
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Facilties is unsafe or may otherwise adversely affect Idaho Power's equipment, personnel or
service to its customers, Idaho Power may temporarily disconnect the Facilty from Idaho
Power's trsmission/distribution system as specified within Schedule 72 or take such other
reasonable steps as Idaho Power deems appropriate.
12.2.3 Under no circumstances wil the Seller deliver Net Energy from the Facilty to the Point of
Delivery in an amount that exceeds the Maximum Ca city Amount at any moment in time.
12.3
of this Agreement.
Seller's failure to limit deliveries to the Maximu ty Amount wil be a Material Breach
12.2.4 If Idaho Power is unable to accept
accepting the Facility's energy, Ida
Power wil have no
incur.
12.3.1 utage due to equipment failure which is not caused
ect, disrepair or lack of adequate preventative
may, after giving notice as provided in pargraph
d all deliveries of Net Energy to Idaho Power from the Facilty
ation unites) within the Facility impacted by the forced outage for a
hours to correct the forced outage condition ("Declared Suspension of
The Seller's Declared Suspension of Energy Deliveries wil begin at the
sta of the next full hour following the Seller's telephone notification as specified in paragraph
12.3.2 and wil continue for the time as specified (not less than 48 hours) in the written
notification provided by the Seller. In the month(s) in which the Declared Suspension of Energy
occurred, the Net Energy Amount wil be adjusted as specified in paragraph 6.2.4.
12.3.2 If the Seller desires to initiate a Declared Suspension of Energy Deliveries as provided in
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paragraph 12.3.1, the Seller wil notify the Designated Dispatch Facility by telephone. The
beginning hour of the Declared Suspension of Energy Deliveries wil be at the earliest the next
full hour after making telephone contact with Idaho Power. The Seller wil, within 24 hours
after the telephone contact, provide Idaho Power a written notice in accordance with XX that
wil contain the begining hour and duration of the Declared Suspension of Energy Deliveries
and a description of the conditions that caused the Sel r to initiate a Declared Suspension of
12.5
Energy Deliveries. Idaho Power wil review t entation provided by the Seller to
determine Idaho Power's acceptance of the d outage as qualifying for a Declared
Suspension of Energy Deliveries as sp Idaho Power's acceptace of
the Seller's forced outage as an based upon the clear
documentation provided b an event of Force
Majeure or by neglect, di
Facilty.
12.4 year, Seller shall submit a written
proposed mainte ity maintenance for that calendar year and Idaho
ptability of the proposed schedule. The Paries
d timetable for scheduled maintenance wil tae into
, Idaho Power system requirements and the Seller's preferred
asonab y withold acceptace of the proposed maintenance schedule.
Seller and Idaho Power shall, to the extent practical, coordinate their
intenance schedules such that they occur simultaeously.
12.6 Contact Prior to Curilment - Idaho Power wil make a reasonable attempt to contact the Seller prior to
exercising its rights to interrpt interconnection or curail deliveries from the Seller's Facilty. Seller
understads that in the case of emergency circumstances, real time operations of the electrical system,
and/or unplaned events Idaho Power may not be able to provide notice to the Seller prior to
interrption, curtailment, or reduction of electrical energy deliveries to Idaho Power.
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ARTICLE XII: INEMNIFICATION AND INSURNCE
13.1 Indemnification - Each Par shall agree to hold harless and to indemnify the other Par, its officers,
agents, affiliates, subsidiaries, parent company and employees against all loss, damage, expense and
liability to third persons for injury to or death of person or injury to propert, proximately caused by the
indemnifying Par's (a) constrction, ownership, operation or maintenance of, or by failure of, any of
13.2.1 Comprehensive General Li
ment or (b) negligent or intentionalsuch Part's works or facilties used in connection with this
acts, errors or omissions. The indemnifying Par shall ther Par's request, defend any suit
asserting a claim covered by this indemnity. The .shall pay all documented costs,
including reasonable attorney fees that may b
13.2 Insurance - During the term of this Agreemen
insurance coverage:
with an insurace company with an A.M. Best
Idaho Power as an additional insured and loss payee as
(b)ing that such policy shall not be canceled or the limits of liabilty
out sixty (60) days' prior written notice to Idaho Power.
13.3 Seller to Provide Certificate of Insurance - As required in paragraph 4.1.6 herein and anually
thereafter, Seller shall furnish Idaho Power a certificate of insurance, together with the endorsements
required therein, evidencing the coverage as set fort above.
13.4 Seller to Notify Idaho Power of Loss of Coverage - If the insurance coverage required by paragraph
13.2 shall lapse for any reason, Seller wil immediately notify Idaho Power in writing. The notice wil
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advise Idaho Power of the specific reason for the lapse and the steps Seller is taing to reinstate the
coverage. Failure to provide this notice and to expeditiously reinstate or replace the coverage wil
constitute a Material Breach of this Agreement.
ARTICLE XIV: FORCE MAUR
14.1 As used in this Agreement, "Force Majeure" or "an event of Force Majeure" means any cause beyond
exercise of reasonable foresight such par coul
rcise of due diligence, such Par isthe control of the Seller or of Idaho Power which, despite
unable to prevent or overcome. Force Majeure inclu ot limited to, acts of God, fire, flood,
storms, wars, hostilties, civil strife, strikes and es, earhquakes, fires, lightning,
epidemics, sabotage, or changes in law or
d to avoid and by the
exercise of due dilgence, it shall
of an event of Force Majeure, both
vent of Force Majeure, provided
that:
soon as is reasonably possible after the occurence
ar written notice describing the particulars of
ance shall be of no greater scope and of no longer duration
y the event of Force Majeure.
(3)of either Par which arose before the occurrence causing the suspension
of pedormance and which could and should have been fully pedormed before such
occurrence shall be excused as a result of such occurrence.
ARTICLE XV: LIAILITY; DEDICATION
15.1 Limitation of Liabilty. Nothing in this Agreement shall be constred to create any duty to, any
standad of care with reference to, or any liabilty to any person not a Par to this Agreement. Neither
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par shall be liable to the other for any indirect, special, consequential, nor punitive damages, except as
expressly authorized by this Agreement. Consequential damages wil include, but not be limited to, the
value of any environmental attibutes.
15.2 Dedication. No undertaking by one Par to the other under any provision of this Agreement shall
constitute the dedication of that Par's system or any porton thereof to the Par or the public or affect
the status ofIdaho Power as an independent public utilty corpor ion or Seller as an independent
individual or entity.
Except where specifically stated in this Agr , obligations and liabilties16.1
of the Paries are intended to be several and not J d in this Agreement
shall ever be constred to create
17.1 respect to a default under this Agreement or
ion with this Agreement shall not be deemed a
It or other matter.
II: CHOICE OF LAWS AND VENUE
18.1 tred and interpreted in accordance with the laws of the State ofIdaho
without reference to its choice of law provisions.
18.2 Venue for any litigation arising out of or related to this Agreement wil lie in the Distrct Cour of the
Fourth Judicial District ofIdaho in and for the County of Ada.
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ARTICLE XIX: DISPUTES AND DEFAULT
19.1 Disputes - All disputes related to or arising under this Agreement, including, but not limited to, the
interpretation of the terms and conditions of this Agreement, wil be submitted to the Commission for
resolution.
19.2 Notice of Default
19.2.1 Defaults. If either Par fails to perform any of t rms or conditions of this Agreement
19.3
(an "event of default"), the non defaulting P cause notice in writing to be given to
the defaulting Par, specifying the m default occurred. If the defaulting
Par shall fail to cure such defau er service of such notice, or
0) day period and
then fails to diligently
19.2.2
Date and thereafter for the full term of this
19.3.1 of compliance with the provisions of pargraph 13.2. If Seller fails to
wil be a Material Breach and may only be cured by Seller supplying
required insurance coverage has been replaced or reinstated;
19.3.2 Engineer's Certifications - Every three (3) years after the Operation Date, Seller wil supply
Idaho Power with a Certification of Ongoing Operations and Maintenance (O&M) from a
Registered Professional Engineer licensed in the State of Idaho, which Certification of
Ongoing 0 & M shall be in the form specified in Appendix C. Seller's failure to supply the
-25-
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required certificate wil be an event of default. Such a default may only be cured by Seller
providing the required certificate; and
19.3.3 Licenses and Permits - During the full term of this Agreement, Seller shall maintain
compliance with all permits and licenses described in paragraph 4.1.1 of this Agreement. In
addition, Seller wil supply Idaho Power with copies of any new or additional permits or
licenses. At least every fifth Contract Year, Seller wl1 update the documentation described
Part of this Agree
in Paragraph 4.1.1. If at any time Seller fails tain compliance with the permits and
licenses described in paragraph 4.1.1 0 he documentation required by this
paragraph, such failure wil be Seller
submitting to Idaho Power eviden
20.1
21.1 the Commission's approval of all terms and
p d declaration that all payments to be made to Seller
urred expenses for ratemaking purposes.
XXI: SUCCESSORS AND ASSIGNS
22.1 terms and provisions hereof shall be binding upon and inure to the benefit
of the respective successors and assigns of the Parties hereto, except that no assignment hereof by either
Part shall become effective without the written consent of both Paries being first obtained. Such
consent shall not be unreasonably withheld. Notwithstading the foregoing, any par which Idaho
Power may consolidate, or into which it may merge, or to which it may conveyor transfer substantially
all of its electric utilty assets, shall automatically, without further act, and without need of consent or
-26-
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approval by the Seller, succeed to all of Idaho Power's rights, obligations and interests under this
Agreement. This aricle shall not prevent a financing entity with recorded or secured rights from
exercising all rights and remedies available to it under law or contract. Idaho Power shall have the right
to be notified by the financing entity tht it is exercising such rights or remedies.
ARTICLE XXII: MODIFICATION
25.1
ing and signed by both Paries and23.1 No modification to this Agreement shall be valid unless it is'
subsequently approved by the Commission.
24.1 Each Par shall pay before delinquency all ta
paid when due, could result in a li
directed as follows and shall be considered
deposit in the U.S. Mail, first-class,
p
Telephone:
Cell:
FAX:
E-mail:
Copy of document to:
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Telephone:
Email:
To Idaho Power:
Original document to:
26.1
Senior Vice President, Pow
Idaho Power Company
POBox 70
Boise, Idaho 83707
Email: L row
Either Par may change the ove, by providing writen notice
from an authorized perso
S AND CONDITIONS
which are attached hereto and included by
Generation Scheduling and Reporting
Facility and Point of Delivery
Engineer's Certifications
Forms of Liquid Security
ARTICLE XXII: SEVERAILITY
27.1 The invalidity or unenforceabilty of any term or provision of this Agreement shall not affect the
validity or enforceabilty of any other terms or provisions and this Agreement shall be constred in all
other respects as if the invalid or unenforceable term or provision were omitted.
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ARTICLE XXII: COUNTERPARTS
28.1 This Agreement may be executed in two or more counterpars, each of which shall be deemed an
original but all of which together shall constitute one and the same instent.
ARTICLE XXX: ENTIR AGREEMENT
29.1 This Agreement constitutes the entire Agreement of the Paries c nceming the subject matter hereof and
subject mattr hereof.
Idaho Power Company
supersedes all prior or contemporaneous oral or wrtten agr
their respective names on the dates set fort
By
Dated Dated
"Seller"
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APPENDIX A
A -1 MONTHLY POWER PRODUCTION AND SWITCHIG REPORT
At the end of each month the following required documentation wil be submitted to:
adequately administer this Agreement. Th
Idaho Power Company
Att: Cogeneration and Small Power Produ
POBox70
Boise, Idaho 83707
The meter readings required on this report wil be the r r Meter Equipment measurng
the Facilty's total energy production and Station U
energy payment calculation and payment pro
calculate the actual payme reading information that wil be
gathered as described in it
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Idaho Power Company
Cogeneration and Small Power Production
MONmLY POWER PRODUCTION AN SWITCHIG REPORT
Month Year
Project Name Project Number:
*Breaker 0 Reason
Lack of Adequate Prime Mov
Forced Outage of Facilty
Disturbance of IPCo System
Scheduled Maintenance
Testing of Protection Systems
Cause Unknown
Other (Explain)
Address
City State Zip
MeteredFacilty
Output
Meter Number:
End of Month kWh Meter Reading:
Beginning of Month kWh Meter:
Difference:
kW
Net Generation
Breaker Open in
Date
Breaker Closing Record
Date Time Meter
1
2
3
4
5
6
7
I hereby certify that the above meter readings are
true and correct as of Midnight on the last day of the
above month and that the switching record is accurate
and complete as required by the Firm Energy Sales
Agreement to which I am a Party.
DateSignature
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A-2 AUTOMATED METER READING COLLECTION PROCESS
Monthly, Idaho Power wil use the provided Metering and Telemetr equipment and processes to collect the
meter reading information from the Idaho Power provided Metering Equipment that measures the Net Energy
and energy delivered to supply Station Use for the Facility recorded at 12:00 AM (Midnight) ofthe last day of
the month..
Once the Facilty has achieved its Operation Dat
for a reasonable period of time, the Parties may mu
requirement.
roduction, Station Use, the maximumThe meter information collected wil include but not be limited to e
generated power (kW) and any other required energy measur
A-3 ROUTINE REPORTING
consistent manner
Reporting
and leave the following information:
leave the following information:
ication - Project Name and Project Number
. Approxi te time outage occurred
. Estimated day and time of project coming back online
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Seller's Contact Information
24-Hour Project Operational Contact
Name:
Telephone Number:
Cell Phone:
Project On-site Contact information
Name:
Telephone Number:
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APPENDIXB
FACILITY AND POINT OF DELIVRY
Project Name: Grand View Solar II
Project Number:
B-3
B- 1 DESCRIPTION OF FACILITY
Var Capability (Both leading and lagging: Leadi
B-2 LOCATION OF FACILITY
Near:
Sections:
the Scheduled First Energy Date.
as the Scheduled Operation Date.
er recognizes that adequate testing of the Facility and completion of all
5.2 of this Agreement must be completed prior to the project being granted
an Operation Date.
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B-4 MAIMUM CAPACITY AMOUNT
This value wil be which is consistent with the value provided by the Seller to Idaho Power in
accordance with Schedule 72. This value is the maximum energy (MW) that potentially could be
delivered by the Seller's Facilty to the Idaho Power electrical system at any moment in time.
B-5 POINT OF DELIVRY
"Point of Delivery" means, unless otherwise agreed by both P the point of where the Sellers
Facilty's energy is delivered to the Idaho Power electri . Schedule 72 wil determine the
specific Point of Delivery for this Facilty.
an integral par of this Agreement.
B-6 LOSSES
Ifthe Idaho Power Metering equip the exact energy deliveries by the Seller
Losses wil be calculated for this
re the exact energy deliveries by
Delivery, a Losses calculation wil be
en the Seller's Facility and the Idaho Power Point
o et at 2% of the kWh energy production recorded on
At such time as Seller provides Idaho Power with the
s (transformer loss specifications, conductor sizes, etc.) of all of the
e Facility and the Idaho Power electrical system, Idaho Power wil
culation formula to be agreed to by both parties and used to calculate the
kWh losses for the remaining term of the Agreement. If at any time during the term of this Agreement,
Idaho Power determines that the loss calculation does not correctly reflect the actual kWh Losses
attibuted to the electrical equipment between the Facilty and the Idaho Power electrical system, Idaho
Power may adjust the calculation and retroactively adjust the previous months kWh losses calculations.
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B-7 METERIG AND TELEMETRY
Schedule 72 wil determine the specific metenng and telemetr requirements for this Facilty. At the
minimum the Metering Equipment and Telemetr equipment must be able to provide and record hourly
energy deliveries to the Point of Delivery and any other energy measurements required to administer
this Agreement. These specifications wil include but not be limited to equipment specifications,
equipment location, Idaho Power provided equipment,provided equipment, and all costs
B-8
associated with the equipment, design and installation of o Power provided equipment. Seller
wil arange for and make available at Seller's cost 'on circuit(s) compatible with Idaho
Power's communications equipment and dedic
facilities capable of providing Idaho Power rmation on the Facilties
d by Idaho Power,
with total cost of purchase, install
wil be in accordance with Schedule
of the Monthly Operation and
I from this Facilty until a Network Resource
accepted by Idaho Power's delivery business unit. Federal
"FERC") rules require Idaho Power to prepare and submit the NR.
n Idaho Power needs to prepare the NRD is specific to the Seller's
Facilty, Idaho Power's ity to file the NRD in a timely manner is contingent upon timely receipt of
the required information from the Seller. Prior to Idaho Power beginning the process to enable Idaho
Power to submit a request for NR status for this Facilty, the Seller shall have completed all
requirements as specified in Paragraph 5.7 of this Agreement. Seller's failure to provide complete
and accurate information in a timely manner can significantly impact Idaho Power's abilty and
-36-
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cost to attain the NR designation for the Seller's Facilty and the Seller shall bear the costs of
any of these delays that are a result of any action or inaction by the Seller.
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APPENDIXC
ENGINER'S CERTIFICATION
OF
OPERATIONS & MAINTENANCE POLICY
3.
The undersigned on behalf of himself /herself
and , hereinafter collectively referred to as"es and certifies to the Seller as
follows:
1. That Engineer is a Licensed Professional Engin
2. That Engineer has reviewed the E
Power as Buyer, and
bject of the Agreement and this
Statement is identified as and is hereinafter
4.Project, is located in
Section County, Idaho.
5.nt provides for the Project to fuish electrical energy to
Idaho Power for a
6.perience in the design, constrction and operation of electric power
plants of the same type as this Project.
7. That Engineer has no economic relationship to the Design Engineer of this Project.
8. That Engineer has reviewed and/or supervised the review of the Policy for Operation and Maintenance
("O&M") for this Project and it is his professional opinion that, provided said Project has been designed and
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built to appropriate stadards, adherence to said O&M Policy wil result in the Project's producing at or near the
design electrcal output, effciency and plant factor for a year period.
9. That Engineer recognizes that Idaho Power, in accordace with paragraph 5.2 of the Agreement, is
relying on Engineer's representations and opinions contained in this Statement.
10. That Engineer certifies that the above statements are complete, tre and accurate to the best ofhis/er
knowledge and therefore sets his/her hand and seal below.
By
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APPENDIXC
ENGINER'S CERTIFICATION
OF
ONGOING OPERATIONS AND MAINTENANCE
2. That Engineer has reviewed the Energy Sales
The undersigned , on behalf of himselVherself and
hereinafter collectively referred to 'neer," hereby states and certifies to
the Seller as follows:
i. That Engineer is a Licensed Professional Engi
Power as Buyer, and
3. That the cogeneration or small po
and hereinafter referred
to as the "Project".
4.Project, is located in
Section County, Idaho.
5.es for the Project to fuish electrical energy to
6.erience in the design, constrction and operation of electric power
7.ic relationship to the Design Engineer of this Project.
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8. That Engineer has made a physical inspection of said Project, its operations and maintenance records
since the last previous certified inspection. It is Engineer's professional opinion, based on the Project's
appearance, that its ongoing O&M has been substatially in accordance with said O&M Policy; that it is in
reasonably good operating condition; and that if adherence to said O&M Policy continues, the Project wil
continue producing at or near its design electrical output, effciency and plant factor for the remaining
10. That Engineer certifies that the above statem
(P.E. Stamp)
years of the Agreement.
9. That Engineer recognizes that Idaho Power, in accor
relying on Engineer's representations and opinions conta'
knowledge and therefore sets his/her hand and seal belo
Date
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APPENDIXC
ENGINER'S CERTIFICATION
OF
DESIGN & CONSTRUCTION ADEQUACY
The undersigned
hereinafter collectively referre 'neer", hereby states and certifies to
Idaho Power as follows:
i. That Engineer is a Licensed Professional En
2. ent", between Idaho
Power as Buyer, and
3.ubject of the Agreement and this
Statement, is identified a and is hereinafer
4.Project, is located in
Section County, Idaho.
5.t provides for the Project to fuish electrical energy to
Idaho Power for a
6.xperience in the design, constrction and operation of electric power
plants of the same type as this Project.
7. That Engineer has no economic relationship to the Design Engineer of this Project and has made the
analysis of the plans and specifications independently.
-42-
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8. That Engineer has reviewed the engineering design and constrction of the Project, including the civil
work, electrical work, generating equipment, prie mover conveyance system, Seller fuished Interconnection
Facilties and other Project facilties and equipment.
9. That the Project has been constrcted in accordance with said plans and specifications, all applicable
codes and consistent with Prudent Electrcal Practices as that term is described in the Agreement.
11.That Engineer recognizes that Idaho Power, in 5.2 of the Agreement, in
10. That the design and constrction of the Project is such that with
maintenance practices by Seller, the Project is capable of pedormi
Agreement and with Prudent Electrical Practices for a
interconnecting the Project with its system, is relying
this Statement.
12. That Engineer certifies that the abo
knowledge and therefore sets hislher hand and
By
(P .E. Stamp)
Date
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APPENDIXD
FORMS OF LIQUID SECURITY
The Seller shall provide Idaho Power with commercially reasonable security instrments such as Cash
in the reasonable judgment of Idah
efined below or other forms ofliquidEscrow Security, Guarantee or Letter of Credit as those terms
financial security that would provide readily available cas o Power to satisfy the Delay Security
requirement and any other security requirement wi .
For the purose of this Appendix D, the term
creditworthiness of the entity prov'of the obligation
it rating by Standard & Poor's
1.ds in an escrow account established by the Seller in
Paries equal to the Delay Security or any other required
er shall be responsible for all costs, and receive any interest eared
d maintaining the escrow account(s).
2. Guarantee or Letter of Credit Security - Seller shall post and maintain in an amount equal to the
Delay Security or any other required security amounts: a) a guaraty from a par that satisfies the
Credit Requirements, in a form acceptable to Idaho Power at its discretion, or b) an irrevocable
Letter of Credit in a form acceptable to Idaho Power, in favor of Idaho Power. The Letter of Credit
-44-
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wil be issued by a financial institution acceptable to both paries. The Seller shall be responsible for
all costs associated with establishing and maintaining the Guartee(s) or Letter(s) of Credit.
-45-
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Peter J. Richardson (ISB # 3195)
Gregory M. Adams (ISB # 7454)
Richardson & O'Lear, PLLC
515 N. 2ih Street
P.O. Box 7218
Boise, Idaho 83702
Telephone: [phone]
Fax: [phone]
peteraYnchardsonandolear.com
gregaYrichardsonandolear .com
Attorneys for Complainant
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
GRA VIEW PV SOLAR II, LLC,
Complainant,)
) Case No. IPC-E-II-15
)
) AFFIDAVIT OF ROBERT A. PAUL
)
)
)
)
vs.
IDAHO POWER COMPANY,
Defendant.
EXHIBIT 2
IDAHO POWER'S RENEWABLE ENERGY
CREDIT MAAGEMENT PLAN
IPUC CASE NO. IPC-E-08-24
~~~~'f-,"'~i-.~":K'\b,,*'~-;~~~~ø.A"'tY,wr~r~;;i~~IDA~POqo
An IDACORP copany
~~,,-9~'\~:r,ij~~~i!:~"I¡'i~~c";-'.:'í~~\t~~a;~\,:;r~,~,"'~\:~'J":~!,':~"%~'i'~';;*&,*Jl,~~';
usA D. NORDSTROM
Senior Consllnordstm(/idahor.com ~~I;~ìWJi;-'f~~ci~..~~~~~
December 30, 2009
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utlities Commission
472 West Washington Street
P.O. Box 83720
Boise, Idaho 83720-0074
Re: Case No. IPC-E-08-24 - REC ManagementPlan
Dear Ms. Jewell:
In Order No. 30818, the Commission directed Idaho Power Company ("Idaho
Power" or "the Company") to formulate a business plan that describes how it wil manage
Green Tags generated in 2009 and later. Enclose with this letter is Idaho Powets
Renewable Energy Credit ("RECj Management Plan describing the sænariosunderwhich
Idaho Power wil likely acquire RECs and how it intends to manage them going forw.
If you have any questions or concerns, please do not hesitte to contact me at 388-
5825.
Very truly yours,
cß.vß '1 01~
Lisa D. Nordstrom
LDN:csb
Enclosures
P.O. Box 70 (83707)
1221 W. Idaho St.
Boise. 10 83702
RECEIVED
IDAHO POWER REC MANAGEMENT PLAN
2009 DEC 30 PH It: i¡a
Renewable Energy Credits IDAHO PUBLIC
UTILITIES COMMlSS¡ON
To promote the construction of renewable resources, a system was created that
separates renewable generation into two parts: (1) the electrical energy produce by a
renewable resourc and (2) the renewable attributes of that generation. These
renewable attributes are referred to as renewable energy credits ("RECs") or green
tags. The entit that holds a REC has the right to make claims about the environmental
benefits associated with the renewable energy from the project. One REC is issued for
each megawatt-hour ("MWh") of elecricity generated by a qualified resourc. Elecricit
that is split from the REC is no longer considered renewable and cannot be marketed as
renewable by the entity that purchases the electricit.
A REC must be retire once it has been used for regulatory compliance and once
a REC is retired, it cannot be sold or transferr to another part. The same REC may
not be claimed by more than one entit, including any environmentl claims made
pursuant to electricity coming from renewable energy resources, environmental labeling,
or disclosure requirements. State renewable portolio standard caRPS") requirements
also typically specify a "shelf life" for RECs so they cannot be banked indefinitely.
Idaho Power's RECs
Idaho Power Company (" Idaho Power") is currntly receiving all of the RECs
from the 101 megawatt ("MW") Elkhorn Valley Wind Project in norteast Oreon. The
Elkhorn Valley Wind Project is expected to provide approximately 300,000 RECs to
Idaho Power annually throughout the tenn of the power purchase agreement ("PPA")
that expires in 2027.
Idaho Power is also receiving RECs from the 13 MW Raft River Geothennal
Project. For the first 10 years (2008-2017) of the agreement, Idaho Power is entitled to
75 percent of the RECs from the project for generation that exceeds a monthly average
of 10 MW. For the send 10 years of the agreement (2018-2027), Idaho Power is
entitled to 51 percent of the RECs generated by the Raft River Geothermal Project.
1
Regulatory Treatment of Idaho Power's RECs
In late 2008, Idaho Power filed an Application with the Idaho Public Utlities
Commission in Case No. IPC-E-08-24 asking to retire RECs received as part of the
long-term power purchase agreements for generation from the Elkhom Valley Wind
Project and the Raft River Geothermal Project. Because the state of Idaho does not
have a RPS, these RECs could be either voluntarily retire or sold. Idaho Powets
Application indicated that these RECs needed to be retired in order for Idaho Power to
represent to its customers they were receiving renewable energy from these projecs.
In May 2009, the Commission issued Order No. 30818 directing Idaho Power to
sell eligible 2007 and 2008 RECs from these projects and include the proceeds in the
Company's 2010 Power Cost Adjustment ("PCA") calculation. The Order also
instructed Idaho Power to file a business plan addressing the disposition of future RECs
by the end of 2009.
Idaho Power's REC Management Strategy
Idaho Power believes there is a reasonable likelihood that a federal renewable
energy standard ("RES") wil be passed by Congress that wil require the Company to
obtain and retire RECs for compliance. Idaho Power. also believes it is prudent tor!
continue acquiring ownership of RECs associated with renewable resources to minim'ize
the impact when a federal RES is implemented. However, because of currnt ecnomic
conditions and recent increases in costs and customer rates, the basic philosophy of
Idaho Powets REC Management Plan is to sell its RECs in the near-term and retum
.
the customers' share of.the proceeds through the PCA mechanism while continuing to
acquire and hold long-term contractual rights to own RECs for use in meeting a future
federal RES.
Proposed federal RES legislation includes a shelf life for RECs. thereby allowing
the holder to "bank" RECs for a period of time. The abilty to bank RECs is important to
Id~ho Power because the number of RECs required to comply with a federal RES is
expected to fluctuate depending on hydrologic conditions. The proposed federal RES
legislation would allow Idaho Power to deduct generation from its hydroelectric
resources from the sales base used to calculate the number of RECs required annually.
2
In above average water years, Idaho Powts REC reuirement will be lower
because of increased production frm hydroelectric resources. In low water years,
Idaho Powets hydroelectric resources will produce less elecricit and the number of
RECs required wil increase. With the abilit to bank RECs, Idaho Power would be able
to save additional RECs from good water years and rely on banked REGs to meet
requirements in low water years.
Therefore, Idaho Powets REC Management Plan is as follows:
1. Existing Long-Term PPAs. For existing . project, such as Elkhorn
Valley Wind Project and the Raft River Geothermal Project, in which Idaho Power
receives REGs as part of a long-term power purchase agreement, Idaho Power plans to
sell the near-term RECs and return the customers' share of the proceeds through the
PCA while continuing to acquire and hold long-term contractual rihts to own RECs for
use in meeting a future federal RES.
2. Existing PURPA and REC Generating Contrct. For existing
PURPA and other REC generating projects that provide output to Idaho Power under
mid- to long-term contracts (such as Fossil Gulch Wind Project or the Arrwrck
Hydroelectric ProjectClatskanie Exchange), if a mutually agreeable price can be
. reached with the project owner, Idaho Power may enter into contrct to purchase the
project's RECs on a mid- to long-term basis with the expection that the REG
acquisition costs wil be treted as a PGA expense. In this situation, Idaho Powets
intent is the same - to sell the near-term RECs and return the customers' share of
proceeds through the PCA while continuing to acquire and hold long-term contrctual
rights to own REGs for use in meeting a future federal RES.
3. New Long- Term PPAs. For new long-term power purchase
agreements, like the rently filed Neal Hot Springs Geothermal contract (Case No.
IPG-E-09-34), Idaho Power intends to continue to acquire long-term rights to the RECs
under these agreements. As noted above, Idaho Power intends to sell the near-term
RECs and return the customers' share of the proceds through the PCA while
contnuing to acquire and hold long-term contractual rights to REGs for use in meeting a
future federal RES.
3
4. Qualifed Reneable Projects. To the extent Idaho Powets small
hydroelectric projects can be certifed as renewable under other states' renewable
portolio standards, Idaho Power will consider selling the near-term RECs as
opportunities become available and retum the customers' share of the proceeds
through the PCA.
4
Peter 1. Richardson (lSB # 3195)
Gregory M. Adams (lSB # 7454)
Richardson & O'Lear, PLLC
515 N. 27th Street
P.O. Box 7218
Boise, Idaho 83702
Telephone: [phone]
Fax: [phone]
peteraYrichardsonandolear.com
gregaYnchardsonandolear.com
Attorneys for Complainant
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
GRA VIEW PV SOLAR II, LLC,
Complainant,)
) Case No. IPC-E-II-15
)
) AFFIDAVIT OF ROBERT A. PAUL
)
)
)
)
vs.
IDAHO POWER COMPANY,
Defendant.
EXHIBIT 3
IDAHO POWER'S APPLICATION REQUESTING
APPROVAL OF SALE OF RENEWABLE ENERGY CREDITS
OREGON PUC DOCKET NO. UP 269
OCTOBER 22,2010
McDowell
Rackner&
Gibson PC
. . . . .
ADAM LOWNEY
Direct [phone]
adam~mcd-Iaw.com
October 22,2010
VIA ELECTRONIC AND U.S. MAIL
PUC Filng Center
Public Utilty Commission of Oregon
PO Box 2148
Salem, OR 97308-2148
Re: UP _ - In The Matter of IDAHO POWER COMPANY Application Requesting
Approval of the Sale of Renewable Energy Credits
Attention Filng Center:
Enclosed for filng in the above-referenced docket are an original and one copy of Idaho
Power's Application Requesting Approval of the Sale of Renewable Energy Credits.
Please contact me with any questions.
Phone: 503,595.3922. Fax: [phone] · www,mcd-Iaw.com
419 Southwest 11th Avenue, Suite 400. Portland, Oregon 97205-2605
1
2
3
4
5
BEFORE THE PUBLIC UTILITY COMMISSION
OF OREGON
UP
In the Matter of
IDAHO POWER COMPANY APPLICATION OF IDAHO POWER AND
WAIVER OF PAPER SERVICE
6 Application Requesting Approval of the
Sale of Renewable Energy Credits
7
8
9 Idaho Power Compa~y ("Idaho Powet' or "Company") requests an order from the
10 Public Utilty Commission of Oregon ("Commission") determining that ORS 757.480 does
11 not apply to the sale of Renewable Energy Credits ("RECs") because they are not utilty
12 propert necessary or useful to the performance of Idaho Power's duties to the public. In
13 the alternative, pursuant to ORS 757.480(1)(a) and OAR 860-027-0025 the Company seks
14 approval from the Commission for the sale of RECs and requests that the Commission issue
15 an accounting order authorizing Idaho Power to enter into contracts and record the net
16 proceeds from the sale of RECs as a regulatory liabilty for the benefit of its Oregon
17 customers. Pursuant to OAR 860-013-0070(4), the Company respectfully waives paper
18 service in this docket.19 I. Introduction
20 This Application addresses the sale of RECs obtained by Idaho Power that will not
21 be used to comply with Oregon's Renewable Portolio Standard ("RPS"), which applies to
22 Idaho Power beginning in 2025.1 Because the Company does not anticipate that RECs
23 obtained now will be necessary to comply with the RPS in 2025, the Company has begun
24 sellng RECs and anticipates that it wil continue to do so for the foreseeable future.
25
26 1 See ORS 469A.055.
PAGE 1 APPLICATION OF IDAHO POWER COMPANY McDowell Rackner & Gibson PC
419 SW 11th Avenue, Suite 400
Portland, OR 97205
1 Here, Idaho Power seeks a finding by the Commission that Oregon's utilty property
2 transaction statute, ORS 757.480, does not apply to the sale of RECs because RECs are
3 not utilty property. The Company believes that because RECs are commodities they should
4 be treated in a manner comparable to the Company's sale of sulfur dioxide emission
5 allowances ("S02"), which are not governed by ORS 757.480.
6 While the Company maintains that ORS 757.480 should not govern REC sales, it
7 recognizes that this position is a departure from current Commission practice. The
8 Company also acknowledges that it believes it can work within the Commission's ORS
9 757.480 framework for REC sales. Therefore, if the Commission applies ORS 757.480,
10 Idaho Power seeks approval to sell both Oregon-eligible and non-eligible RECs in 2010 and
11 going forward. Because these sales are considered to be in the public interest the proceeds
12 will be recorded as a regulatory liabilty for the benefit of the customer and included as an
13 offset to the Oregon Allocated Power Cost Deviation calculated as part of the annual Power
14 Cost Adjustment Mechanism (" PCAM") , similar to the Company's treatment of its S02
15 allowance sales in previous years. Authorizing these sales is also consistent the
16 Company's REC management strategy, which the Commission concluded is reasonable
17 and in the best interest of customers.
18 Idaho Power acknowledges that if ORS 757.480 applies, this application is not timely
19 filed because it has already sold RECs in 2010. Thus, the Company seeks approval for the
20 sales that have already occurred. Because the Commission has never ruled in an Idaho
21 Power docket that ORS 757.480 governs REC sales, the Company did not understand that
22 it required pre-authorization before sellng RECs. Although these sales occurred without
23 Commission authorization they were beneficial to Idaho Power's customers and can be
24 given the same accounting treatment as sales occurring after Commission authorization.
25
26
PAGE 2 APPLICATION OF IDAHO POWER COMPANY McDowell Rackner & Gibson PC
419 SW 11th Avenue, Suite 400
Portland, OR 97205
1
2 A.
II. Background
Commission Treatment of REC Sales.
3 In 2007 the Oregon legislature passed Senate Bil 838 ("SB 838), codified as ORS
4 Chapter 469A. SB 838 established Oregon's RPS, which requires a certain percentage of
5 the electricity utilties provide to their Oregon retail consumers be produced by eligible
6 renewable resources.2 Utilties demonstrate compliance with the RPS using RECs, which
7 can be obtained from either utilty-owned resources or by purchasing qualifying RECs.
8 Because utilties may buy and sell RECs, a market has developed and Oregon
9 utilties have begun sellng RECs on that market. In Order No. 07-083 the Commission
10 approved Portland General Electric's ("PGE") application to sell "Tradable Renewable
11 Energy Credits" and record the proceeds from those sales in a property sale balancing
12 account.3 PGE's application sought authorization to sell RECs under ORS 757.480, which
13 requires a utilty to seek Commission approval prior to sellng "property of such public utility
14 necessary or useful in the performance of its duties to the public...of a value in excess of
15 $100,000."4
16 Thereafter, in Order No. 10-022-the final order approving a stipulation in
17 PacifiCorp's Docket UE 210 general rate case-the Commission noted:
18
19
20
21
22
23 2 ORS 469A.052-055.3 Re Portland General Electric Application for Approval to Sell Tradable Renewable Energy Credits,
24 Docket UP 236, Order No. 07-083 at 1 (Mar. 5, 2007).
25 4 ORS 757.480(1)(a).5 Re PacifiCorp Request for General Rate Revision, Docket UE 210, Order No. 10-022 at 15 (Jan.
26 26, 2010).
The Commission's rules governing treatment of REC sales
include reporting requirements, but they do not explicitly
require a utilty to seek preapproval of REC sales.
Commission Order No. 07-083 makes clear, however, that the
sale of RECs wil be treated as a property sale with gains on
sale being placed in a property sales balancing account for
return to customers.5
PAGE 3 - APPLICATION OF IDAHO POWER COMPANY McDowell Rackner & Gibson PC
419 SW 11th Avenue, Suite 400
Portland, OR 97205
1 In response to Order No. 10-022 PacifiCorp filed an application pursuant to ORS
2 757.480 requesting approval to sell RECs that were not eligible to meet Oregon's RPS.6
3 The Commission approved this application in Order No. 10-210. That order also required
4 PacifiCorp to seek separate approval if it intended to sell Oregon-eligible RECs.7 Thus,
5 PacifiCorp filed an Application to do so on August 26, 2010, which opened Docket UP 266.
6 The Commission has never ruled in an Idaho Power docket that ORS 757.480
7 governs the sale of RECs nor has the Commission issued an order addressing Idaho
8 Power's RECs. However, in the Company's 2009 Integrated Resource Plan docket, LC 50,
9 Staff analyzed the Company's REC management strategy, which indicated that the
10 Company intends to sell all RECs, and concluded that it is reasonable.s The Commission
11 agreed noting that the Company's "REC management strategy is in the best Interest of
12 customers, will reduce rates, and will provide the ability to meet future (renewable energy)
13 standards..9
14 B.Idaho Public Utilties Commission Treatment of REC Sales
15 Although the state of Idaho does not have a RPS, the Idaho Public Utilties
16 Commission ("I PUC") has addressed the question of RECs in several orders relating to
17 Idaho Power. In Order No. 30818 the IPUC ordered Idaho Power to sell its RECs generated
18 in 2007 and 2008 by two qualifying renewable energy facilties and account for the proceeds
19 from the sale of the RECs in the Company's annual power cost adjustment.1o These are the
20 6 Re PacifiCorp Application Requesting Approval of Sale of Renewable Energy Credits, Docket UP
21 260, Order No. 10-210 at 1 (June9, 2010).
22 71d. at 2.6 Re Idaho Power Company's 2009 Integrated Resource Plan, Docket LC 50, Staffs Final
23 Comments and Recommendations at 11 (July 9, 2010) ("Staff believes that the Company's REC
management strategy, as approved by the IPUC, is reasonable.").
24 9 Re Idaho Power Company's 2009 Integrated Resource Plan, Order No. 10-392 at 13 (Oct. 11,
25 2010).10 Re Application of Idaho Power Company for Authority to Retire its Green Tags, Case No. IPC-E-
26 08-24, Order No. 30818. at 4-5 (May 20, 2009).
PAGE 4 - APPLICATION OF IDAHO POWER COMPANY McDowell Rackner & Gibson PC
419 SW 11th Avenue, Suite 400
Portland, OR 97205
1 sales that occurred in 2010. In that same order the IPUC ordered the Company to formulate
2 a business plan describing how the Company intends to manage RECs generated in 2009
3 and beyond.11
4 On December 30, 2009, Idaho Power filed its REC Management Plan with the IPUC.
5 This plan consists of four elements:
6
7
8
9
10
11
12
13
14
1.For existing, long-term power purchase agreements in which Idaho Power
receives RECs, the Company plans on sellng the near-term RECs.
For existing PURPA and other REC generating projects that provide power to
Idaho Power under mid- to long-term contracts, the Company may enter into
contracts to purchase the RECs. If the Company does obtain RECs under
these contracts they wil also sell the near-term RECs.
For new long-term power purchase agreements, the Company likewise
intends to sell near-term RECs.
2.
3.
4.For Idaho Power's small hydroelectric projects that can be certified as
15 qualified renewable projects, the Company intends to sell near-term RECs.
16 This plan provides benefits to the Company's customers because it allows the
17 proceeds from the REC sales to be refunded to customers through the Company's power
18 cost adjustment, while ensuring that the Company acquires and holds long-term contractual
19 rights to RECs for use in meeting future RPS. The IPUC accepted the REC Management
20 Plan as filed by the Company.12 This is the same REC Management Plan that the
21 Commission found reasonable in Order No. 10-392.
22
23
24 11 In Oregon, OAR 860-083-0400 requires all electric company's subject to ORS 469A.052 to fileimplementation plans with the Commission. Because Idaho Power is governed by ORS 469A.055
25 and not 469A.052, it is not required to comply with this rule.
12 Re Application of Idaho Power Company for Authority to Retire its Green Tags, Case No. IPC-E-
26 08-24, Order No. 32002 (June 11, 2010).
PAGE 5 APPLICATION OF IDAHO POWER COMPANY McDowell Rackner & Gibson PC
419 SW 11th Avenue, Suite 400
Portland, OR 97205
1 C.Company REC Sales.
2 In response to the IPUC order requiring it to sell RECs the Company began doing so
3 in 2010. Additionally, as directed by IPUC Order No. 30818, dated May 20, 2009, the
4 Company is including those sales as an adjustment to its Idaho Power Cost Adjustment
5 ("PCA") true-up. Similar to treatment of RECs in the Idaho jurisdiction, the Company is
6 seeking approval to credit the net proceeds from the sale of RECs in the Company's annual
7 Power Cost Adjustment Mechanism filing. As of September 30, 2010, the Company has
8 received approximately $3.1 millon in net proceeds from these sales, of which the current
9 Oregon jurisdictional percentage is approximately 4.78 percent.
10
11
12
II. DISCUSSION
A.The Commission Should Rule That ORS 757.480 Does Not Apply to REC
Sales.
13 Although it is a departure from past orders, the Commission should nevertheless rule
14 that ORS 757.480 does not apply to the sale of RECs. ORS 757.480(1)(a) requires utilties
15 to obtain Commission approval prior to a transaction that sells
16
17
18
19
the whole of the propert of such public utilty necessary or
useful in the performance of its duties to the public or any part
thereof of a value in excess of $100,000, or sell, lease, assign
or otherwise dispose of any franchise, permit or right to
maintain and operate such public utilty or public utilty
property, or perform any service as a public utilty.
20 Thus, this statute applies only to the sale of propert "necessary or useful in the
21 performance" of the utility's duties to the public.13 Here, RECs are neither property as
22 defined by ORS 757.480 nor necessary or useful to Idaho Power in the performance of its
23 duties to the public.
24
25 13 See also ORS 757.480(4) ("This section does not prohibit or invalidate the sale, lease or other
disposition by any public utility of property which is not necessary or useful in the performance of Its
26 duties to the public.").
PAGE 6 - APPLICATION OF IDAHO POWER COMPANY McDowell Rackner & Gibson PC
419 SW 11 th Avenue, Suite 400
Portland, OR 97205
1 First, RECs are commodities and not propert and therefore are not subject to ORS
2 757.480(1)(a). In Order No. 05-1229, which adopted rules related to the ownership of
3 RECs, the Commission recognized that RECs are commodities independent of the
4 electricity they are associated with.14 The Commission noted that RECs are a "discrete
5 commodity to be owned and managed by the owner of the generating renewable energy
6 facilty,"15 and the rules adopted by the Commission specifically "identify(J (RECs) as a
7 commodity.,,16
8 Moreover, the Commission has recognized that ORS 757.480 does not apply to
9 commodities, such as sulfur dioxide emission allowances.17 In Order No. 05-983, the
10 Commission adopted Staff's report finding that the federal Clean Air Act ("CAN') specifically
11 defined sulfur dioxide emission allowances as commodities and not property.18 Based on
12 that defnition, Staffs report stated:
13
14
15
16
17
18
19 14 Re Public Utility Commission Rulemaking to Adopt and Amend Rules Related to Ownership of the
20 Non-Energy Attributes of Renewable Energy, Docket AR 495, Order No. 05-1229 at 7 (Nov. 28, 2005)
("The recent development of 'green tags' as a commodity in energy markets has arguably unbundled
21 renewable energy Into two products: megawatts of electricity and the non-energy attributesassociated with each megawatt.").
22 15 Order No. 05-1229 at 7.
23 16 Order No. 05-1229 at 8; see e.g., OAR 860-022-0001(4) (RECs are "non-energy attributes" ofgeneration from renewable resources).
24 17 Re Idaho Power Company Requests Blanket Authoriy to Sell Surplus Sulfur Dioxide Emission
Allowances, Docket UM 1205, Order No. 05-983 (Sept. 13, 2005).
25 18 See 42 USC § 7651 b(f) ("Such allowance does not constitu a propert right").
26 19 Order No. 05-983 at App. A at 2.
ORS 757.480 grants the Commission authority to approve
utilty transactions to sell, lease, assign or otherwise dispose of
property necessary or useful in the performance of its duties to
the public. Staff's counsel advises that since the CM
amendments of 1990 declare sulfur dioxide emissions to be
commodities rather than property, no waiver of ORS
757.480...is needed by Idaho Power to sell sulfur dioxide
emission allowances.19
PAGE 7 . APPLICATION OF IDAHO POWER COMPANY McDowell Rackner & Gibson PC
419 SW 11th Avenue, Suite 400
Portland, OR 97205
1 Like sulfur dioxide emission allowances, RECs are also commodities and therefore the
2 Commission should conclude that DRS 757.480 does not apply when RECs are sold.
3 Second, even if RECs are property, they are not necessary or useful to Idaho
4 Power's provision of utilty servces to the public. Idaho Power's ownership, or lack thereof,
5 of RECs has no bearing on its abilty to provide safe, reliable, and effcient power to
6 customers at just and reasonable rates. Arguably, RECs impact only the Company's abilty
7 to provide service to the extent they are required to satisfy Oregon's RPS. The RPS does
8 not apply to Idaho Power, however, until 2025. Even if RECs are ICproperty" under DRS
9 757.480, because they are not necessary or useful today, the Company does not need
10 Commission authorization for their sale.
11 Because RECs are not property useful and necessary to the provision of utilty
12 servces DRS 757.480(1)(a) does not apply when RECs are sold. Thus, the Commission
13 should rule that DRS 757.480(1)(a) does not apply to REC sales, as the Commission
14 concluded with respect to sulfur dioxide emission allowances.
15 B.In the Alternative, the Commission Should Approve the Sale of RECs.
16 If the Commission concludes that DRS 757.480 does apply to REC sales, then
17 consistent with Orders Nos. 07-083 and 10-210, the Commission should grant Idaho
18 Power's request for authorization to sell RECs. These transactions wil prove beneficial to
19 Idaho Power's customers because the net proceeds from the sales will be recorded as a
20 regulatory liabilty for the benefit of the customer and included as an offset to the Oregon
21 Allocated Power Cost Deviation calculated as part of the annual Power Cost Adjustment
22 Mechanism (ICPCAMIC), similar to the Company's treatment of its 802 allowance sales in
23 previous years. Moreover, the first year Idaho Power must comply with Oregon's RPS is
24 2025; therefore, banking RECs currently owned by the Company is not necessary for RP8
25 compliance. The Commission previously examined the Company's REC management
26 strategy, which calls for the sale of all RECs, and concluded that it was in the best interests
PAGE 8 - APPLICATION OF IDAHO POWER COMPANY McDowell Rackner & Gibson PC
419 SW 11 th Avenue, Suite 400
Portland, OR 97205
1 of customers.20 These sales are consistent with the public interest because not only will
2 they not harm Idaho Power's customers, they wil provide a clear and significant benefit.21
3 Because the market for REC sales is fluid and constantly changing, the Commission
4 should authorize Idaho Power to sell RECs in 2010 and beyond. This blanket authorization
5 wil ensure that the Company is not hindered in its abilty to respond to changing market
6 conditions because it must seek pre-approval for each REC transaction. Thus, Idaho Power
7 can pursue more favorable transactions without delays caused by seeking preapproval.
8 In addition to providing prospective authorization to sell RECs, the Commission
9 should also approve the REC sales that have already occurred this year. Thus far, Idaho
10 Power has received approximately $3.1 millon through September 30,2010, on a system-
11 wide basis for the sale of RECs. Notably, the Commission's RPS rules specifically did not
12 include a pre-sale approval requirement2 and the Commission had never ruled in an Idaho
13 Power docket that ORS 757.480 applied to the sale of RECs. Thus, the Company intended
14 to treat the sale of RECs in the same way it treats the sale of S02 allowances, the net
15 proceeds of which are accounted for in the Company's annual Power Cost Adjustment
16
17 20 Order No. 10-392 at 13.
18 21 See, e.g., In the Matter of a Legal Standard for Approval of Mergers, Docket UM 1011, Order No.
19 01-778 (Sept. 4, 2001) (liThe remainder of the statutory scheme, those statutes governing transfer,sale, affiliated interest transactions, and contracts, either expresses no standard (for instance, ORS
20 757.480, .485) and has been read to require a no harm standard, or contains a 'not contrary to thepublic interest' standard (ORS 757.490. .495.)") (emphasis added); In the Matter of the Application of
21 PacifiCorp, Docket UP 168. Order No. 00-112. at 6 (Feb. 29. 2000) (regarding the sale of theCentralia generating plant); In the Matter of Portland General Electric. Docket UP 158, Order No. 00-
22 111, at 2 (Feb. 29. 2000) (regarding the sale of the Colstrip generating units); In the Matter of theApplication of Portland General Electrc, Docket UP 165/UP 170. Order No. 99-730, at 7 (Nov. 29,
23 1999) (regarding the sale of the Centralia generating plant).22 See OAR 860-083-0005 to -0500. The initial rules proposed by Staff required utilities to seek
24 Commission approval prior to the sale of bundled RECs. See Re Rulemaking to Implement sa 838
Relating to Renewable Portolio Standard, Docket AR518-Phase II. Order No. 09-299 at 12 (Aug. 3,
25 2009). However, prior to hearing, Staff removed the requirement and proposed instead a disclosure
requirement. See OAR 860-083-0400(5)(c). The Commission approved Staffs revision noting that
26 U(a)n after-the-fact reasonableness rule for such transactions is sufficient." Order No. 09-299 at 12.
PAGE 9 - APPLICATION OF IDAHO POWER COMPANY McDowell Rackner & Gibson PC
419 SW 11th Avenue, Suite 400
Portland, OR 97205
1 Mechanism filng.23 Because REC sales are in many ways analogous to S02 allowance
2 sales, the Company believed it was reasonable to treat them in a comparable manner.
3 However, with the filng of PacifiCorp's Application in Docket UP 266, the Company has
4 become aware that the Commission treats the sale of RECs as a property sale under ORS
5 757.480.
6 Idaho Power's customers are not prejudiced by these previous sales, even though
7 they occurred without Commission authorization. As noted above, the Company has
8 received approximately $3.1 million in net proceeds through September 30,2010, which wil
9 be refunded to customers system wide. The Company's current accounting treatment
10 allows the Company to easily account for any net proceeds allocated to Oregon in a
11 regulatory liabilty account for the benefit of the customer and subsequently included as an
12 adjustment in its annual PCAM filng. The inclusion in the PCAM filing is consistent with that
13 required by the IPUC. Therefore, the Commission should grant authorization for the RECs
14 sales that occurred prior to this application.
15 Recognizing that the Commission's past orders authorizing PGE and PacifiCorp to
16 sell RECs included reporting requirements, the Company proposes that the Commission
17 adopt the following requirements. These proposed conditions will ensure that the
18 Commission is able to regularly monitor Idaho Power's transactions, while the Company will
19 be able to pursue transactions on the most favorable available terms.
20
21
22
23
24
25
1.Idaho Power wil provide the Commission access to all books of account, as
well as documents, data, and records that pertain to the sale of RECs.
Idaho Power wil record all net proceeds from the sale of RECs in a
regulatory liabilty account and wil report the net proceeds for all transactions
2.
26 23 See Order No. 05-983.
PAGE 10 - APPLICATION OF IDAHO POWER COMPANY McDowell Rackner & Gibson PC
419 SW 11 th Avenue, Suite 400
Portland, OR 97205
1
2
3
4
5
6
7
8
with supporting documentation in its annual PCAM filng for Commission
review.
3.The Commission reserves the right to review all financial aspects of these
transactions in any rate proceeding or alternative form of regulation.
Idaho Power wil provide the Commission notice of any material changes to
its REC Management Plan.
iV. Compliance with OAR 860-027-0026(1) Filng Requirements
Address
4.
A.
9 The Company's exact name and address of its principal business office are:
10 Idaho Power Company
PO Box 70
11 1221 West Idaho Street
Boise, 1083702
12
13
14
B. State in which incorporated; date of incorporation; other states in which
authorized to transact utilty business
Idaho Power is a corporation organized on May 6, 1915, under the laws of the State
15 of Maine. Idaho Power migrated its state of incorporation from the State of Maine to the
16 State of Idaho effective June 30, 1989. It is qualified as a foreign corporation to do business
17 in the states of Oregon, Nevada, Montana, and Wyoming in connection with its utilty
18 business. Idaho Power is authorized to provide retail electric service in Idaho and Oregon.
19 C.Comm unications and notices
20 All notices and communications with respect to this Application should be addressed
21 to:
22 Lisa Nordstrom
Idaho Power Company
23 PO Box 70
Boise, 1083707-0070
24 Telephone: [phone]
Facsimile: 208-388-6936
25 Email: Inorstrom(§idahopower.com
26
Christa Bearry
Idaho Power Company
PO Box 70
Boise, 1083707-0070
Telephone: [phone]
Facsimile: 208-388-6936
Email: cbearry(§idahopower.com
PAGE 11 - APPLICATION OF IDAHO POWER COMPANY McDowell Rackner & Gibson PC
419 SW 11th Avenue. Suite 400
Portland, OR 97205
Lisa Rackner
1 McDowell Rackner & Gibson PC
419 SW 11th Ave., Suite 400
2 Portland, OR 97205
Telephone: [phone]
3 Facsimile: 503-595-3928
Email: IisaØlmcd-law.com
Adam Lowney
McDowell Rackner & Gibson PC
419 SW 11th Ave., Suite 400
Portland, OR 97205
Telephone: [phone]
Facsimile: 503-595-3926
Email: adamØlmcd-law.com
4
Wendy Mclndoo
5 McDowell Rackner & Gibson PC
419 SW 11th Ave., Suite 400
6 Portland, OR 97205
Telephone: [phone]
7 Facsimile: 503-595-3928
Email: wendyØlmcd-law.com
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
D.Principal officers
Name Title
J. LaMont Keen President & Chief Executive Officer
Darrel T. Anderson Executive Vice President of Administrative
Services and Chief Financial Officer
Daniel B. Minor Executive Vice President of Operations
Lisa A. Grow Senior Vice President of Power Supplv
Rex Blackburn Senior Vice President and General
Counsel
Patrick A. Harrinaton Corporate Secretary
N. Vern Porter Vice President of Delivery Engineering and
Operations
Warren Kline Vice President of Customer Operations
John R. Gale Senior Vice President of Corporate
Responsibiltv
Steve R. Keen Vice President of Finance and Treasurer
Dennis C. Gribble Vice President and Chief Information
Oficer
Luci K. McDonald Vice President of Human Resources
Jeffrev L. Malmen Vice President of Public Affairs
Lori D. Smith Vice President and Chief Risk Officer
Ken Petersen Corporate Controller and Chief Accounting
Oficer
Naomi C. Shankel Vice President of Supplv Chain
The address of all of the above officers is:
1221 W. Idaho Street
PO Box 70
Boise,ID 83702
PAGE 12 - APPLICATION OF IDAHO POWER COMPANY McDowell Rackner & Gibson PC
419 SW 11 th Avenue, Suite 400
Portland, OR 97205
1 E.Description of business; designation of territories served
2 The Company is an electric public utilty engaged principally in the generation,
3 purchase, transmission, distribution, and sale of electric energy in an approximately 24,000
4 square mile area in southern Idaho and in the counties of Baker, Harney, and Malheur in
5 eastern Oregon. A map showing Applicant's service terrtory is on file with the Commission
6 as Exhibit H to Applicant's application in Docket UF 4063.
7
8
9
F.Statement showing for each class and series of capital stock: brief
description; amount authorized; amount outstanding; amount held as
required securities; amount pledged; amount owned by affliated
interests; amount held in any fund
10 Idaho Power requests the Commission waive the requirements of OAR 860-027-
11 0025(1)(f) because this transaction does not involve the acquisition or sale of financial
12 instruments. A grant of this waiver wil not impede the Commission's analysis of this
13 Application.
14
15
16
G.Statement showing for each class and series of long-term debt and
notes: brief description of amount authorized; amount outstanding;
amount held as required securities; amount pledged; amount held by
affilated interests; amount in sinking and other funds
17 Idaho Power requests the Commission waive the requirements of OAR 860-027-
18 0025(1)(g) because this transaction does not involve the acquisition or sale of financial
19 instruments. A grant of this waiver will not impede the Commission's analysis of this
20 Application.
21
22
H.Purpose of application; description of consideration and method of
arriving at amount thereof
23 The Company seeks approval of the sale of both Oregon eligible and non-eligible
24 RECs sold in 2010 and beyond. The Company seeks authorization to record the net
25 proceeds from the sale in a property transaction balancing account for subsequent refund to
26 customers. The value of each sale wil be determined by good faith negotiations.
PAGE 13. APPLICATION OF IDAHO POWER COMPANY McDowell Rackner & Gibson PC
419 SW 11 th Avenue, Suite 400
Portland, OR 97205
1 In addition, the Company seeks approval for past REC sales occurring in 2010,
2 which total approximately $3.1 millon in net proceeds. The sales price for each REC
3 already sold was determined through an arms length transaction between Idaho Power and
4 the counterparty.
5
6
i.Statement of facilties to be disposed of; description of present use and
proposed use; inclusion of all operating facilties of partes to the
transaction
7 The Company intends to dispose of both Oregon eligible and non-eligible RECs sold
8 in 2010 and beyond. These RECs were generated in 2007 and beyond and are not
9 currently used to satisfy Oregon's RPS.
10
11
J.Statement by primary account of cost of the facilties and applicable
depreciation reserve
12 No cost of facilties or depreciation reserves are implicated in these sales.
13 K.Required filings with other state or federal regulatory bodies
14 No other state or federal filngs are required to authorize the sale of RECs.
15
16
L.Facts relied upon by applicant to show transaction is within the public
interest
17 A proposed transaction must be consistent with the public interest for Commission
18 approval.24 A transaction is consistent with the public interest when it will not harm the
19 Company's customers.25 As described in Section ilLS. above, the proposed transactions
20 satisfy this standard because the Company will be able to sell RECs that are not needed for
21 compliance with Oregon's RPS. The proceeds of these sales will be returned to customers.
22 Reasons relied upon for entering into the proposed transaction;
benefits to customers
Please refer to subsection Labove.
M.
23
24
25 24 See OAR 860-027-0025(1)(1).
26 25 See, supra n. 21.
PAGE 14 - APPLICATION OF IDAHO POWER COMPANY McDowell Rackner & Gibson PC
419 SW 11 th Avenue, Suite 400
Portland, OR 97205
1 N. Amount of stock, bonds, or other securities, now owned, held or
controlled by applicant, of the utilty from which stock or bonds are
2 proposed to be acquired
3 This requirement is not applicable to this transaction and therefore Idaho Power
4 requests the Commission waive the requirements of OAR 860-027-0025(n). This
5 transaction does not involve the acquisition or sale of financial instruments. A grant of this
6 waiver wil not impede the Commission's analysis of this Application.
7 O.Statement of franchises held; date of expiration; facilties of transferees
8 This requirement is not applicable. Idaho Power requests the Commission waive the
9 requirements of OAR 860-027-0025(0) because this transaction does not involve the
10 acquisition or sale of financial instruments. A grant of this waiver wil not impede the
11 Commission's analysis of this Application.
12
13
v. Compliance with OAR 860-027-0025(2) Filng Requirements
Exhibit A. Artcles of IncorporationA.
14 Due to the burdensome nature of this requirement, Idaho Power respectfully
15 requests a waiver. The production of the Articles of Incorporation also would not advance
16 the Commission's analysis of this application. The transaction at issue here does not affct
17 the Company's corporate structure or governance.
18 B.Exhibit B. Bylaws
19 Due to the burdensome nature of this requirement, Idaho Power respectfully
20 requests a waiver. The production of the Bylaws also would not advance the Commission's
21 analysis of this application. The transaction at issue here does not affect the Company's
22 corporate structure or governance.
23 C.Exhibit C. Resolution of directors authorizing transaction
24 This transaction does not require a resolution of the directors for authorization.
25
26
PAGE 15 - APPLICATION OF IDAHO POWER COMPANY McDowell Rackner & Gibson PC
419 SW 11th Avenue, Suite 400
Portland, OR 97205
1 D.Exhibit D. Mortgages, trust, deeds or Indentures securing obligation of
each party
2
3 This transaction does not involve any mortgages, trusts, deeds, or indentures
4 securing the obligation of any party to the transaction.
5
6
7
Exhibit E. Balance sheet showing booked amounts, adjustments to
record the proposed transaction and pro fonna, with supporting fixed
capital or plant schedules In confonnlty with the forms In the annual
report
The sale of the assets did not materially affect the Company's balance sheet. Idaho
E.
8 Power respectfully requests that the requirement to provide pro forma information be waived
9 because the subject transaction is not expected to materially affect the Company's financial
10 statements.
11 F.Exhibit F. Known contingent liabilties
12 There are no known contingent liabilties associated with this transaction. Idaho
13 Power respectfully requests a waiver of this requirement because the Company is unaware
14 of any contingent liabilties that remain outstanding as of the date of this Application.
15
16
G.Exhibit G. Comparative income statements showing recorded results of
operations, adjustments to record the proposed transaction and pro
forma, in confonnity with the form in the annual report
17 The sale of the assets wil not materially affect the Company's income statements.
18 For the reasons set forth in Section V.E above, the Company respectully requests a waiver
19 of these requirements
20
21
H.Exhibit H. Analysis of surplus for the period covered by income
statements referred to In G
22 The sale of the assets does not materially affect the Company's income statements.
23 For the reasons set forth in Section V. E above, the Company respectfully requests a waiver
24 of these requirements
25
26
PAGE 16 - APPLICATION OF IDAHO POWER COMPANY McDowell Rackner & Gibson PC
419 SW 11th Avenue, Suite 400
Portland, OR 97205
1 I.Exhibit I. Copy of contract for transaction and other written instruments
2 Because of the confidential nature of these contracts, the Company requests a
3 waiver of this provision.
4 J.Exhibit J. Copy of each proposed journal entry to be used to record the
transaction5
6 Please refer to the attached Exhibit J for a sample journal entry that reflects how
7 these transactions wil be recorded.
8
9
K.Exhibit K. Copy of each supporting schedule showing the benefits, if
any, which each applicant relies upon to support the facts required by
(1)(1) ofthis rule and reasons as required by (1)(m).
10 The Company relies upon this Application and attached documentation to provide
11 support for OAR 860-027-0025(1)(1) and (1)(m) and respectfully requests a waiver of this
12 filng requirement.
13 VI.Prayer for Relief
14 Idaho Power respectfully requests a Commission order finding that ORS
15 757.480(1)(a) does not apply to REC sales. In the alternative, if the Commission concludes
16 that ORS 757.480(1)(a) does apply to REC sales, the Company requests an order finding
17 that the sale of the RECs will not harm Idaho Power's customers and is consistent with the
18 public interest and authorizing Idaho Power to enter into contracts in 2010 and beyond and
19 1/11
20 111/
21 1/11
22 1/11
23 1/11
24 IIII
25 111/
26 1/11
PAGE 17 - APPLICATION OF IDAHO POWER COMPANY McDowell Rackner & Gibson PC
419 SW 11th Avenue, Suite 400
Portland, OR 97205
1 record the net proceeds from the sale of RECs as a regulatory liability for the benefit of its
2 Oregon customers.
3
4 DATED: October 22,2010.
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
IDAHO POWER COMPANY
Lisa Nordstrom
Lead Counsel
PO Box 70
Boise, I D 83707
Attorneys for Idaho Power Company
PAGE 18 - APPLICATION OF IDAHO POWER COMPANY McDowell Rackner & Gibson PC
419 SW 11th Avenue, Suite 400
Portland, OR 97205
Oregon Renewable Energ Credit ("REC") Filng
Accounting Entries
Account Account Description
(1)
Dr. Cr.
131
254
Cash
Other Regulatory Liabilty
$XXX.XX
$XXX.XX
This entry Is to record cash received (net of variable transaction fees) from the sale of Renewable Energy
Credits ("RECs") for Oregon's jurisdictional portion which Is currently 4.78%.
254
411.8
(2)
Other Regulatory Liabilty
Gains from Disposition of Allowances
$XXX.XX
$XXX.XX
This entry is to record Idaho Power's gain from the sale of REC's for the Company's sharing percentage, at
10%, as incentive to maximize the the value of the RECs.
254
431
(3)
Other Regulatory Liabilty
Other Interest Expense
$XXX.XX
$XXX.XX
This entry is to record interest accrued on the Other Regulatory liabilty account balance for the benefit of
the Oregon customers at the Company's allowed rate of return.
254
182.3
(4)
Other Regulatory Liabilty
Other Regulatory Asset - Current Year PCAM
$XXX.XX
$XXX.XX
This entry is to provide the benefit to the Company's Oregon customers by offsetlng the current years
PCAM's deviation from the forecast.
Peter J. Richardson (ISB # 3195)
Gregory M. Adams (ISB # 7454)
Richardson & O'Lear, PLLC
515 N. 27th Street
P.O. Box 7218
Boise, Idaho 83702
Telephone: [phone]
Fax: [phone]
peteraYrichardsonandolear.com
gregaYrichardsonandolear.com
Attorneys for Complaiant
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
GRA VIEW PV SOLAR II, LLC,
Complainant,)
) Case No. IPC-E-II-15
)
~ AFFIDAVIT OF ROBERT A. PAUL
)
)
)
vs.
IDAHO POWER COMPANY,
Defendant.
EXHIBIT 4
IDAHO POWER'S LETTER FILING REGARING
MODIFICATION OF REC PLAN FILED IN OREGON
DOCKET NO. UM 269
JUE 6, 2011
a_.
AA IOACOR cony
Tim Tatum
Manager. Cost of Service
ttatum(idahopøwer .com
June 6.2011
Vikie Bailey-Goggns
Public Utility Commssion of Oregon
550 Capitol Street N.E., Suite 215
P.O. Box 2148
Salem, OR 97308-2148
RE: Idaho Power Sales of Renewable Energy Cerficates ("REC"), UP 269, Order No. 11-086
Dear Ms. Bailey-Goggs:
On March 15, 2011, the Orgon Public Utì1ty Commission ("Commssion") issued Orer No.
11-086 approving the sale of RECs by Idaho Power Company ("Company") under its REC
Mangement Plan. Under the curently approved plan, the Company sells its RECs in the nea-
ter and retus the cuomer' share of the proce thugh the power cost adjustment
mechansm while continuing to acuire and hold long-ter contrct rights to own RECs for
use in meeng a futue federal renewable energy stadard. Since the plan was approved, the
Company has had success selling its RECs into the wholesale or spot market. However, recet
developments in the REC market have force the Company to reevaluate its REC sales apprach.
In rect month, the Company has obsered a reducton in the demand for RECs in the spot
market frm counteraresthat purchas RECs for compliance purposes. These counterares
consist prmarly of invesor-owned utì1ties ("IOU") that are subjec to reewable energy
stadards and make up what is refered to as the "compliance market". The other mai segment
of the REC maret is the "volunta market" which consists ofIOUsthat purchae RECs asplU
of voluntar "gree power progrs or businesses that wish to purchas reewable attbutes as
a volunta business practice. REC sales into the volunta market have also becme
increaingly more diffcult to execte due to limited buyer and have tyicaly brught lower
prces than transactions in the copliance market.
Upon investigating the cause of ret change in the REC market, the Company has foutd that
most REC buyers in the compliance maret have moved towar purchasing the majority of theì
RECs under longer-ter agreements thugh requests for proposals ("RFP"). Ths change in
market conditions has made it extremely diffcult for Idaho Power find spot maret buyer for its
RECs in rect months. As a rest, the Company is plang to include biddig into REC RFPs
issued by compliance buyers in its REC saes stategy. Ths approach may reuire the Copany
(008II.DO; I)1221 W.ldah St. (83702)
P.O. BÐx70
Boise. 108307
Page 2 of2
to commt to sellig a porton of its available RECs for up to a five-year perod. Until now, the
Company has limited its REC trsactions to agrents with a maxum ter of two-year.
Because the Company is awar of the possibilty tht it may become subject to a feder
renewable energy standa in the futu, it plans to evaluate each REC sales agreeent with an
eye towar minimizing its risk exposure under futue requirements.
Order No. 11-086 direcs the Company to "provide the Commission notice of any materal
changes to its REC Management Plan." Whle ths new apprach may requi the Company to
enter into sales agreements for up to five year, the Company believes tht the aproach is
consistent with the intent of the curently apprved REC Management PIan and does not
constitute a materal change. Idaho Power fuer believes that ths modified aproach will
provide the Company with a beter opportty to maximize the value of its RECs to the benefit
of its customer. Although Idaho Power is not requestig any spefic action by the Commission
at ths tie. the Company feels it is importt to notify the Commission of this modification to
its previous REC saes strtegy. If the Comssion prefer that Idaho Power fonnally clarfy its
REC Management Plan to addrs these maximum five-yea contract, please so advise.
ZI7!Tiin Tatu
TET:kt
cc: Maur Galbraith, OPUC
Mar Hellman OPUC
Lisa Rackner
LìsaGrow
Johny Andern
Greg Said
Jasn Willams
Reguatory Files
(0081 L.OO; I l
Peter J. Richardson (ISB # 3195)
Gregory M. Adams (ISB # 7454)
Richardson & O'Lear, PLLC
515 N. 27th Street
P.O. Box 7218
Boise, Idaho 83702
Telephone: [phone]
Fax: [phone]
peteraYnchardsonandolear.com
greg(irichardsonandolear.com
Attorneys for Complainant
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
GRA VIEW PV SOLAR II, LLC,
Complainant,)
) Case No. IPC-E-II-15
)
~ AFFIDAVIT OF ROBERT A. PAUL
)
)
)
vs.
IDAHO POWER COMPANY,
Defendant.
EXHIBIT 5.1
IDAHO POWER APPLICATION FOR A DETERMINATION
REGARDING THE FIRM ENERGY SALES AGREEMENT WITH
CLARK CANYON, LLC FOR THE SALE AND PURCHASE OF ELECTRIC ENERGY
IPC- E-II-09
DONOVAN E.WALKER
Led Consel
dwalkerØdahopoer.com
-iIDA~POGÐ
An IDACORP cony
~ \;;
\r~!1_tAO i.J ,-LJ. ..' '" ~"0il
\Ji.I\ \T\ E:::. ~F~J. .h_.' .
May 24, 2011
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilties Commission
472 West Washington Street
P.O. Box 83720
Boise, Idaho 83720-0074
Re: Case No. IPC-E-11-09
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 CLARK CANYON, LLC
Dear Ms. Jewell:
Enclosed for filing please find an original and seven (7) copies of Idaho Power
Company's Application in the above matter.
uJ~
Donovan E. Walker
DEW:csb
Enclosures
1221 W. Idaho St. (83702)
P.O. Box 70
Boise. 10 83707
. --,~~. -::--' .;."-:
DONOVAN E. WALKER (ISB No. 5921)
JASON B. WILLIAMS
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: (208) 388~5317
Facsimile: [phone]
dwalkercmidahopower.com
Inordstromcmidahopower.com
RECEIVED
ioii HAY 24 PH 2: 2S
.. lO/\f10 pL.I:,~,! 1''-''\.
UlllI1-It?, r ",~;.;¡~~.i';;::, ,,,OFrPJí~~. IOld"1711;..,... fi
Attorneys for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF IDAHO POWER COMPANY FOR ) CASE NO. IPC-E-11-09
A DETERMINATION REGARDING THE )
FIRM ENERGY SALES AGREEMENT FOR ) APPLICATION
THE SALE AND PURCHASE OF ELECTRIC )
ENERGY BETWEEN IDAHO POWER )
COMPANY AND CLARK CANYON, LLC. )
)
Idaho Power Company ("Idaho Power" or "Company"), in accordance with RP 52
and the applicable provisions of the Public Utilit Regulatory Policies Act of 1978
("PURPA"), hereby respeclly applies to the Idaho Public Utilties Commission
("Commission") for an Order accepting or rejecing the Firm Energy Sales Agreement
("FESA") between Idaho Power and Clark canyon, LLC ("Clark Canyon" or "Seller")
under which Clark Canyon would sell and Idaho Power would purchase electric energy
generated by the Clark Canyon hydroelectric project ("Facilit) located near Dilon,
Montana.
APPLICATION - 1
In support of this Appliction, Idaho Power represents as follows:
I. BACKGROUND
1. Sections 201 and 210 of PURPA, and pertinent regulations of the Federal
Energy Regulatory Commission ("FERC"), reuire that regulated electric utlities
purchase power produced by cogenerators or small power producers that obtain
qualifying facilty ("QF") sttus. The rate a QF receives for the sale of its power is
generally referrd to as the "avoided cost" rate and is to reflec the incremental cost to
an electric utilit of electric energy or capaci or both, which,. but for the purchase from
the QF, such utilit would generate itself or purchase from another sourc. The
Commission has autority under PURPA Sections. 201 and 210 and the implementing
regulations of the FERC, 18 C.F.R. § 292, to set avoided costs, to order elecric utilties
to enter into fixed-term obligations for the purchase of energy from QFs, and to
implement FERC rules.
2. Clark Canyon proposes to own, operate, and maintain a 4.7 megawatt
("MW") (Maximum Capacit Amount) hydroelectric generating facilty to be located near
Dilon, Montana. The Facilty will be a QF under the applicable provisions of PURPA.
The FESA for this Facilit has been executed by Kim Johnson, Execute Vice
President for Clark Canyon, LLC.
II. THE FIRM ENERGY SALES AGREEMENT
3. On May 20, 2011, Idaho Power and Clark Canyon entere into a FESA, a
copy of which is attched to this Application as Attachment NO.1. Under the. terms of
this FESA, Clark Canyon elected to contct wih Idaho Power for a 20-year term using
the non-Ievelized published avoided cost rates as currntly established by the
Commission for energy deliveries of less than 10 average megawatt ("aMW"). This
APPLICATION - 2
APPLICATION - 3
Idaho Power will monitor compliance wih these initial requirements. In addition, Idaho
Power wil monitor the ongoing requirements through the full term of the attached FESA.
7. The FESA, as signed and submited by the parties thereto, contains non-
levelized published avoided cost rates in conformity with applicable Commission
Orders. All applicable intercnnection charges and monthly operation and maintenance
charges under Schedule 72 wil be assessd to Clark Canyon. The Facilty is currntly
in the generator interconnecion process. Assuming that Seller continues to provide
necessary technical information and make payments for intercnnection materials and
studies in a timely manner, Idaho Power's Delivery business unit will be able to proce
with its interconnection and transmission study processes, which ultimately results in a
Schedule 72 Generator Intercnnection Agreement, or "GIA" betwen Clark Canyon
and Idaho Power. PURPA QF generation must be designated as a network resource
("DNR") on Idaho Power's system. Upon resolution of any and all upgrades required to
acquire transmission capacit for this Facilit's generation, and upon execution of the
FESA and the GIA, this Facilty may then be designated as a netwrk resource.
8. Clark Canyon has been advised that it is Clark Canyon's responsibilit to
work wih Idaho Power's Delivery business unit to ensure that suffcient time and
resourcs wil be available for Delivery to construct the intercnnection facilties, and
transmission upgrades if require, in time to allow the Facilty to achieve the March 31,
2013, Scheduled Operation date. Seller has been furter advised that delays in the
intercnnection or transmission process do not constitute excusable delays in achieving
the Sèheduled Operation date, and if Seller fails to achieve the Scheduled Operation
date at the times specified in the FESA, delay damages will be assssed.
APPLICATION - 4
9. Clark Canyon has also been made aware of and accpted the provisions
of the FESA and the Company's approved Tari Schedule 72 regarding non-
compensated curtailment or disconnection of its Facilit should certain operating
conditions develop on the Company's system. Accrding to the stndard provisions in
Article XII of the FESA, curtailment wihout compensation may occur if there is an event
of Force Majeure, a Forc Outage, or a temporary disconnectn .of the Facilty in
accrdance wih Tari Schedule 72. If the generation from the Facilty wil have an
adverse effect upon Idaho Powets service to its customers, Idaho Power may
temporarily disconnect the Facilty from Idaho Powets transmission/distribution system
as specifed within Schedule 72, or take such other reasonable steps as Idaho Power
deems appropriate. The parties' intent and undersnding is that non-cmpensated
curtilment would be exercised when the generation being provided by the Facilty in
certain operating conditions exceeds or approaches the minimum load levels of the
Company's system such that it may have a detrimental efect upon the Company's
abilty to manage its thermal, hydro, and other resources in order to meet its obligation
to reliably serve loads on its system.
10. Section 21 of the FESA provides that the FESA wil not beme effectve
until the Commission has approved all of the FESA's terms and conditions and declare
that all payments Idaho Power makes to Clark Canyon for purcases of energy wil be
allowed as prudently incurr expnses for rate making purposes.
II.. MODIFIED PROCEDURE
11. Idaho Power believes that a hearing is not necessary to consider the
issues presented herein and respectully reuests that this Application be processe
under Modifed Procedure; i.e., by wren submissions rather than by hearing. RP 201
APPLICATION - 5
et se. If, however, the Commission determines that a technical hearing is required, the
Company stnds ready to prepare and prent its testmony in such hearing.
IV. COMMUNICATIONS AND SERVICE OF PLEADINGS
12. Communications and service of pleadings, exhibits, orders, and other
documents relating to this proceing should be sent to the following:
Donovan E. Walker
Lead Counsel
Idaho Power Company
1221 West Idaho Street
P.O. Box 70
Boise, Idaho 83707
dwalkertidahopower.com
Randy C. Allphin
Energy Contract Administrator
Idaho Power Company
1221 West Idaho Street
P.O. Bo)(70
Boise, Idaho 83707
rallphin£midahooower.com
V. REQUEST FOR RELIEF
13. Idaho Power Company repectlly requests that the Commission issue
an Order: (1) authorizing that this matter may be processed by Modified Proceure; (2)
accepting or rejecing the Firm Energy Sales Agreement betwen Idaho Power
Company and Clark Canyon, LLC, without change or condition; and, if accepted, (3)
declaring that all payments for purchases of energy under the Firm Energy Sales
Agreement between Idaho Power Company and Clark Canyon, LLC, be allowed as
prudently incurr expenses for ratemaking purposes.
Respectlly submitted this 24th day of May 2011.
£lÝ,úf£LDONOVAN E. WAlKER ç
Attorney for Idaho Power Company
APPLICATION - 6
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 24th day of May 2011 I serv a true and corr
copy of the witin and foreoing APPLICATION upon the following named parties by the
method indicated below, and addressed to the following:
Clark Canyon, LLC
Kim L. Johnson
Executive Vice President, Business
Development
Clark Canyon Hydro, LLC
c/o Symbiotics, LLC
2000 South Ocean Boulevard #703
DelRay Beach, Florida 33438
Hand Delivered
-l U.S. Mail
_ Overnight Mail
FAX
X Email kim.johnson(Briverbankpower.com
~()~
Donovan E. Walker
APPLICATION - 7
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-11-09
IDAHO POWER COMPANY
ATTACHMENT NO.1.
Aricle
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
FIR ENRGY SALS AGREEM
BETWEN
IDAHO POWE COMPAN
AN
CLA CANON, LLC
TABLE OF CONTS
'IlLE
Defitions
No Reliace on Idao Power
Warties
Conditions to Acceptace of Ener
Ter and Option Date
Puchase and Sale of Net Energ
Puchas Prce and Metod of Payment
Envionmental Attbutes
Facilty and Interconnection
Metg and Telemetry
Record
Opertions
Indemnfication and Insurce
Force Majeur
Liabilty; Dedcation
Sever Obligaons
Waiver
Choice of Laws and Venue
Disputes and Default
Goverenta Authorition
Commsion Orer
Successors and Assigns
Modification
Taxes
Notices
Additiona Ters and Conditions
Seerbilty
Counterar
Entir Agrement Signs
Appendi A
AppendiB
AppendiC
AppdiD
FIR ENRGY SALES AGREEMENT
(10 aMW or Less)
Projec Name: Clark Canyon Hydrelecc
Prjec Numbe: 41455600
TIS AGREEMENT, enter into on ths ~day of Jl4V 2011 beee,
CLAR CANON, LLC (Seller), and IDAHO POWER COMPAN, an Idao corpraon (Idao
Power), heriner sometimes referr to collecively as "Pares" or individuay as "Par."
WISSETH:
WHEREAS, Seller will design constret, own mainta and operate an electc generon
facilty; and
WHEREAS, Seller wishes to sell, and Idao Power is willig to purhase, fi electc ener
produced by the Seller's Facilty.
THEREFORE, In considertion of the mutu covets and agrents hereft se fort, the
Pares agr as follows:
ARTICLE I: DEFINIONS
As used in ths Agrment and the appendices attached hereto, the following ters
shl have the following meanngs:
1. i "Base Energy" - Monthy Net Energy less any Surlus Energy as calculated in pargrph 1.32.
1.2 "Commssion" - The Idao Public Utilities Commssion.
1.3 "Contrct Year - The peod commencing each caenda yea on the same calenda date as the
Operation Date and ending 364 days thereaft.
1.4 "Delay Liquidated Damges" - Damages payable to Idaho Power as calculated in Aricle V.
1.5 "Delay Perod" - Al days past the Scheduled Option Date until the Seller's Facilty achiev
the Opertion Date.
- 1.
1.6 "Delay Prce" - The curt month's Mid-Columbia Market Ener Cost mius th cut
month's All Hour Ener Prce speified in pargrph 7.3 of ths Agrent. If th calcultion
results in a value less than 0, the result of ths calculation wil be O.
1.7 "Designted Disptch Facilty" - Idao Power's Sys Operations Grup, or any subsequent
grup designted by Idao Power.
1.8 "Effecve Date" - The date staed in the opg paph of ths Fir Ene Sales Agent
reretig the date upon which ths Fir Ener Sales Agent was fuy executed by both
Pares.
1.9 "Envionmenta Attbutes" - mean any and all crts, beefits, emssions rections, offs,
and alowances, howsoer entitled, attbutable to the genertion from the Facilty, and its
avoide emssion of pollutants. Envinmenta Attbutes include but ar not limte to: (1) any
avoide emssion of pollutats to the ai, soil or wate such as sulfu oxides (SOx), nitrgen
oxides (NOx), carn monoxide (CO) and other pollutats; (2) any avoide emssions of cabon
dioxide (C02), mete (CH4), nitrous oxide, hydrfluorocabons, peuorocarns, sulfu
hexafuoride and other greeouse gass (GHOs) tht have been detered by the Unite
Nations Intergoverenta Panel on Climte Change, or otherise by law, to contrbute to the
ac or potential that of alteng the Ea's climate by trpping heat in the atmospher;l (3)
the reprtg rights to thes avoided emissions, such as REC Reportg Rights. REC Reprtg
Rights ar the right of a REC Puhaer to rert the ownerhip of accuulated RECs in
compliance with feder or state law, if applicable, and to a fed or state agency or any other
pary at the REC Puhase's discretion, and include without litation those REC Reprting
Rights accruing under Secion 1 605(b) of The Energy Policy Act of 1992 and any preset or
futu fed, state, or local law , reguation or bil, and intetiona or foreign emissions trdig
progr. RECs are accumulated on a MWh basis and one REC reresents the Envionmenta
Attbute associated with one (1) MW of energy. Envionenta Attbutes do not include (i)
Avoided emssions mayor may not have any vaue for GHG compliance purses. Although avoided
emssions ar includd in th list of Envinmental Attbutes, ths inclusion does not create any right to us those
avoide emssions to comply with any GHG reguatory progr
- 2-
any energ, capacity, reliabilty or other power atbutes frm the Facilty, (ü) proucton ta
crets associated with the constrction or operion of the Facilty and other ficial incetives
in the form of crts, reuctions, or alowances associated with the Facilty tht ar applicable to
a state or feder income taxation obligation, (ii) the cash grt in lieu of the investent tax
cret puruat to Section 1603 of the Amenca Recover and Reinvestment Act of 2009, or (iv)
emssion reduction crts encuberd or use by the Facilty for compliance with local, ste, or
fede opertig and/or air qualty peits.
i. i 0 "Facilty" - That electrc genertion facilty descbed in Appendi B of ths Agrent.
1. i "Firt Ener Date" - The day commencing at 00:01 hour, Mountai Time, followig the day
that Seller ha satisfied the reuiments of Aricle IV and the Seller begis deliverg energy to
Idao Power's system at the Point of Deliver.
1.12 "Heavy Load Hour" - The daly hour beginng at 7:00 am, endig at i i :00 pm Mountain
Time, (16 hour) excludig all hour on all Sundays, New Yea Day, Memorial Day,
Indepndence Day, Labor Day, Thgivig and Chstmas.
i. i 3 "Indverent Energy" - Elecc ener Seller does not inted to generte. Indverent energy is
more pacularly descbed in pagrph 7.5 of ths Agrent.
1.4 "Inteconnection Facilties" - All equipment speifed in Schedule 72.
i. i 5 "Intial Capacity Determnation" - The proess by which Idao Power conf tht unde
norm or averge design conditions the Facilty wil generate at no more th i 0 average MW
per month and is therfore eligible to be paid the published rates in accordce with Commssion
Order No. 29632.
1.16 "Light Load Hours" - The daly hour begig at i 1:00 pm, endig at 7:00 am Mountai Time
(8 hour), plus all other hour on all Sundays, New Year Day, Memorial Day, Indepdence
Day, Labor Day, Thsgiving and Chrstmas.
1.17 "Losses" - The loss of eleccal energy expressed in kilowatt hour (kWh) occug as a result
of the trsformation and trsmission of energy beween the point wher the Facilty's ener is
- 3-
l
metered and the point the Facilty's energy is deliver to the Idao Power electrca syste. The
loss cacuaton forula will be as spfied in Ap B of ths Agement.
i. i 8 "Market Energy Refernce Pnce" - Eighty-five pet (85%) of the Mid-Columbia Market
Energy Cost.
i. 1 9 "Material Brech" - A Default (pgrph 19.2. i) subject to pagrph 19.2.2.
1.20 "Maxum Capacity Amount" - The maximum capacity (MW) of the Facilty will be as
specifed in Appendix B of ths Agrent.
1.2 i "Meterg Eqipment" - All eqpment spifed in Schedue 72, this Agrement and any
adtional equipment specifed in Appendi B reui to measur, reord and telemeter bi-
ditiona power flows beeen the Sellers elecric genertion plant and Idao Power's system.
1.22 "Mid- Columbia Market Energy Cost" - The monthy weighted averge of the day on-peak and
off-peak Dow Jones Mid-Columbia Index (Dow Jones Mid-C Index) prices for non-fi energy.
If the Dow Jones Mid-Colwnbia Index price is discntiued by the rerting agency, both Paries
will mutuly agr upon a relacement index which is simlar to the Dow Jones Mid-Columbia
Index. The selected relacment index wil be consistt with other simlar agrents and a
commonly use index by the eleccal industr.
i .23 "Nameplate Capacity" -The ful-load electrcal quatities assigned by the designer to a genertor
and its prime mover or other piece of eleccal equipment, such as trsformer and ciruit
breaker, unde stadaed conditions, expsse in ampes, kilovolt-amper, kiowatts, volts
or other appropriate unts. Usualy indicated on a nameplate attched to the individua machie
or device.
1.24 "Net Energy - All of the elecc energy prodce by the Facilty, less Losses, expresed in
kilowatt hours (kWh) delivered by the Facilty to Idao Power at the Point of Deliver. Subjec to
the terms of ths Agreement, Seller commts to deliver all Net Energy to Idao Power at th Point
of Deliver for the full ter of the Agrment. Net Energy dos not include Inadverent Energy.
1.25 "Opertion Date" - The day commencing at 00:01 hour, Mountain Time, following the day tht
all requiements of pargrph 5.2 have be completed.
- 4-
1.26 "Point ofDeliveiy" - The location specified in Appedi B, where Idao Power's and the
Seller's electrca facilties are interconnecte and the energy frm ths Facilty is deliver to the
Idao Power electrcal system.
1.27 "Prdet Elecrica Prctices" - Those practces, methods and equipment that ar commonly and
ordly used in electrcal engieeg and opetions to operte electrc equipment lawfuy,
safely, depdably, effciently and ecnomically.
1.28 "Renewable Energ Cerificate" or "REC" mea a cerficate, cret, alowance, green tag, or
other transferble indicia, howsoever entitled, indicating generation of reewable ener by the
'Facilty, and includes all Envinmenta Attbute arsing as a resut of the genertion of
eleccity associate with the REC. One REC rereents the Envinmenta Attbutes associate
with the genertion of one thousand (1,00) kWh of Net Energy.
1.29 "Scheded Opertion Date" - The date spifed in Appedi B when Seller anticipates
achievig the Opertion Date. It is expeced th, the Scheduled Option Date provided by the
Seller shal be a reaonable estimate of the date th the Seller anticipates that the Seller's Facilty
shal achieve the Option Date.
1.30 "Schedule 72" - Idao Power's Tarff No 101, Schedule 72 or its successor schedules as
approved by the Commssion. The Seller shl be respoible to pay al costs of intercnnection
and integion of ths Facilty into the Idao Power electrcal system as spified withi
Schedule 72.
1.31 "Season" - The thr perod identified in pargrph 6.2.1 of ths Ageement.
1.32 "Speial Facilties" - Additions or altetions of trsmission and/or distrbution lines and
trformer as described in Schedle 72.
1.33 "Station Use" - Electrc energy tht is use to opte equipment tht is auxliar or otherse
related to the production of electcity by the Facilty. As ths Facilty is not located in the
Idao Power serce tertory, Idao Power ha no rensibilty or abilty to prvide Station Use
to ths Facilty.
- 5-
1.34 "Surlus Energy" - Is (1) Net Energy proed by the Seller's Facility and deliver to the Idao
Power electrcal system durg the month which excee 110% of the monthly Net Energy
Amount for the corspondig month speified in pagrph 6.2, or (2) if the Net Energ
prouced by the Seller's Faclity and deliver to the Ida Power elecca syst dung the
month is less th 9(1o of the monthy Net En Amount for the corrspndig month
speified in pargrh 6.2, then all Net Ene deliver by the Facility to the Idao Power
electrcal system for tht given month, or (3) all Net Energy proced by the Seller's Facility and
delivered by the Facilty to the Idao Power electrcal system pnor to the Option Date.
1.35 "Total Cost of the Facilty - The total cost of strctus, equipment and appurences.
ARTICLE ll: NO RELIACE ON IDAHO POWER
2.1 Seller Independent Investigation - Seller warts and reresents to Idao Power tht in enteg
into ths Agrent and the underg by Seller of the obligations set fort her Seller has
investigated and detered th it is capable of peormg hereunder and ha not relied upon
the advice, experence or expeise ofldao Power in connecion with the trsactions
contemplated by this Agrement.
2.2 Seller Indeendent Expers - All professions or exps including, but not limited to, engiee,
attorneys or acountants, th Seller may have consulted or relied on in undeg the
tractions contemplated by this Agment have be solely those of Seller.
ARTICLE il: WARIES
3.1 No Warty by Idao Power - Any review, accetace or failur to reew Seller's design,
specifications, equipment or facilties shl not be an endorsent or a confation by Idao
Power and Idao Power makes no warties, exprese or implied rearing any asect of
Seller's design, spefications, equipment or facilties, including, but not limted to, safety,
durbilty, reliabilty, strengt, capacity, adequay or economic feasibilty.
3.2 Qualifyg Facilty Status - Seller wart.s tht the Facilty is a "Qulifyng Facilty," as tht ter
-6-
is used and defied in 18 CFR 292.20 I et se. Afer initial qualification, Seller wil tae such
steps as may be reui to maitain the Facilty's QufYg Facilty status durg the te of
th Agement and Seller's failur to maitan Quifyg Facilty sta wil be a Materal
Breach of ths Agreement. Idao Power rerves the right to review the Facilty's Quag
Facilty status and associated support and compliance docents at anytme dur the ter of
this Ageement.
3.3 FERC Licens (only applies to hydro projects) - Seller warts tht Seller posseses a vad
license or exemption frm licening frm the Feder Energy Regulatory Commssion ("FEC")
for the Facilty. Seller reognes tht Sellers possession and retention of a valid FERC licen
or exemption is a materal par of the consideon for Idao Power's execution of ths
Agrement. Seller will tae such steps as may be reui to maita a vald FERC license or
exemption for the Facilty durg the ter of ths Agrent, and Seller's failur to maita a
valid FERC lice or exemption wil be a materal breach of ths Agrement.
ARTICLE IV: CONDITIONS TO ACCEPTANCE OF ENRGY
4.1 Pror to the Firt Energy Date and as a condition ofIdao Power's acceptace of deliveres of
energy from the Seller unde ths Agreement, Seller shal:
4.1. Submit prof to Idao Power that all licenes, perts or approvas necssar for Seller's
opertions have be obtaied frm applicable feder, state or loc authorities,
includig, but not limted to, evdece of compliae with Subp B, 18 CFR 292.201 et
seq. as a cefied Quifyg Facilty.
4.1.2 Opinon of Counsel. Submit to Idao Power an Opinon Letter signed by an attorney
adtted to practice and in goo stadig in the State of Idao providig an opinion tht
Seller's licens, perits and approvals as set fort in pargrph 4.1.1 above ar legally
and validly issued, are held in the nae of the Seller and, based on a reanable
independent review, counsel is of the opinon tht Seller is in substatial compliance with
sad permts as of the date of the Opinon Letter. The Opinon Le wil be in a fon
-7-
aceptable to Idao Power and wi acknowledge tht the atorney rederig the opinon
unrstands tht Idao Power is relyig on said opinon. Idao Power's acceta of the
form wil not be unasonaly witheld. The Opinon Lettr wil be govered by and
shall be interreed in accordce with the legal opinon accord of the American Bar
Association Section of Busess Law (1991).
4.1.3 Intial Capacity Detetion - Submit to Idao Power such data as Idao Power may
reasonably re to peorm the Inti Capty Deteron. Such data will include
but not be limted to, Nameplate Capacity, equipment spifications, prie mover data
resoure chaertics, norm and/or average operating design conditions and Station
Use da. Upon reeipt of ths informtion, Idao Power wil review the prvided data
and if necssa, reuest addtiona da to complete the Intial Capacity Detertion
withi a reasonable time.
4.1.3.1 If the Maxum Capacty spified in Appdi B of ths Agrent and the
cuulative maufact Nameplate Capaity ratig of the individual genertion
unts at ths Facility is less than 10 MW. Th Seller shl submit detled,
maufactu, verifiable data of the Nameplate Capacity ratings of the ac
individua genertion unts to be intaled at ths Faclity. Upon verification by
Idao Power that the data provided establishes the combined Nameplate Capacity
ratig of the genertion units to be intaled at this Faciltyis less than 10 MW, it
will be deeed that the Seller ha satisfied the Initial Capacity Detertion for
this Facilty.
4.1.4 Nameplate Capacity - Submit to Idao Power maufactu's and engieeg
docuentation that esablises the Nameplate Capacity of each individua genertion unit
that is included with ths entir Facility. Upon receipt of ths data, Idao Power shal
review the provided data and detne if the Nameplate Capacity specfied is reonable
bas upon the manufac's speified generon ratigs for the specific genertion
unts.
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4.1.5 Engiee's Cerfications - Submt an execte Enginee's Cerification of Deign &
Constrion Adeuay and an Engiee's Cerification of Opertions and Maitece
(O&M) Policy as desribed in Commssion Or No. 21690. Thes ceficates wil be
in the form speified in Appedix C but may be modfied to the extent necessa to
recogniz the differt engieeg disciplies prviding the cerifcates.
4.1.6 Ince - Submit wrtt proof to Idao Power of all inurce requi in Arcle xm.
4.1.7 Internnecon - Prvide wrtten conftion frm Idao Power's delivery business
unt that Seller ha satisfied all interconnection reuirements.
4.1.8 Network Resurce Deianation - The Seller's Facility has bee designated as an
Idao Power network resour capable of deliveng fi ener up to the amount of the
Maximum Capacity at the Point of Deliver.
4.1.9 Station Usage - The Seller shal prvide evidece tht argeents have been made to
provide eleccal serce to supply the Seller's Station Usage frm an entity other than
Idao Power.
4.1.10 Written Accetace - Reuest and obtai wrtten conftion frm Idao Power tht al
conditions to acceptace of energy have be fufilled. Such wrtt conftion shall be
provide with a commercially reonable tie following the Seller's reuest and wil
not be uneasonably witheld by Idao Power.
ARTICLE V: TER AN OPERATION DATE
5.1 Ter - Subject to the provisions of pagrh 5.2 below, ths Agrent shall become effecve
on the dae fit wrtten and shal contiue in ful force and effect for a perod of twenty (20)
Contrt Year fr the Operation Date.
5.2 Opertion Date - The Option Date may occur only afer the Facility has achieved all of the
following:
a) Achieved the Firt Ener Date.
b) Commssion approva of ths Agrement in a form acceptable to Idao Power has
- 9-
bee reved.
c) Seller bas deonste to Idao Powers safaon th the Facilty is complet and
able to prvide ener in a consistent, relible and safe maer.
d) Seller ba requeted an Option Date frm Ida Power in a wrtten formt.
e) Seller ba reved wrtten confiion from Idao Power of the Option Da.
Ths confion wil not be unbly witheld by Idao Power.
5.3 Opraon :Date Pe1 - Seller shall caus the Facity to achiev th Opon Date on or before the
Sched Option Dat. Delays in the intercnnecon and trmission netork upgre stdy,
deign àI constction proess tht are Dot Forc Majeu evts acceted by both Pares, shall DO
prvent Delay Liquida Damges fr being due and owig as calcuated in accorce with ths
Agrent.
5.3.1 If the Option Date occu afr the Scheuled Option Date but on or pror to 90
days following the Schedued Opion Date, Seller sha pay Ido Power Dèlay
Liquda :Dges calculted at the end of eah calenda month afer the Scheduled
Operation Date as follows:
Delay Liquidate Damges ar equa to ((Cut month's hitial Yea Net
Engy Amunt as spified in pargrph 6.2.1 divided by the numbe of days in
the cut month) multiplied by the numbe of days in the Delay Per in the
curt month) multiplied by the cut month's Delay Prce.
5.3.2 If the Option Date doe not occur with niney (90) days following the Scheduled
Opion Date the Seller shl pay Idao Power Delay Liqudated Damages, in addtion
to those prvide in pargrph 5.3.1, caculated as follows:
Forty five dollar ($45) multiplied by the Maxmum Capacity with the Maxum
Capaity being meaur in kW.
5.4 If Selle fails to achieve the Option Date withn ninety (90) days following the Scheduled
Option Date, such faur wil be a Mater Brech and Idao Power may terte ths
Agent at any tie until the Seller curs the Matea1 Breh. Addition Delay Liquidate
- 10-
Damges beond thse cacuat in 5.3.1 and 5.3.2 will be caculte and payable usin the
Delay Liquidaed Damge caculation desbe in 5.3. I above for all days excee 90 days
pat the Scheduled Option Dae until such tie as the Seller cu th Mater Breh or
Ido Power terines ths Ageeent.
5.5 Seller shal pay Idao Power any calcla Delay Damges or Dela Liquidate Damge with
7 days of when Idao Power calcuate and presets any Delay Damage or Delay Liquida
Damges bilings to the Stller. Seller's failur to pay these &mge with the speified tie
will be a Materal Brech of ths Agrent and Ida Power shl drw fu fr. the Delay
Securty provide by the Seller in an amount equa to the calcated Delay Damges or Delay
Liquidated Dams.
5.6 The Pares ag tht the daes Idao Power would incu due to delay in the Facilty
achig the Option Date on or before the SCheduled Option Dae would be diffcult or
impsible to prct wit certy, and tht the Delay Liquidated Damges ar an aproprate
approxion of such dages.
5.7 Pror to the Seller executg ths Agt, th Seller sha have:
a) Filed for inteonnecon and is in compliane with al payments and
reuits of the interecion proess
b) Received and acceed an intennection feaibility stdy for ths Faclity.
c) Prvided al infortion reuir to enble Idao Power to fie an inti
trission capacity request.
d) Received the relts of the inti trmission caacity reues and have
agree they ar accetable to the Seller.
e) Acknwledge rensibilty for all internnectin costs an any cots
asociated with acquig adequa fi trssion capaci to enable th
projec to be classified as an Idao Power fi netork resour.
5.8 Within thy (0) days of the date of a fial non-apeaable order as spified in Arcle XX
apprvig th Agent Selle shll post liquid securty ("Delay Secty") in a fo as
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describe in Appdix D equa to or exceeng the amount caul in par 5.8.1. Faiur
to post ths Delay Securty in the time spified above will be a Mater Brech of ths
Agreeent and Ido Power may ternate th Agent.
5.8.1 Dey Seçty The gr of fort five ($45) mullied by th Maxmum Capaity with
th Maxum Capacity be meaur in kW or the su of th moth's estimted
reene. Wher the este th moth of reenue is th estted reenue
asciated with the fit th full month following the estimted Scheduled Opraon
Date, the estimted kWh of en prouction as specified in pagrph 6.2.1 for those
th months multiplied by the All Hour Ener Pnce spefied in pargrph 7.3 for
eah of thse th month wil be used.
5.8.1.1 In the event Seller prvide Idao Power wit cerfication tht, (1) a geertion
interonnecon agrt speify a scedule th will enble ths Facilty to
achieve the Operation Date no later th the Scheduled Operon Date ha ben
copleted an the Seller ha paid all re internnecon costs, or (2) a
genertion interonnecion agrent is substialy comlete an all maten
costs of inercnnecon have be identified and ag upon and th Seller is in
copliance with all ter and condition of th genertion intennecion
agent, the Delay Securty calculated in acordce with pagrph 5.8.1 wil
be reuced by ten peent (10%).
5.8.12 If the Seller ha received a reuction in the caculate Delay Securty as spified
in pagrph 5.8.1. and subseently, (1) at Seller's reue, the genertion
internnecon agrent spified in pagrph 5.8.1. is revised and as a
result the Facilty wíl not achieve its Option Date by the Scheled Operation
Date, or (2) if the Seller does not maintà compliance with the generion
interonnecion agrent, the full amount of the Delay Seurty as caculated in
pargrph 5.8.1 wil be subjec to reintateent and wil be due.an owing with
five (5) business days from th date Idao Power reess reintatement. Faiur
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to tiely reintate the Delay Secty wil be a Materal Breach of ths
Agent.
5.8.2 Idao Power shall relea any reg securty pote herunde after all calculated Delay
Damge and/or Delay Liquidated Dages ar pai in ful to Idao Power and the ealier of, (1)
30 days after the Option Date ha be acev or (2) 60 days afer the Agren ha be
terted
ARTICLE VI: PUCHAEAN SALE OF NE ENGY
6.1 Deìye and Acctace of Net En .. Excet when either Par's perormce is excus as
prvided hein Idao Power wil purha and Seller wil sell al of the Ne Energy to Ido
Power at the Point of Deliver. All Inadveren Ene pruced by the FacHity will also be
deliver by the Seller to Idao Power at the Point ofDeliveiy. At no tie wil th tot amount
of Net Ener and/or Inveen Ene prduced by th Facilty and deliver by the Seller to
the Point of Delive excee the Maxum Capcity Amount.
6.2 Net Ener Amouts - Seller inten to prouce and delive Net Ener in th followin monthy
amounts:
6.2.1 Inal Yea Monthly Net Energy Atouts:
Month kWh
Seasn 1
Marh
April
May
Sean 2
July
Augut
NovemberDebe
Seaon 3
June
Septembe
OctoberJan
Febru
- 13-
736,848
840,000
1,807,322
2,613,46
2,290,535
1,009,517
959,191
2,460,261
1,456,776
1,099,227
783,848
696,290
6.2.2 Ongoig Monthy Net Ener Amuns. Seller sha intially provide Ida Power with
one yea of monthy gention estes (Iti Yea Monthy Net Ener Amounts)
and beging at th end of month ni an eve th mont therer prvide Idao
Power with an addition th months of forar gention estites beond thos
genertion estite prevously provide. Th inortion will be prvi to
Ido Power by wrtt notice in acrdce with pah 25.1, no later tha 5:00 PM
of the Slh day followi th end of the prous month. If the Seller does not prvide the
Ongoing Monthly Net En Amounts in a tiely ma, Idao Power will use the
most reent thr (3) month of th Initial Yea Mothy Net Ener Amounts spifed
in pagrph 6.2.1 for the next th (3) mont of monthy Net Ener amoun.
6.2.3 Seller's Adjusent ofl'et Ene Amount
6.2.3.1 No later th the Opertion Date, by wr notice given to Idao Power in
accordae with pargrph 25.1, the ~ller may rese all of the preously
\
prvided Irtia Yea Monthy Net Ener~ Amounts.i
6.2.3.2 Begiing with the en of the 9t month after the Opraion Date and at th end
of ever t. month ther: (l) the Seller may not revise the immate next
th (3) month of prviousy provided Net Energy Amounts, (2) but by wrtt
notice given to Idao Power in acordce with parph 25~1, no later th
5:00 PM of the 5lh day following th end of the previous mont the Seller may
revise all other previously provided Net Ener Amounts. Failut t-O provide
timely wrtten notice of chged amounts wil be deed to be an elecon of no
change.
6.2.4 Idao Power Adjustment. of Net En Amount ~ If Ida Power is excus frm
acceping the Seller's Net Ener as spified in pagrph 12.2.1 or if the Seller declar
a Suspeion of Ener Deliveres as spcified in pargrh 12.3.1 and th Seller's
declår Suspension of Energy Deliveres is acepted by Idao Power, the Net Ener
.14-
Amount as specified in pagrph 6.2 for the spific month in which the reucon or
suspeio unde pah 12.2.1 or 12.3.1 occur wil be reuce in accordce with
the followig:
Wher:
NEA = Cu Month's Net Ener Amount (Parh 6.2)
sou = a.) If Idao POwer is excu fr accetig the Seller's Net
Energy as speified in paph 12.2.1 this value Will be
equa to the perentage of eulient as spfied by
Idao Power multiplied by the TGU as defied below.
b.) If the Seller delars a Suspesion of Ener Deliveres as
specfied in pargrph 12.3.1 ths vaue will be the sum of
the individul genon uns siz raings as speified in
Appdi B that ar impaced by the ciumtance
causing th Seller to dela a Suspn of EnDelivees. .
TGU = Sum of all of the individu genertor ratings of the geeron
unts at ths Faclity as spified in Appx B of thagrent.
RSH "" Act hour the Facilty's Net Ener deliveres wer eitherreuc or sude un parh 12.2.1 or 12.3.1
TH = Actu total hour in the cut month
Resulting fortul beg:
Adjusted ( ( ) ( H
Net Ener = NEA - ~ii X NE X FfN
Amount ) )
Ths Adjusted Net Energ Amount will be us in applicable Surlus Energ calcultions for
only the speific month in which Idao Power was excused frm acctig the Seller's Net
Ener or the Seller declar a Suspension of Ener.
6.3 Unless excu by an event of Force Majeu, Seller's failur to delier Net Ener in any
Contr Yea in an amout equa to at leat ten peent (10%) of the sum of the Intial Yea Net
Energy Amounts as speifi in paph 6.2 shal constitute an event of default.
.15-
ARTICLE vn: PURCHE.PRICE AN MEHOD OF PAYMNT
7.1 Bas Ener Heayy Load Puha Prce - For al Ba En reve durg Heavy Load
Hour, Idao Power wil pay th no~leveliz en price in acor with Commsion
Order 31025 with senaon facrs aplied:
Year
Seaon 1 - (73.50 %)
MilsWh
Season 2 - (120.00 %) Season 3 - (100.00 %)
MillsWh MilslWh
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
49.26
51.86
54.66
57.66
59.39
61.09
62.93
64.75
66.62
68.84
71.5
73.55
76.05
78.64
80.85
83.12
85.46
87.88
90.37
93.72
96.65
80.43
84.68
89.24
94.14
96.96
99.73
102.75
105.71
108.77
112.40
116.17
120.09
124.16
128.40
131.99
135.70
139.53
143.47
147.54
153.01
157.80
67.02
70.56
74.37
78.45
80.80
83.11
85.62
88.09
90.64
93.66
96.81
100.07
103.47
107.00
109.99
113.08
116.27
119.56
122.95
127.51
131.50
7.2 Base Ener Light Load Puhae Price - For all Base Energy reived durg Light Load Hour
Ido Power wil pay the non-leveliz engy price in accordce with Commission Ord
3 i 025 with~sontion factors aplied :
Sean 1 - (73.50 %)
MilslWh~Seaon 2 - (120.00 %)
MilslWh
Sean 3 - (100.00 %)
MilslWh
2012
2013
2014
43.91
46.51
49.31
71.69
75.94
80.50
59.74
63.28
67.09
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2015 52.31 85.41 71.17
2016 54.04 88.23 73.52
2017 55.14 91.00 75.83
2018 57.58 94.01 78.34
2019 59.40 96.97 80.81
2020 61.27 100.03 83.36
2021 63.49 103.66 86.38
2022 65.80 107.43 89.53
2023 68.20 111.35 92.79
2024 70.70 115.42 96.19
2025 73.29 119.66 99.72
2026 75.49 123.26 102.71
2027 77.77 126.97 105.80
2028 80.1 1 130.79 108.99
2029 82.53 134.74 112.28
2030 85.02 138.81 115.67
2031 88.37 144.2 120.23
2032 91.30 149.06 124.22
7.3 AU Hout Ener Prce - The price to be used in the calculation of the Suilus Ener Prce an
Delay Dage Prce shal be the non-levlize ener prce in acordce with Comion
Orde 3 i 025 with seoniztion factors aplied:
~Sean 1 - (7350 %)
MilslWh
Season 2 - (120.00 %)
MillWh
Seaon 3 - (100.00 %)
Milsl
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
46.88
49.48
5228
55.28
57.01
58.71
60.55
62.36
64.24
66.46
68.77
71.7
73.67
76.26
78.46
80.74
83.08
85.50
76.54
80.79
85.35
90.25
93.08
95.85
98.86
101.82
104.88
108.51
112.28
116.20
120.27
124.51
128.10
131.81
135.64
139.59
63.78
67.32
71.3
75.21
77.56
79.87
82.38
84.85
87.40
90.42
93.51
96.83
100.23
103.76
106.75
109.85
113.03
116.32
- 17-
2030
2031
2032
87.99
91.34
94.27
143.66
149.12
153.91
119.71
124.27
128.26
7.4 Surlus EnergyPrce - For al Surlus Ene, Idao Power sha pay to the Seller the curt
month' $ Maret Ene Refee Pnce or the Al Hou Ener Pr sped in pagrh
7.3, whichever is lower.
7.5 Inver Ener-
7.5.1 Inadveren Engy is e1eetc engy produced by the Faclity, expresse in kWh,
which the Seller deliver to Idao Power at the Point of Deliver tht excee 10,00
kW multilied by the hour in the spific month in whch the en was deliver.
(For examle Janua contains 744 hour. 744 hour times 10,00 kW = 7,440,000
kWh. Energy delive in Janua in excess of7,440, 000 kWh in ths exaple
would be Inveren Ener.)
7.5.2 Althugh Seller inteds to deign and operte th Facilty to genere no mor th
10 avege MW and therfore dos not inte to genere Indvent Ener,
Idao Power wil acep Inveren Energy tht doe not exce th Maxum
Capaity Amount but wil not purhae or pay for Invernt Energy.
7.6 PaYmt Due Date - Undispted Energy payments, les any payments due to Ida Power will be
disbured to the Seller with th (30) days of the date which Idao Power reeive and
acep th doentation of the monthly Net Energ actuy deliver to Idao Powe as
speified in Appendix A.
7.7 Cotiuing Jurtion of the Comission .Ths Agent is a spe contr and, as such, the
rates, ters and conditions contaed in ths Agrent wil be consted in accordce with
Ido Power Compa v. Ido Publc Utilies Commission and Af Engy Inc., 107 Idao
781, 693 P.2d 427 (1984), Idao Power Compa v. Idao Puc Utili COIssion, 107
Idao 1122,695 P.2d 1261 (1985), Afn Ener. Inc. v. Ido Power_Comany, 111 Idao 925,
729 P.2d 400 (1986), Setion 210 of the Pulic Utilty Reguatory Policies Act of 1978 and 18
- 18-
CP §292.303-308
ARTICLE vm: ENlRQNENTAL ATS
8.1 Owerhip of Envita Attbutes is d.ed in a sete agent be Ida
Power and the Seller.
ARTICLE IX: FACllY AN INCONNON
9.1 Design.QfFacilty - Seller wil deign constt, instl, own, opete and mata the Facilty
and an Sell-owned Intennecon Facties so as to allow sae and reliable genertion and
deliver of Net Ener and Inverent Ener to the Idao Power Point of Deiver for the fu
ter of the Agrent.
ARTICL X: METERIG AN TEMETY
10.1 Metri ~ Idao Powe shal, for the account of Seller, provide, instal, and mata Meterg
Equipment to be located at a mutuly agr upon locaon to reor an meas powe flows to
Idao Power in acorce with ths Agreet and Schedle 72. Th Meterg Equipment will
be at the loction and the ty reui to measur, record an rert the Facilty's Net Energy,
Station Use, Indverent Ener and maimum ener delivees (kW) at the Poit of Delive in
a maer to provide Ido Power adeuate energy measurent data to admster ths
Agent and to integrte ths Facilty's energy production in the Idao Power eleccal
systm.
10.2 Telem - Idao Power will intal, opee and maiai at Sellets expee councations
and teleetequipment which will be capable of prvidig Ida Power with continuous
intaeous telemet of Seller's Net Ener and Indver Ener pruced and delive to
the Ida Power Point of Deliver to Ida Power's Designated Dispach Facility.
ARTICLE XI - RECORDS
11. Maince of Recor - Selle shl maintain at the Faclity or such other location mutuly
-19-
acceble to the Paries adequae tota geeron, Ne En, Station Use, Invet Enegy
and maimum geeraon (lW) re in a for and content actable to Idao Power. '
11.2 Inon - Either Par, af resonable noti to th other Par, shll have the right, durg
non business hour, to int and audit any or all geerion. Net Ener, Station Use
Inverent Ener and maum genertion (kW) records pe to th Sellers Facilty.
ARTICLE XU: OPERTIONS
12.1 Communcati. Idao Power and the Seller sha ma aprite opetig
commcation thugh Idao Power's Deignted Disath Faclity in acordace with
Apdi A of ths Agent.
12 .2 Ener Accepce -
12.2.1 Idao Power shll be ~cuse fr acceting and payig £o Net Enegy or acepti
Indve En which would have oterse be prduc by the Facility and
deliver by the Seller to the Point of Deliver, if it is preented frm doing so by an
event of Force Majeu, or tempo discnnon of the Facilty in accore with
Schedule 72 or if Idao Power deterns tht curil, interption or recton of
Net Ener or Indvert Energy deliveres is necsa ~ause of line conson,
electca sytem matece reents, emerencies, eleccal system opeing
conditions, or electrcal sytem reliabilty emgecies on its sys or as other
re by Prdent Eleccal Prctces. If, for rens other th an event of Force
Majeu, a tera disonnon under Schede 72 exce twenty (20) days,
benng with the twenty-fi day of such inteption cuilment or reuction, Seller
wil be deed to be deliverg Net Ener at a rate equivalent to the pr rata daly
avege of the amounts spified for the applicable month in pagrh 6.2. idao Power
wíl notify Seller whe the intepton, culmen or reuction is terii.
12.2.2 If, in the renable opinon of Idao Power, Sellers opon of the Faclity or
Interconnecon FaciHties is unfe or may otherwise advery affec Idao Powers
- 20-
equipmen, peonnel or serce to its cuomer, Ido Power may temray
disconec the Facity fr Idao Power's trinsion/distbution syste as spe
with Schedule 72 or ta such other renale stes as Idao Power des
approrie.
12.2.3 Under no circes will th Seller deliver Net En and/or Indvent En
frm the Faclity to the Point of Deliver in an amount tht exce the Maxum
Capacity AmUnt. Seller's faur to lit deliveres to the Maxum Capacity Amt
will be a Materal Brech of th Agen.
12.2.4 If Idao Power is unble to accep the ener frm th Facilty and is not excu frm
accepg the Facilty's ener, Ido Power's dages shal be limited to only th value
of the ested energy th Ida Power was unble to accep. Idao Power wil have
no respnsibility to pay for any other cots, lost reenue or constial dage th
Facilty may incur.
12.3 seller Dela Suspesion of Ene Deveres
12.3.1 If the Seller's Facility expenences a for outage due to equipment failur which is not
cause by an event of Force Majeu or by negec diair or lack of adequae
prventative maiteance of the Seller's Facility, Seller may, after givig notice as
provide in parh 12.3.2 below, tèJporaly suspnd all deliveres of Net Ener to
Idao Power fr the Faciity or frm individu genertion unt(s) within the Faciit
impacted by the forc outae for a peod of not less th 48 hour to cor the forced
outge condtion ("Declar SusPeion of Ener Deliveres''). The Seller's Delar
Suspesion of Ener Deliveres wil begi at the st of the next full hour following the
Seller's telephone nocation as spfied in pagrh 12.3.2 and will contiue for th
time as spfied (not les than 48 hour) in the wntten notification prvide by the
Seller. In the month(s) in which the Dela Susion of Energy ocur the Net
Ene Amount wil be adjusted as spified in pagrh 6.2.4.
12.3.2 If the Seller. desis to intiate a Delar Susion of Ener Deliver as provided in
- 21-
pargrph 12.3.1, th Seller wil notify th Designted Distch Facity by telephoe.
The begi hour of th Dela Susion of Ene Deliveres wil be at th
earliest th next full hour aft mag telephone cotact with Idao Power. The Seller
wil, within 24 hou af the telephon cont provide Idao Power a wrtten notce in
acrdce with XXV th wil cota th begig hour an durtion of the Dela
Suspen ofEngy Deliveres an a deption of the conditions tht caus the Seller
to intiate a Declar Suson. of Ener Delivees. Idao Power wil review th
doenon provde by th Selle to detere Idao Power's actace of th
descnbe forc outage as quafyg for a Delared Suspsion of Ener Deliveres as
spified in pargrph 12.3.1. Ido Power's aceptace of the Seller's forced outae as
an acceble forc outage will be bas upon th clea documtation prode by the
Seller tht .the forced outage is not due do an event of For Majeue or by neglect,
diai or lak of adeuate preventive maitence of th Seller's Facilty.
12.4 Scheuled Mateice - On or beor Janua 31st of eah calen yea, Seller sha submt a
wrtten proose ntintee scedule of signficant Facilty matece for th calenda yè8
and Idao Power and Seller sha mutuly agr as to the acceptabilty of the propsed scheule.
The Pares deterition as to the accilty of the Seller's tietble for scheduled
matence wil tae into considertion Prut Eleccal Prctces, Ida Power sýSte
reuits and the Seller's prefer scheule. Neither Pary sha uneaonbly withold
acceptae of th pro matece schedule.
12.5 MiiÎItece Coordiation - The Seller and Idao Power shl, to the ext prtica, cord
th respctve line and Facilty maitece scheules such that they ocur simltaneously.
12.6 Contact Prr to Curent - Ido Power will mae a reonable iltt to cotact th Seller
prior to exerising its rights to intept interonecon or curl deveres frm the Seller's
Facilty. Seer undeds tht in the cae of emery citac~ re tie options of
the elecca system, and/or unlaed events, ida Power may not be able to prvide notice to
the Seller pror to inteption cuilment, or reuction of electrcal energy deliveres to
-22-
Idao Power.
ARTICLE xm: INCATION AN INSURCE
13.1 Inification - Each Par shal agr to hold baless and to indemify the ot Par, its
offce, agét~ afliates, subsidianes, part coany and employees again all loss, dage,
expe and liability to th péon for inur to or deth of pen or injur to proper,
prxÎtate1y caus by th infy Par's. (a) consction ownhip, operon or
matenance of, or by failur of, any of such Par's work or falities use in connÎon with
th Agrement, or (b) negigent or ineniona acts, errs or omissions. The indemfy Par
sha, on the other Par's reuest, defend any sut aserg a c1ai cover by ths inty.
Th indefyg Par shall pay all docuente costs, inludig reasonable atorney fee th
mày be ined by the oter Par in enorcg ths indety.
13.2 In - Dung the ter of ths Agen, Seller sbaH seure and contiuousy car th
following Ìlurce coverge:
13.2.1 Comprhenive Gener Liability Ince for both boy inur and prpe dage
with liits equa to $1,00,000, eah OCCUIce, combined single limt. Th dectible
for such inurce sh be conisten with curt Inurce Industr Utility prces for
simiar proy.
13.2.2 The above Însurce cover sh be placed with an insuce company with an AM.
Best Compay rating of A- or beter and shal inlude:
(a) An endoent naing Idao Power as an addition insur an los paye as
applicable; and
(b) A prvision sttig tht such policy shall not be caceled or the liits of liabilty
reduce without sixty (60) days' prior wrtten notice to Idao Power.
13.3 Seller to IEvide Cerificate of In - As reui in parph 4.1.5 herei and anually
therfter, Seller shal fuh Ido Power a cerificate of insuce, toger wit th
enorsents reui ther, evidenci the coverge as se fort above.
-23-
13.4 Selle to NotIôo Power of Loss of Cover - If the insce cove reui by
pargrh 13.2 shlapSè for any re Seller wil imedately notify Idao Power in wrtig.
Th notice wil advise Idao Power of the spifc reson for the lapse and the steps Seller is
tak to reinstte the covege. Failur to prvide ths notice an to expetiouly reintae or
relace the coverage wil constue a Mateal Bre of th Agent.
ARTICLE XI: FQCEMA
14.1 As used in ths Ageeent, "Force Maje" or "an event of Force Majeur" mea any cau
beynd the cotrl of the Seller or of Idao Power which, despite the exerse of due diigece,
such Paty is unble to pret or overome. Force Majeu includ, but is not lited to, acts of
God, :f, floo storm, war, hoilties, civi stfe, stres and other labor distce,
eauaes, fi, lightn, epidemics, saboge, or chages in law or reguation occuig af
the efecve date, which, by the exercise of reasntble forsight such pa cod not renably
have be expeted to avoid and by the exercise of due diligence, it sh be unable to overome.
If . either Pary is rede wholly or in pa unble to peorm its obligations unr ths
Agrent becus of an ev of Force Majeu, both Pares shall be excuse frm whateer
perrmce is afec by the event of Forc Majeu, provided tht:
(1) The non-peing Par shl, as soon as is renably posible af th
occurce of the Force Majeu, give the oth Par wrtten notice desbing
the paicu of the occe.
(2) The susenion of perorce sh be of no grter scope and of no longer
dur th is requi by the event of Forc Majeu.
(3) No obligations of either Par which arse befor th occurce causing the
susion of peore and which could and should have be fuly
permed before such occurce shal be excu as a result of such
ocure.
-24-
ARTICLE XV: LIILITY; DEDICAIION
i S. i Limtation of Libilty. Nothg in ths Agent shal be constr to cre any duty to, any
stada of car with referce to, or any libilty to any person not a Pary to this Agent.
Neith pa shal be liable to the other for any indict, speia. consuential, nor puntive
dages, except as exply author by ths Agrent.
15.2 Dediction. No unde by one Par to the other under any prvision of ths Agrent
sha contitute the decation of that Par's system or any portn therf to the Par or the
public or affect the sttus ofIdao Power as an indept public utity corpration or Seller as
an indedet individua or enty.
ARTIÇLE XV: SEVER OBLIGATIONS
16. i Except wher specifcaly state in ths Agr to be otherse, the duties, obligations and
liabilties of the Pares ar intended to be sever and not joit or collective. Nothg conta
in ths Ageeen shall ev be constr to crate an association, trst, parerhip or joint
ventu or impose a tr or parerhip dut, obligation or liability on or with regard to eith
Par. Each Par shl be individualy and severly liable for its own obligtions under ths
Ageeent.
ARCLE XV: W AIER
17.1 Any waver at any tie by either Par of its nghts with respet to a default unde this Agren
or with respec to any other matt arsin in connecion with ths Agrment shal not be
deeed a waive with repet to any subsuent defaul or other matter.
ARTICLE xv: CHOICE OF LA WSAN VEN
18.1 Ths Agrent shal be consted and inter in accordce with the laws of the State of
Idao without referce to its choice of law provisions.
1 8.2 Venue fo any litigation aring out of or related to this Agent wil lie in the Distrct Cour of
- 25-
the Four Judicial Distct ofIda in and fo the County of Ada.
ARTÎCLE XI DISPUTS AN DEAULT
19.1 Dites - Al diutes related to or arsin unde ths Agr includig, but not lited to,
the interio of the ter an conditions of ths Agrent, will be submitted to. the
Commssion for resolution.
19.2 Notice of Defat
19.2.1 Defaults. If either Par fais to peorm any of the te or conditions of ths
Agrent (an "event of default'), the nondfaultig Par shl cause notice in
wrtig to be given to the defaultig Par, spify th maer in which such
default oo If the defaultig Par sha fai to cu such default with the six
(60) days after seice of such notice, or if the defaulting Pary rebly
deonstrte to the other Par tht the default can be cur wi a cotterally
renable ti but not with such six (60) day peod an then fals to diligently
pue such cu, th the nodefaulti Par may, at its opon, terte ths
Agrent and/or purue its leg or equitable reedies.
19.2.2 Matal Bres - Th notic and cure prvisions in pah 19.2.1 do not apply
to defaults identified in ths Agent as Material Breches. Mater Breaches must
be cur as expetiously as poible following occunce of the brch.
19.3 Secty for Perormce .. Pror to the Opon Da and therfter for the full ter of ths
Agrent, Seller wil provide Idao Power with the following:
19.3.1 Inurce - Evidence of compliace with the provisions of parh 13.2. If Selle
fails to comply, such falur wil be a Materal Breh an mày ~. be cu by
Seller suplyig evdece th th reuire inur coverge ha be relace or
reintated.
19.3.2 Engiee's Cerations - Every th (3) yea aft the Option Date, Seller wil
supply Ida Power with a Cerfication of Ongoing Options and Maitence
-26-
(O&M) frm a Register Profession Engiee licensed in th Stae of Ida, whìch
Cerifieaon of Ongoig 0 & M shall be in th fo spefied in Ap C. . Seller's
failur to supply th reui cerficate will be an even of default. Suc a default.
may only be cu by Seller prvidi th reui ceifcate; and
19.3.3 Licenes and Pets - Dug the fu te of ths Agren Seller shl ma
copliat:e with al pets an lice descbe in pah 4.1. .of this
Agt. In addtion Seller will suly Idao Power wi copies of any new or
additon pets or licenses. At leat ever fift Contrt Yea, Seller wi upd th
documntation descbed in Pargrh 4.1.1. If at any time Seller fals to matain
compliance with the pets and licen desbe in pagrph 4.1.1 or to provide
th docentaon reui by th pagrh, such failur wi be an event of default
an may Q! be cu by Seller subtting to Idao Power evde of complian
frm th pett agey.
ARTICLE XX: GOVERWALAUTORTION
20.1 Th Agent is subjec to the jursdcton of those goveenta agenies havig contrl over
either Par of th Agrent.
ARUCLE XX: COMMISSION ORER
21.1 Ths Agt sh beme fily effective upon the Commion's approval of al ter and
provisìons herof without change or condition and delartion that aU payments to be made to
Seller heredeshall be allowed as prently incu exps for rag purp.
ARTICLE xx: SUCCESSORS AN ASSIGNS
22.1 Ths Agrement an al of the te and prvisions herof shal be bindig upon an inur to the
beefit of the repetive succsor and assigns of the Paries hero. except that no asignt
he by either Par shall become effctive without the wrtt const of both Paries beg
fi obtaed. Such const sh not be unnaly witheld. Notwthtading the forgoing,
-27-
any par which Idao Power may cosolidate, or into which it may mere, or to whih it may
convey or trfer substatily al of its elecc utiit asse, shal automcaly, without fuer
act, and without need of const or aproval by the Seller, sucd to all of Idao Power's nghts,
obligaons and intests un ths Agren. Ths arcle shal no prent a fiing entity
with reded or seur rights frm exerg al rights and reedes avalable to it unde law
or CòItr. Idao Power sh have the nght to be notified by the ficing entity th it is
exeisi suh rights or reedes.
ARTICLE xx: MODIFICATION
23.1 No modification to ths Agrent shal be valid uness it is in wrtig and signed by both Pares
and subsuently appved by the Comssion.
ARTICLE XX: TAXS
24.1 Eah Par sh pay before delinueny al taes and other governenta ches which, if failed
to be paid whe due, could result in a lien upn the Faclity or th Inteecti Facilties.
ARTæLE XX: NOTæES
25.1 All wrtten notices under ths Agrent shall be dited as follows and shall be conside
deliver when faxed e-mailed and confued with depsit in the U.S. Mail, fit-class, potage
praid, as follows:
-28-
To Seller:
Orginal document to:
Clark Canyon Hydr, LLC
C/O Syibwtics LLC
Ki Johnon
2000 S. Oce Blvd # 703
DelRay Bech, Flonda 33438
Telephone: [phone]
Mobile [phone]
E-mal: vice.lamarCâlsymioticsenet.çgm
E-ma Coyto:ki.johnn~veer.comElbe.~symbiotièergy.co
To Idao Powr:
Qngi doent to:
Vice Prsidet, Power Supply
Idao Power Comy
PO Box 70
Boise, Ida 83707
Email: Lgrow~ìdaopwe.com
Copy of docent to:
Cogeertion an Sm.L Power Production
Idao Power Company
POBox 70
Boise, Ida 83707
E-mal: ral.~idahopower.com
Either Par may chage the conta peron anor addrss inontion listed abve, by providing wrtt
notce frm an autored pe resentig th Par.
ARTICt£ XX: APDmONAL TER AN CONDITIONS
26.1 Ths Agt includes th followi appdices, which are atched heo an includèd by
refere:
Appendi AAppdiß
AppdixC
Generion SCheduling an Reprtg
Facilty and Poin of Delive
Engi's Cerfications
- 29-
AppediD Form of Liqud Secty
ARTICLE xxvn: SEVEILITY
27.1 Th inidity or unenorbilty of any te or proviion of th Agrent shall not affec the
Vaidi or enorcbilty of any oth ter or provision and th Agrt sha be constr
in all oter re as if th invad or unorceable tè or provision wer omitt
ARTICLE xx: COUNTS
28.1 Ths Agent may be execute in two or more countes, eah ofwbich sha be deed an
original but all of which togeter sha constitute one and the sae ínen.
ARTICLE XXIX: EN AGREEEN
29.1 Ths Agren constitutes the enti Agent of th Pares conceg the subjec ma
herf an supees al pror or contempoeous or or wrtten agts betwee the
Pares concethe subjec ma herf.
-30-
IN WISS WHREOF, The Paries hero have cau ths Agett to be execute
in their reive names on th das set fort below:
Idao Power Compay Cla Canyon, LLC
By ~~ia. tk
if LisAGrw.
Sr. Vice Preident, Powe Supply
Dat 5. LO~ , 1 Date
t5- \8- \1
"Idao Power "Seller"
- 31-
APENDIX A
A -1 MONTY POWE PRODUCTION AN SWITHIG RERT
At the en of each month the followg reuir docenion wil be submited to:
Id Power Company
Att Cogeneron and Smal Power PrUCtiOn
POBox 70
Bois, Ido 83707
The meer regs reir on th re wil be the readings on the Idao Power Mete Equipment
meaur the Faclity's tota energy pruction and Station Usage deliver to Ida Powe and the
mamum geerted ener (kW) as reor on the Met Equipment and/or any other reui
ener measurents to aduaely admste ths Agrent. Ths doent shl be the document to
enble Idao Power to begi the ener payment caculation and payment proess. Th meter regs
on ths rert shal not be used to caculate the ac payment, but ins wil be a check of the
automted meter reg informtion th will be gather as desnb in ite A-2 below:
- 32-
Idaho Power Company
Cogeneration and sma Power Prducton
MONTY POWER PRODUCTION AN SWICHIG RET
Project Name
Month Year
Prjec Numer:
Addr
at)
Meter NUD:
End of Moth kWh Meter Rea:
Be of Month kWl Met:
Dierce:
tiies Mtete Cont:
kWh for the Month:
Meter Ded:
Brakr Open R.ecrd
pate Tim Meter
_.
..Brear Qpior Reasn C9des
Laek of Adequate Prme MO'er
Force Outa of Faei
Dibáee of 1P0 System
Seheduled Maitece
Téf of Protection Systems
Caus Unknown
Otr (Expai)
i
2
3
4
S'
6
7
State Zip
Fadlty~Station~
Phone Number:
StationY!Metéred
Mm"'" Ge
kW
Net Genen
=
Breer Cl Red
Date li M*
*1
ßg
I
ii
I
I hery cert tht the above meter re are
true and correct as of Mit on the lat day of the
above òI and that the swhi reord is aettte
an compete as required by the Fi Energ Sal
Agnt to whieh I am a Pái.
Sigtüe
-33-
Date
A-2 AUTOMATED MET REING COLLCTON PROCESS
Monthy, Idao Power will use th prde Met an Telemet equient and prses to collect
the meer redig inrmtion frJí the Idao Power prvide Metg Equipmt th measus the Net
Ener and en deliver to suly Staon Use for the Facilty rede at 12:00 AM (Midnght) of
the las day of the month..
The Jíeter inortion oollected wil include but no be limted to ener proucon, Station Use, the
inimum geer power (lW) and any other reui ener measurents to aduaely adtst
th Agrent.
A-3 ROUTIN RERTING
Once the Facility ha achieved its Option Date and ha opeed in a reliable and consistet
iner for a resonable peod of time, the Pares may mut agr to modfy th Routine
Rertg requirent.
Ido Power Contat Infortion
DalyEn Pruction Reprtin¡
Call daly by 10 a.m., 1-800-356-4328 or I..SOO-635-1923 and leave the following
inonnaton:
. Projec Idetification.. Prject Name and Prject Number
. Curt Meter Reag
· Estite Genertion for the cut day
· Esimted Geertion for th next day
Plaed an Unanned Prje outages
Call1-SQQ-345-1319 and leave the following inortion:
· Prject Idenficaton - Prject Nam and Prject Numbe
. Approxie time outàge occu
. Estimted day an tie of projec coming back onlie
- 34-
Seer's Conta InonatiQn
24.Hou Prec Opertiona Contact
Name:
Telephone Numbe
CellPhon~
Bret Smith
(541) 330:8779
(208) 521~2473
PrjectOi~site Contact inormon
Name:
Telephone Numbe:
Bret Smith
[phone]
- 35-
APPENDIXB
FACIL AN POIN OF DELIVERY
Prjec Name: Clar cayo Hydelecc
Prjec Numbe 4145560
B-1 DESCRITION OF FACILIT
(Must include the Nameplate Capacity rating an V AR capility (bot leaing and laggg) of all
generation units to be inluded in tke Facility.)
Th 4.7 MW Clark Canyon Hydr LLC prject is located at the Clk Canyon da on the
Beaverhed River in Beverhead County nea the town of Dillon Mr. Long:44.99, La:-112.8S.
Cla Canyon Hydro to build a lie to deliver power dily to Idao Power at the Peteron
Subston loted in Southwest MOílta south of the town of Dilon MT.
Var Capability (Both leading and laggng) Le is ~ Laggg is ~
B-2 LOCATION OF F ACIL
Nea: Dillon, MT
Geogrphic Coordies: Lo 44.99, Lat -112.85 County Beverd
Deription of Interconnecon Lotion: Connec dily to the Ida PoWer Pet-enSubsttion
B-3 SCHULD FIRT ENEGY AN OPERTION DATE
Seller has selec Noveiher 1. 2012 as the Scheuled Firt Energy Date.
Seller ha select March 31. 2013 as the Scheduled Option Dat.
In ing these selecons, Seller reogts tht aduate testig of th Facilty and completion
of all requients in pargrph 5.2 of ths Agrent must be complet prior to the prjec
being grted an Option Date.
8-4 MAIM CAPACIT AMOUN:
Ths value will he 4.7 MW whieh is COílSÌsten with th vaue provided by the Seller to Idao
Power in aooOtce with Schedule 72. This value is the mawn energy (M) tht potentily
- 36-
cod be deliver by the Seller's Facilty to the Ida Power elecca sysem at any moment in
time.
B.S POIN OF DELIVERY
"Poin of Delivery" meai, uness oterise agred by both Pares, th poin of wher the
Seller's Facilty energy is delivere to the Idao Power eletnca sysem. Scheule 72 wil
detee the spific Point of Deliver for ths FacHty. Th Poin of Deliver idetified by
Schede 72 wil beome an integr pa of ths Agrt.
B-6 LOSSES
If the Idao Power Met equipment is capale of meg the exact ener delivees by the
Seller to the Ido Power eleccal system at the Point of Deliver, no Loses wil be calcued
for ths Facilty. If the Ida Power Meter is unble to mea the exac en deliveries by
the Seller to the Idao Power eleccal syem at the Point of Dever, a Losses calculation wi
be estblished to meaur the ener losses (kWh) beee the Selle's Faclity and th Idao
Power Point of Deliver. Th loss calculation will be intialy set at 2% of the kWh engy
prodcton record on the Facilty geertion inng eqipment. At such tie as Seller
provide Idao Power with the eleccal equiment speifcations (trsforer loss
speificaions, conductor sizs, etc.) of al of the electnca equipment beee the Facilty and the
Idao Power eleccal sysem Idao Power wil congu a rese loss cacuion forula to
be agr to by both paries and us to calcute the kWh Loses for the reai ter of th
Agrent. If at any tie durg the ter of ths Agt, Ida Power detnes that th
loss calcution do not corrly reflect the acua kWh losse attbute to the eleccal
equipment betee the Facilty and the Idao Power elecca syem, Idao Power may adjus
the caculn an reactively adjust the previous month's kWh loss calcUlations.
B.7 METERG AN TELEMETRY
Schedule 72 wi detere the spific meterg and teleet reents for th Facil. At
the miui the Meter Equipmet and Telemetiy equipIit must be able to provide an
.37.
reord hourly en deliveres to th ~oint of Deliver and any other ener meaurents
reed to adster thi Agt. Th speificaons wil inlude but not be limte to
equipment spificatons, equipment loctioll Idao Powe provide equipmen, Seller prvide
equipment, and all cost assoiated with the equipmen, design and ination of the Ida
Power provided equipment. Seller wil arge for and mae available at Seller's cost
councation ciruit(s) compatible with Idao Power's comuncations equipment an
dedcated to Idao Powers use, teinti at Idao Power's facilty capable of providig Idao
Power with couous intaeous inorition on th Facty's enetproöton. Idao
~ower provide equipment wil be owned and maintaed by Idao Powèr, with tota cost of
purhae,. intaation, option, an maienance, includig adtrtive cost to be rebur
to Idao Power by the Seller. Payment of these coss wil be in acordàce with Schee 72 and
the total meerig cost wil be includ in the cacuation of the Monthy Option an
Maience Chas speced in Schede 72.
B-8 NEORK RESOURCE DESIGNATION
Idao Power caot acct or pay for generon frm ths Facility un a Network Resur
Designtion ("NR") application ha be acceed by Ido Powe's deliver business unt.
Fed Ener Reguator Commssion ("PEC") Rules req Ido Power to pre an
submit the NR. Because much of the information Idao Power nee to preare the NR is
spific to the Seller's Faci1ty, Idao Power's abilty to file the NR in a tily nier is
contgent upon timely reeipt of the requid information frm the Seller. Pror to Ida Power
begig the proess to enble Ida Power to submit a reuet for NR sttu for ths Faclity,
the Seller shll have complet al reuients as speifed in Pargrph 5.7 of ths Agélt.
SeDer;s faiure to prode comple and acCllte inrma.tÎ in a tiely manner can
signcant impact Idaho Power's abil and cost to attai the NR desigtion for the
Seler's Faci and tbe Seer sba be the costs of any of these delays tbat ar a resul of
any actn or inacon by tbe SeDer.
- 38-
APPENixc
ENGINERiS CERTIFICATION
OF
OPERTIONS & MANANCE POLICY
The undeigned . on behaf of hielf and
herinfter collecively refer to as "Engi," heby stte and cerfies to th Seller as follows:
i. Th Engiee is a Lice Professiona Engiee in good stadig in the Stte ofIdao.
2. Th Enginee ha reviewed the Ener Sales Agent, herin "Agent," beee
Idao Power as Buye, an as Seller, date
3. Th th cogeertion or small power proucon projec which is th subjec of the Agrent
and ths Staement is idetified as IPCo Facilty No. an is he refe to as
the "Prject"
4. Th the Prjec, which is commony known as the Prjec is locted in
Secon _ Townhip Rage . Boise Merdian County, Idao.
S. Tht Engi reognzes tht the Agent provide for the Projet to fuh elecca en
to Id Power fur a yea peod.
6. Th Engiee has substtial expen in the deign constnon and opration of electrc
power plans of the sae ty as ths Prject.
7. Tht Engi ha no ecnomc relationship to the Design Engiee of this Projec.
8. Th Engi ha reviewed and/or supese the review of the Policy for Option an
Maintence ("O&M") for thi Projec and it is his prssional opiron that, provide sad Project ha
be deigned an built to approprate standads, adhe to sad O&M Policy wil reult in th
Projec's proding at or nea the design elecal outt, effciecy and plan far for a fift (15) .
yea peod.
.39-
9. Th En regns tht Idao Power, in accordace with pagr 5.2 of the Agren
is relyig on Engees reresetaons and opinon cont in th Staent.
10. Tht Engir cees th the aboe stts ar complet, tr and accute to the bet of his
kiowledgeand therefore se his ha an se below.
By
(P.E. Stap)
Date
-40-
APPENDIXC
ENGINER'S CERTIFICATIN
OF
ONGOING OPERTIONS AN MANANCE
The tmergned , on behaf of hilf and
herer collecvely refe to as "Engiee." herby stte and
ceres to the Seller as follows:
1. Th Engee is a Lice Prfesiona Engiee in goo stag in th State ofIdao.
2. Th Engiee ha reviewed the Ener Sales Agrent, herr "Agent," between
Idao Power as Buyer, and as Seller, dated
3. Tht the cogention or sm power proion prjec which is th subjec of the Agent
and ths Statement is idetied as IPCo Facilty No. an hereifter refer to as the
"Prjec" .
4. Tht the Projec which is commony know as the Prjec, is locted in
Secon _Townhip Rage , Boise MediaI Coun, Idao.
5. That Engiee reog tht the Agrent provide for the Project to fush electrcal ener
to Id Power fot a tw (20) yea peod.
6. That Engiee bas substtial expence in the design constiction and operation of eleco
poer plats of the sae ty as ths Prjec.
7. Tht Eng ha no economc relationhip to the Design Engiee of ths Prject.
-41-
8. Th Engiee ha ma a physica inon of sad Prec, it op an maience
rerd sine the la prous ce intion. It is Engiee's prfessiona opinon, ba on the
Prjects appece, that its ongoing O&M has be substtialy in acordce with sad O&M Policy;
tht it is in realy good optig codition and tht if adherce to said O&M Policy contiue, the
Project wil contiue prcig at or ne its deign elecca outp, effciency an plat facor for th
reg yea of the Agrt.
9. Tht Engiee regns tht Id Power, in ace with pah 5.2 of the Agen,
is relyi on Engiee's resetaons and opinons conted in ths Stateent.
10. Tht Engi cerfies tht the above staements ar conilete, tre and accurte to th bet ofhi
knowlede and thfor sets his had an se below.
By
(P .E. Sta)
Date
-42-
APPENixC
ENGINER'S CERTIFICATION
OF
DESIGN & CONSTRUCTON ADEQUACY
The undeigned , on beh of hilf an
herer collecvely refer to as "Engiee", heby states and
cerifes to Idao Power as follows:
l. Th En is a Licese Prfeona Engee in go stadig in the State of Idao.
2. That Engiee ha reewed the Fir Ene Saes Agent, heiner "Agenti,
beteen Idao Power as Buye, and as Sellet, da J
3. That the cogenertion or sma power prueonprjec, which is . the subject of the
Agent and ths Statement, is idtifed as IPCo Facilty No and is her
refer to as the "Prjec" .
4. Tht the Prject, which is coonly known as th Prject, is loete in
Seon .. Townsp Rage , Boise Merdi County, Id.
S. That Enginee reognze th th Agrt provides for the Prjec to fush elec
ener to Idao Power for a twenty (20) year perod.
6. Tht Engieer ha substatia expeence in the deign constron an opon of
elecc power plants of the same tye as th Prjec.
7. Th Engiee ha no econom relaonship to the Deign Engiee of th Prect and
has ma the anysis of the plans an spifcations indedetly.
8. Th Engiee ha reviewed the engierg design and constion of the Prjec
inludig the civil work, eleccal work, generating equipment, prie mover conveyance system, Seller
fushed Interonecion Facilties and oter Prjec facilties an equipment.
- 43-
9. Th the Prjec ha be cons in acrd with sad pla an spficaon, all
applicable cods and consistt wi Prt Elecca Prce as th te is de'b in the
Agent.
10. That the design and conseton of th Prjec is suc tht with reonble and prude
operaion and matence prices by Seller, the Prjec is capable of peorm in acco with th
ter of the Agt and with Prdent Eleccal Prices for a year penod.
11. Tht Bngiee regnzes tht Idao Power, in accordce with pah 5.2 of the
Agent, in intennecg the Prjec with its sysei is relyi on Engees rereentations an
opinoll contaed in ths Stateent.
12. Tht Engiee certes that the above stateients ar complete, tr and acte to the
be ofhi knowledge an ther ses his had and se below.
By
(p.E. Sta)
Date
-44
APPENlD
FORMS OF LIQUID SECUR
Th Seller shl prode Idao Power with commerialy reonble seurty instents such as
Cas Esw Seurty, Guate or Le of Cret as those tei ar defied below or oter
form of liquid fici seythat would prvide rey avaable ca to Idà Power to
sasfy the Delay Securty reuient with ths Agt.
For the puse of ths Appdi D, the ter "Cret Requients" shal m.ea aceptale
fici crtwortes of th entity providig the sety inent in relation to th ter of
the obligation in the renable judent ofIdao Power, prvided th any gute and/or
let of crt issu by any other entity with a short-ter or long-ter investent gr crt
rating by Stada & Poor's Corpraon or Mooy's Investor Sece, Inc. sha be deeed to
have acceptable ficia critwors.
1. Cash Escrow Secty - Seer sha desit fus in an escrw account esblished by the
Seller in a ban insttution accetable to both Pares equa to the Delay Sety.
2. Gutee or Le of Cret Secty - Seller shal post aid mata in an amount equa to
th Delay Securty: (a) a guty frm a par tht satisfies the Cret Reuiren, in a
form acceble to Idao Power at its discion, or (b) a Leer of Cret in a form accetable
toldao Power, in favor ofIdao Power. The Le of Cret wil be issue by a ficial
institution accepble to bo paies.
-45-
Peter 1. Richardson (ISB # 3195)
Gregory M. Adams (lSB # 7454)
Richardson & O'Lear, PLLC
515 N. 27th Street
P.O. Box 7218
Boise, Idaho 83702
Telephone: [phone]
Fax: [phone]
peteraYnchardsonandolear.com
gregaYrichardsonandolear .com
Attorneys for Complainant
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
GRAD VIEW PV SOLAR II, LLC,
Complainant,)
) Case No. IPC-E-II-15
)
) AFFIDAVIT OF ROBERT A. PAUL
)
)
)
)
VS.
IDAHO POWER COMPANY,
Defendant.
EXHIBIT 5.2
COMMENTS OF THE COMMISSION STAFF
IPC-E-II-09
KRSTIE A. SASSER
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
POBOX 83720
BOISE, IDAHO 83720-0074
[phone]
BARNO. 6618
RECEIVED
, 2011 JUN 29 PM 2: 31
iDAHO PUbL¡Ç
UTlLîT1ES COMi¡WjSION
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Sta
BEFORE THE IDAHO PUBLIC UTILmES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
IDAHO POWER COMPANY FORA ) CASE NO. IPC-E-ll-09
DETERMINATION REGARING THE FI )
ENERGY SALES AGREEMENT WITH CLAR) COMMNTS OF mE
CANYON, LLC FOR THE SALE AND ) COMMISSION STAFF
PURCHASE OF ELECTRIC ENERGY. )
COMES NOW the Sta of the Idaho Public Utilties Commission, by and though its
Attorney of record, Krstine A. Sasser, Deputy Attorney General, and in respons to the Notice
of Application and Notice of Modified Procedur issued in Order No. 32252 on June 1,2011, in
Case No. IPC-E-11-09, submits the following comments.
BACKGROUND
On May 24, 2011, Idao Power Company filed an Application with the Commission
requesting acceptace or rejecion of a 20-year Firm Energy Sales Agreement (Agreement)
between Idao Power and Clark Canyon, LLC (Clark Canyon) dated May 20, 2011. The
Application states that Clark Canyon would sell and Idao Power would purchae electrc energy
generated by the Clark Canyon hydrelectrc project (Facilty) located nea Dilon, Montaa. The
Application states that Clark Canyon proposes to own, operate and maintain a 4.7 MW (maximum
capacity, nameplate) hydroelectrc generating facilty. Application at 2. The Facilty wil be a QF
under the applicable provisions ofPURA. The Agreement is for a term of 20 year and contans
STAFF COMMENTS 1 JUE 29, 2011
the curent non-Ievelized published avoided cost rates established by the Commission in Order
No. 31025 for energy deliveries of less than 10 average megawatts ("aMW").
Clark Canyon selected November 1,2012, as its Scheduled First Energy Date and March
31,2013, as its Scheduled Operation Date. Application at 3. Idaho Power asserts that varous
requirements have been placed upon the Clark Canyon facilty in order for Idaho Power to accept
the Facilty's energy delivenes. Idao Power staes tht it will monitor the Facilty's compliance
with initial and ongoing requirements though the term of the Agreement.
The Application maintans that all applicable intercnnection chargesand monthly
operation or maintenance chages under Schedule 72 wil be assessed to Clark Canyon. Idaho
Power states that the Facilty is curently in the generator interconnection process. "Upon
resolution of any and all upgrades required to acquire trsmission capacity forthis Facilty's
generation, and upon execution of the FESA and the GIA, ths Facilty may then be designated as
a network resoure." fd. at 4.
Clark Canyon and Idao Power have agrd to liquidated damage and securty provisions
of$45 per kW of nameplate capacity or the sum of th month' estimated revenue. Agreement
ir 5.3.2, 5.8. i.
Ownership of environmental attbutes (i.e., Green Tags, Renewable Energy CreditsICs)
associated with ths Facilty are addressed in a separte agreement. Application at 3.
Idaho Power states that the Facilty has also been made awar of and accepted the
provisions in the Agreement and Idaho Power's approved Schedule 72 regarding non-
compensated curlment or disconnection of its Facilty should certn operating conditions
develop on Idaho Power's system. The Application notes that the paries' intent and
understading is that "non-compensated curlment would be exercised when the generation
being provided by the Facilty in certn operting conditions exceeds or approaches the minimum
10ad levels of (Idao Power's) system such tht it may have a detrmenta effect upon (Idao
Power's) abilty to mange its theral, hydro, and other resources in order to meet its obligation to
reliably serve loads on its system." ¡d. at 5.
By its own terms, the Agreement will not become effective until the Commission ha
approved all ofthe Agreement's terms and conditions and declares that all payments made by
Idaho Power to Clark Canyon for purhass of energy will be allowed as prudently incured
expenses for ratemakng purses. Agrment' 2 i. i .
STAFF COMMNTS 2 JUE29, 201 i
STAFF ANALYSIS
With few exceptions, the rates, terms and conditions contained in the Agreement ar
identical to those contained in other recently approved PURA contracts. Consequently, Staffs
comments will not address the stadard rates, terms and conditions, and instead will focus only on
those thngs that make this Agreement unque.
One unique featur of ths Agreement is tht ownership of environmental attbutes is
determned in a separte agreement between Idao Power and Clark Canyon. Another unque
featue of this project is that the Facilty is not located in Idao but is seeking a contract containing
Idaho's published avoided cost rates. Both issues are discussed in more detail below.
Environmental Attribute Ownership
As the Commssion is awar, there is curently no renewable portfolio stadard in Idao or
requirement that utilities possess environmenta attbutes. Furermore, neither the Commission
nor the Idao State Legislatur has issued orders or passed legislation specifying who-the utilty
or the project owner-owns the RECs and is entitled to sell them. . Neverteless, RECs ar
produced by PUR A projects in Idao and they undeniably have value if sold.
The Commssion has previously stted, "The utilty and the QFs are free to voluntaly
contract and negotiate the sale and purchae of such green tags should environmenta attbutes be
perceived by the contracting paries to have value. The price of the same we find, however, is not
a PURP A cost and is not recoverable as such by the Company." Case No. IPC-E-04-16, Order
No. 29577, p. 6. In all prior Idao Power PURPA contracts in which RECs ar produced by a
project, Idao Power has voluntaly waived any right or claim to ownership of RECs and i 00
percent of the RECs have been claimed by project owners. In the Clark Canyon contract,
however, the pares have negotiated a SO/50 sharng ofRECs.
Idaho Power informed ~ta that it initially proposed reservation of rights languae for the
contract that would preserve for Idaho Power and its customers the right to RECs in ths contract
should the rues, regulations, laws, or legal sttus as to the ownership of RECs in PURP A
contrts be clarfied or changed to abide by such change in law. Ultimately, the paries saw a
mutu value to both the project and to Idao Power and its customers in clarfyng the ownership
of RECs and negotiated the separate agreement whereby the project retas all RECs for the firs
ten year of the contract and Idaho Power own all RECs for the las ten year of the contr.
There is no moneta payment for RECs in the Agreement. The project receives clarfication as to
STAFF COMMNTS 3 JUE 29, 2011
ownership and retans RECs for the firs ten year to obtan what value it can to help offset project
costs. Furermore, Idaho Power and its customers receive clarfication as to the ownership and
get ownership of all RECs for the last ten years to either obtan what value it can for the RECs,
which flows back to customers, or retire such RECs in order to clai the environment attbutes of
the energy on its system or to meet possible futue renewable portolio stdads.
Sta regnzes that agreement between the paes regarding REC ownership seems to be
exactly the typ of negotiation contemplated by the Commission when it issued Order No. 29577.
Neverteless, the sharng argement negotiate in this case is a clear depare from the REC
ownership argements Idaho Power has agreed to in prior PURP A contracts. In a separte
PURA agreement recently filed by Idaho Power (lPC-E-l 1-10, Interconnect Solar Development
LLC.)I, Idao Power and the project owner have negotiated an agreement in which REC
ownership is split 50/50 thoughout the entire 25-year term of the contrac rather than ownership
being split SO/50 between the firs and last halves of the contrct terms as in ths Agreement with
Clark Canyon. Although Staffhas no objection to the REC ownership argements agreed to
between Clark Canyon and Idao Power in this case, the varety of ownership argements
demonstrated in recent Idaho Power contrcts may be an indication that consistent ownership rues
or laws need to be established in the futue.
The Clark Canyon Facilty is Located in Montana
The Clark Canyon Facilty is not located in Idaho but is seeking a contract contaning
Idaho's published avoided cost rates. The Facilty will be directly connected to Idahô Power's
Peterson substation which is also located in Montaa. A relevant question is whether Clark
Canyon should be entitled to receive Idao's avoided cost rates und6l Idaho's rules and
regulations, or whether the project should be subject to Montaa's rates and rues because the
point of delivery is in Montaa. In general, in order for a facilty located outside Idao to be
eligible for an Idao QF contract, the Commission's policy has been that the QF must either
deliver power directly to a substation located within Idao, or alternatively, thtthe QF must pay
wheeling charges to have the power delivered to an Idao substation. Curently, there are six
facilties located outside Idaho that have PURP A contracts with Idaho utilties at Idao avoided
cost rates, and several others have been proposed.
i An application was fied in Case No. IP~E-i 1*10 on June 17,2011.
STAFF COMMENTS 4 JUE 29, 2011
There are thee prior cases which ar instrctive of the Commission's position on this
mattr. In the first cas, Earth Power Energy and Minerals, Inc. vs. Idaho Power Company, Case
No. IPC-E-92-29. Ear Power proposed to develop a 9.9 MW geothennal project in Nevada that
would deliver power to Idao Power's Humboldt substation in Nevad. Earh Power ha
requested Idaho avoided cost rates and contended that Idao Power was obliged to negotiate a
contract with it in accordace with Idao Commssion rues and requirements. At the time of the
complaint, Idao Power stil served 1200 retail customers in Nevada; consequently, Idaho Power
was subject to the regulatory authority and jursdiction of both the Idaho Commission and the
Nevada Commission. Idaho Power argued. however. that the Idaho Commission lacked
jursdiction over this paricular contract beause both the facilty and the point of interconnection
were located in Nevada. Initially, the Idaho Commssion dismissed the complaint and declined to
exercise its jursdiction because it appeared that the Nevada Commssion intended to do so.
Reference Order No. 25174. However. shortly thereafer. the Nevada Commission dismissed the
complaint becaus it believed tht the Idaho Commission was most capable of setting avoided cost
rates for Idaho Power. Subsequently, the Idaho Commission authorized Ea Power, at its
discretion. to fie a new complaint. However. no complaint wa ever filed. so the mattr was
never fully resolved. Nevereless, what was made clear was that jursdiction under PURP A is
shared by all state regulatory authorities who exercise "ratemaking authority" over
multijursdictional utilities. Reference PURA Section 210.
A second relevant case was Island Power Company, Inc. vs. PacifCorp. Case No.
UPL-E-93-04. Island Power proposed to develop a 4.4 MW hydro project at the Clark Canyon
Dam, coincidentally, a nearly identical facilty at the same exact location as is being proposed in
ths case. One signficant difference, however, was that Island Power proposed to wheel the
power from Montaa to Idaho and deliver to either the Goshen or Jefferson substations both
located in Idaho. At the time of the complaint, PacifiCorp was providing retal electrc service
both in Monta and Idaho. Island Power alleged that PacifiCorp was refusing to acept delivery
of power in Idaho and was refusing to pay Idao avoided cost rates. PacifiCorp indicated that it
was willng to purcliase the power only if it was wheeled nort to a PacifiCorp substation in
Monta and alleged that the Idao Commission had no jursdiction because the project was to be
sited in Montaa. In its decision in the cae. the Commission, as in the Eath Power case, stated
tht jursdiction was shared by all state regulatory autorities who exercise "ratemaking authority"
over the utilty. The Commssion noted tht although the project was to be sited in Montaa, the
STAFF COMMENTS 5 JUE 29. 2011
proposed point of delivery to PacifiCorp was in Idao. The Commission denied a motion to
dismiss fied by PacifiCorp to the complait fied by Island Power for failur to negotiate a
contrct. Shortly afer the Commission issued its decision. an avoided cost case was opened that
resulted in a lowering of avoided cost raes. Island Power's initial complaint then transformed into
a dispute over whether Island Power was entitled to grdfathered rates. The Commission rued
that PacifiCorp wa required to purchase the output of the Clark Canyon project at an Idaho
delivery point, but that Island Power was not entitled to grdfathered rates. Reference Order No.
25245. Island Power, however. never chose to pursue a contract.
A thd relevant case was Vaagen Bros. Lumber, fnc. vs. The Washington Water Power
Company, Case No. WWP-E-94-6. In ths case, Vaagen Brothers had a i 979 power sales
agreement with Washington Water Power (WW) that had expired in 1994. Vaagen Brotherswas
seeking a new contract with WWP as a PURP A QF puruat to the Idao avoided cost
methodology and rates. The facilty was located in WW's service terrtory in the stte of
Washingtn. with a point of interconnection also in Washington. Vaagen Brothers fied a
complaint with the Idao Commssion seeking to force WWP to enter into a contract. WWP had
retal electrc service terrtory in both the state of Washington and Idaho. just as it does now. and
was therefore under the regulatory jursdiction of both the Idao and Washington Commissions.
Under the facts of this case, the Commssion found tht it had concurent jursdicton with
Washington, but believed that the Washington avoided cost rates and rules should apply, subject
to the jursdiction of the Washington Commission. The Commission distinguished this case from
the Ear Power and Island Power cases stating, "Vaagen is an existing facilty sited in the
Washington servce terrtory of the utilty that it wishes to sell to. the Washington Water Power
Compay. The established point of delivery is in the state of Washington." The Commission
fuer stated that the Washington Commssion had established a regulatory framework for
PURA in Washington, and that although Idao did have concurent jursdiction with the
Washington Commission. "common sense dictates tht there are some instaces when we should
elect not to exercise our jursdiction." Subsequent to the Commission's decision, Vaagen Brothers
negotiated a PURPA contract with Idaho Power at Idao's avoided cost rates; however, Vaagen
Brothers pays a wheeling charge to deliver the power to Idao Power's system in Idao.
Clark Canyon is slightly differet th the other thee cases discussed above. Clark
Canyon is a QF located in the state of Monta with a proposed point of interconnection dirctly
to Idao Power's Peterson substation in the stte of Montaa. There would be no different
STAFF COMMENTS 6 JUE 29. 201 i
interconnecting utilty and subsequent wheel of the power in order to reh Idao Power. A
signficant distingushing featue in this case, however, is tht Idao Power has no retal electrc
service terrtory in the state of Montaa; therefore, the Montaa Commission has no reguatory
framework for PURPA that is applicable to Idao Power. NortWestern Energy own
trsmission lines that are immediately adjacent to the proposed Clark Canyon facilty, and
PacifiCorp jointly owns trsmission facilties that are equidistat to Idao Power's transmission
facilties (approximately 11.5 miles away). Nonetheless, as long as it is willng to pay the
necessar interconnection costs, there is nothng that prevents Clark Canyon from choosing which
utiltys tranmission system it wishes to interonnect.
Under these facts, and purt to the dirction provided by the previously discussed
Commission Orders above, Sta believes that that the Idao Commission does, in fact, have sole
jursdiction in this matter, and that Idao Power has an obligation to enter into a PURP A contract
under Idaho's rules, regulations and rates.
RECOMMENDATIONS
Staff recommends that the Firm Energy Sales Agrement between Clark Canyon LLC and
Idao Power be approved as fied. Sta fuer recommends that the Commission declare that all
payments for purchases of energy under the Agreement be allowed as prudently incurd expenses
for ratemakng puroses.
Respectfully submitted this i. ~ It day of June 20 i 1.
¿f;.¿l ~.QAstÃ. Saser --
Deputy Attorney General
Technical Sta: Rick Sterling
i:umisc:commentsipcel 1.9ksrp commnts
STAFF COMMENTS 7 JUE 29, 2011
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THT I HAVE THIS 29TH DAY OF JU 2011.
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. IPC-E-II-09, BY MAILING A COpy THEREOF, POSTAGE PREPAID.
TO THE FOLLOWING:
DONOVAN E WALKER
LEAD COUNSEL
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: dwalker(ßidaopower.com
RANDY C ALLPHIN
ENERGY CONTRCT ADMIN
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: rallphin(ßidahopower.com
~~
SECRETARY:
CERTIFICATE OF SERVICE
Peter J. Richardson (ISB # 3195)
Gregory M. Adams (ISB # 7454)
Richardson & O'Lear, PLLC
515 N. 27th Street
P.O. Box 7218
Boise, Idaho 83702
Telephone: [phone]
Fax: [phone]
peteraYrichardsonandolear.com
gregCirichardsonandolear.com
Attorneys for Complainant
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
GRA VIEW PV SOLAR II, LLC,
Complainant,)
) Case No. IPC-E-II-15
)
) AFFIDAVIT OF ROBERT A. PAUL
)
)
)
)
vs.
IDAHO POWER COMPANY,
Defendant.
EXHIBIT 5.3
REPL Y COMMENTS OF CLARK CANYON
IPC- E-II-09
Peter J. Richardson
ISB No. 3195
Gregory Adams
ISB No. 7454
Richardson & O'Lear, PLLC
515 N. 27th Street
P.O. Box 7218
Boise, Idaho 83702
Telephone: [phone] Tel
Fax: [phone] Fax
peteraYnchardsonandoleary.com
greg(ßrichardsonandoleary .com
Attorneys for Clark Canyon Hydro
RECEIVED
20" JUt -6 PH~: 4 ,
I c~ I~, 1~¡ ()
UTiLITiES
BEFORE TH
IDAHO PUBLIC UTILITIES COMMISSION
IN TH MATTR OF THE APPLICATION OF)
IDAHO POWER COMPANY FOR A ) CASE NO. IPC-E-II-09
DETERMINATION REGARING THE FIR )
ENERGY SALES AGREEMENT WITH ) REPLY COMMNTS
CLAR CANYON, LLC FOR THE SALE AN) OF CLAR CANYON, LLC
PURCHASE OF ELECTRIC ENERGY )
)
)
COMES NOW, Clark Canyon, LLC ("Clark Canyon") and provides it's Reply
Comments to the Comments of the Staff of the Idaho Public Utilties Commission ("Staff") in
the above captioned matter dealing with the Application of the Idaho Power Company
("Company" or "Idaho Power") for approval of a PURP A agreement with Clark Canyon.
i.
SUMMAY
Clark Canyon is appreciative of Staff's review of the Agreement between it and Idaho
Power and respects Staff's duty to thoroughly review the terms and conditions of such
agreements. Neverteless, Clark Canyon is concerned that Staffs Comments addressing the
separate REC ownership agreement it entered into with Idaho Power may reflect a
misunderstanding relative to the Commission's role with respect to RECs. The purose of these
Reply Comments is to provided some context as to why Clark entered a separate REC agreement
and express concern relative to Stas conclusion that "the varety of ownership arangements
demonstrated in recent Idaho Power contracts may be an indication that consistent ownership
rules or laws need to be established in the futue." Staf Comments at p. 4.
II
DISCISSION - THE IDAHO PUBLIC UTILITIES COMMISSION HAS NO JUISDICTION
OVER REC OWNERSHIP
The question of ownership ofRECs was addressed by the Commssion in 2004 in a
docket in which it was asked by Idaho Power to determine the ownership of marketable
environmental attbutes associated with the sale of renewable energy from a PURA qualifying
facility to Idaho Power. See Case No. IPC-E-04-2. In that docket, the Staff fied Comments that
contained an extensive legal analysis of the question of the Commission's jurisdiction to even
address that question, let alone rue in favor of one of the paries to the PURP A agreement then
pending before the Commission for approval. See Comments of the Commission Staff IPC-E-
04-2Id (March 19,2004).
Staffbegan its legal analysis by asking a series of relevant questions:
Staff contends that the initial question before the Commssion is one of jurisdiction.
Does the Commssion have the statutory authonty and jursdiction to determne who
owns the "environmental attibutes" associated with a QF project that requests a PURP A
contract and proposes to sell capacity and energy to a regulated utilty? If PURP A and
FERC rues do not address and do not require a QF developer to sell "environmental
attibutes," to the purchasing utilty can the Commission in its implementation ofPURPA
restrict their sale to other paries? If the Commission has the authority under PUR A,
should it restrict their sale? Can the Commission requie as a PURP A contract condition
that a QF grant a purchasing utilty a "right of first refusal" to purchase the "Green Tags"
associated with the QF facilty?
fd. at pp. 5 - 6.
Reply Comments- IPC-E-I 1-09 2
Sta properly began its analysis of the questions posed by addressing the basic jurisdictional
issue:
It is well settled that the Idaho Commission is a creatue of statute and derives its general
authority vis-à-vis electric utilties from Title 61, Idaho Code. Under State Law, the
Commssion has authority over retal service. Wholesale power transactions are
regulated by the Federal Energy Reguatory Commission (PERC). The Federal Power
Act defies "sale at wholesale" as any sale to a person for resale. 16 U.S.C. § 824(d).
Therefore, all QF sales to an electnc utilty are wholesale transactions.
fd. at p. 6.
Having reached the basic conclusion that PURPA sales are not subject to this Commssion's
jurisdiction, but are in fact subject to the exclusive jurisdiction ofFERC, the Stafs analysis next
tured to what powers federal law, though FERC, has delegated to ths Commission relative to
PURPA:
Under federal authority, i.e., PURPA and the implementing regulations ofFERC, the
Idaho Commssion has the authority to set avoided costs, to order electric utilties to enter
into fixed term obligations for the wholesale purchase of energy from quaifyg facilties
and to implement FERC rues regarding such purchases.
fd. Emphasis provided.
The next question addressed by the Sta in their Comments is the relationship between RECs
and PURP A and the relevant FERC ruings addressing that relationship:
FERC in the Order cited by Idaho Power in its Petition (105 FERC ir 61,004) states that
the contract sale of QF capacity and energy entered into pursuat to PUR A does not
convey renewable energy credits (RECs) to the purchasing utilty (absent an express
provision in the contract to the contrary). FERC notes that RECs are relatively recent
creations of the States and suggested that "States, in creatig RECs, have the power to
determne who owns the REC in the intial instance, and how they may be sold and
traded." "It is not" FERC states, "an issue controlled by PURP A."
fd.
Consistent with Stas recommendations in that case, the Commssion rejected Idaho Power's
request for a right of first refusal and rejected PacifiCorp's and Avista's arguents in that case
Reply Comments- ¡PC-E- I 1-09 3
that the utilities owned the RECs in an Idao PUR A contract. Specifically the Commission
stated:
While this Commission wil not permit (fdaho Power J in its contracting practice to
condition QF contracts on inclusion of such a right-of-frst refusal term, neither do we
preclude the paries from voluntaily negotiating the sale and purchase of such a green tag
should it be perceived to have value. The price of the same we find, however, is not a
PURP A cost and is not recoverable as such by the Company.
Order No. 29480, at pp. 16 - 17 (emphasis provided). The QF's logically own the RECs because
the rates on the avoided costs of a gas-fied power plant do not include compensation for any
social or envionmenta benefits that may be associated with a paricular facilty's generation of
electncity.
It is clear from Stas analysis that there are no RECs created in a PUR A contract with
an investor owned utility in Idao. It is also clear that if RECs exist at all, one must tu to state
law to discern how and whether they exist and who owns them. Stas analysis of the status of
RECs in Idaho was directly on point:
Staff notes that Idaho is not a State that has established a renewable energy portfolio
standard for electnc utilties. Nor is it a State that has by legislation created green
certificates, green tags, renewable energy credits (RCs) or tradable renewable
certficates (TRCs) or established a market for the same. Nor also is Idaho presently a
state that has provided tax incentives or credits for the developnient of renewable energy.
(footnote on pending ta legislation omitted) In short, there appears to Sta to be no
hook that gives the Commssion jursdiction over "environmenta attbutes," not under
PUR A or federal law (including the Energy Policies Act of 1992), and not under Title
61 of the Idaho Code.
fd. at pp 6 - 7. Emphasis provided.
Staf was unequivocal in its conclusion that the Commission has no subject matter
jurisdiction over the question of REC ownership. Instrctive to the Coniission as it
contemplates Staffs curent comments on REC ownership is Staffs 2004 observation on Idaho
Reply Comments - IPC-E-II-09 4
Power's attempt to build. a fight of first refusal to REC ownership in PUR A contracts approved
by this Commssion:
Arguably what Idaho Power proposes is an impermssible "tang" of propert. The Fift
Amendment of the U.S. Constitution states, "nor shall private propert be taken for
public use without just compensation." This provision is called the "tangs clause."
Idaho Power requests a Commission Order granting the utilty by regulatory fiat a "nght
of first refusal." It proposes no compensation to the QF for the right. Electnc utilty
purchases of energy and capacity from PURP A QFs are mandatory. (citation omitted)
The environmental attbutes associated with renewable QF projects are curently
separate from the capacity and energy sold to Idaho utilties. They are not bundled
together as a matter of law. Nor is the cost to purchase environmental attbutes included
in an Idaho utilty's avoided cost. To the extent those attibutes have value and provide
additional developer incentive, Staff believes they should remain with the developer. At
ths time, no arguent has been advanced nor authonty cited to justify or require placing
any regulatory restriction by ths Commission on their ownership.
fd. at p. 8.
Stas comments are as apropos today as they were in 2004. Indeed, the Idaho Legislatue has
clearly established a state policy against the concept of a mandatory renewable portfolio stadard
- which is arguably the only state policy upon which one could conjure up an arguent that
RECs belong to the utilities in the PUR A context. In 2007, the Idaho Legislatue adopted the
Idaho State Energy Plan which unequivocally rejects the concept of a mandate that utilties
acquire renewable energy sources:
Whle the Committee endorses renewable resources in general because of the many
benefits they provide, it declines to adopt specific tagets or standards out of concern that
setting arbitrar tagets could confict with the goals of maintaining Idaho's low-cost
energy supply and ensurng access to affordable energy for all Idahoans. The Commttee
is also concerned that adopting firm tagets may not provide sufficient flexibilty for
Idaho energy providers given the rapid development of new energy technologies.
2007 Idao Energy Plan, (Janua 19,2007).
Thus, the Idaho Legislatue has provided the Commission with policy guidance to the effect that
there be no mandated renewable portfolio stadard and that Idaho's utilties have no obligation
to, per se, acquire renewable energy.
Reply Comments - IPC-E- 1l-09 5
CLAR CANYON, LLC'S REC EXPERIENCE WITH IDAHO POWER
Clark Canyon voluntaly gave up ownership of its RECs durg the last ten years of the
curently pending power purchase agreement for the sole reason that it was under extreme time
pressure to execute the agreement for fiancing and other external reasons. It has been Clark
Canyon's position, consistent with the Stas comments cited above, that it owned and will own
all RECs associated with renewable projects it develops in Idaho uness it voluntaly gives or
sells those RECs to another par. Idaho Power improperly insisted on contract language that
would have put a cloud on the marketability of RECs. Clark Canyon did not have the resources
or the luxury of time to engage in protracted negotiations and possible litigation against Idaho
Power to prevent the power company's "taking" of the value of Clark Canyon' RECs. As a
result of a compromise, and in exchange for removing the offending languge, Clark Canyon
agreed to give Idaho power clear title to all RECs beginng in year eleven of ths twenty year
contract while retaning clear title in years one though ten.
Sta s comments that perhaps, "ownership rues or laws need to be established in the
future" are, for all of the foregoing reasons, off the mark. Ownership rues and laws are
unecessar in light of the fact that REC ownership unequivocally and legally lies with the
renewable energy developer. Franly, what is needed is for Idaho Power to cease flexing its
unequal bargaining strengt vis-a-vis QF developers and stop insisting on a cut of the action for
which it refuses to pay and for which it has no legal claim.
CONCLUSION
Clark Canyon, LLC urges the Commssion to approve its Power Purchase Agreement
with Idaho Power as quickly as possible and without reservation. Whle appreciative of Sta s
concern with regard to Idaho Power's having engaged in a "varety of (RC) ownership
. Reply Comments - ¡PC-E- I 1-09 6
arangements," the solution is for the Commssion to direct Idaho Power to retu to the status
quo ante in which "in al prior Idaho Power PUR A contracts in which RECs are produced by a
project, Idao power has voluntaily waived any nght or clai to ownership ofRECs and 100
percent of theRECs have been claied by project owners." Staf Comments at p. 3; see Order
No. 29577.
RESPECTFULLY SUBMITTED THIS 6th day of July 2011.
Richardson & O'Lear, LLP
Byß(~
Peter J. Richardson
Clark Canyon, LLC
Reply Comments - !PC-E- 11.09 7
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 7th day of June, 2011, a tre and correct copy of the
withn and foregoing REPLY COMMENTS OF CLAR COUNTY HYDRO, LLC, was served
in the maner shown to:
Ms. Jean Jewell
Commssion Secreta
Idaho Public Utiities Commssion
POBox83720
Boise, il 83720-0074
X Hand Delivery
_ U.S. Mail, postage pre-paid
Facsimile
Electronic Mail
Donovan E Walker
Idaho Power Company
POBox 70
Boise, Idaho 83707-0070
dwalkerrfidahopower .com
_ Hand Delivery
X U.S. Mail, postage pre-paid
Facsimile
Electronic Mail
Lisa Grow
Vice President, Power Supply
Idaho Power Company
PO Box 70
Boise il 83707-0070
Igrowrfidahopower .com
_ Hand Delivery
XU.S. Mail, postage pre-paid
Facsimile
Electronic Mail
Randy Allphin
Cogeneration & Small Power Development
Idaho Power Company
POBox 70
Boise ID 83707-0070
_ Hand Delivery
XU.S. Mail, postage pre-paid
Facsimile
Electronic Mail
~Cus
Nina Curis
Admstrative Assistat
Peter J. Richardson (ISB # 3195)
Gregory M. Adams (ISB # 7454)
Richardson & O'Lear, PLLC
515 N. 27th Street
P.O. Box 7218
Boise, Idaho 83702
Telephone: [phone]
Fax: [phone]
peteraYnchardsonandolear.com
gregaYrichardsonandolear.com
Attorneys for Complainant
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
GRA VIEW PVSOLAR II, LLC,
Complainant,
)
) Case No. IPC-E-II-15
)
) AFFIDAVIT OF ROBERT A. PAUL
)
)
)
)
vs.
IDAHO POWER COMPANY,
Defendant.
EXHIBIT 5.4
IDAHO POWER RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF
IPC- E-II-09
(
\"
RECEIVED
201\ JUN 23 PM I.: S2
I!IDA~POR~
An IDACORP company
DONOVAN E. WALKER
Lead Counsel
dwalker~idahopower.com
If'. r, ¡.. n p." ¡(.:;L. ,~; ,. lJhi' v . ,~,~~."." ¡ t':,:in H
lJ-I~ILI'fl'"'C: r.i )1"I.J.¡¡V"", ....." 11;_"'_.' \~.- '._'
June 23, 2011
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilties Commission
472 West Washington Street
P.O. Box 83720
Boise, Idaho 83720-0074
Re: Case No. IPC-E-11-09
IN THE MATTER OF THE APPLICA TlON OF IDAHO POWER COMPANY
FOR A DETERMINATION REGARDING THE FIRM ENERGY SALES
AGREEMENT WITH CLARK CANYON, LLCi FOR THE SALE AND
PURCHASE OF ELECTRIC ENERGY
Dear Ms. Jewell:
Enclosed for filing please find an original and three (3) copies of Idaho Power
Company's Response to the First Production Request of the Commission Staff to Idaho
Power Company in the above matter.
1¿¡~
Donovan E. Walker
DEW:csb
Enclosures
1221 W.ldaho St. (83702)
P.O. Box 70
Boise, ID 83707
DONOVAN E. WALKER (ISB No. 5921)
JASON B. WILLIAMS
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
dwalker(ëidahopower.com
jwilliams(ëidahopower.com
RECEIVED
20r I JUH 23 PM~: 52
ir)ArfC~ .Pij f.'i. ¡(:
UTILITIES COÌ'M¡ŠSION
Attorneys for Idaho Power Company
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 WITH )
CLARK CANYON, LLC, FOR THE SALE )
AND PURCHASE OF ELECTRIC ENERGY. )
)
)
)
CASE NO. IPC-E-11-09
IDAHO POWER COMPANY'S
RESPONSE TO THE FIRST
PRODUCTION REQUEST OF
THE COMMISSION STAFF TO
IDAHO POWER COMPANY
COMES NOW, Idaho Power Company ("Idaho Powet' or "Company"), and in
response to the First Production Request of the Commission Staff to Idaho Power
Company dated June 2, 2011, herewith submits the following information:
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 1
REQUEST NO.1: Please provide a copy of the Environmental Attributes
agreement between Idaho Power and Clark Canyon LLC referred to in Section 8.1 of
the Firm Energy Sales Agreement.
RESPONSE TO REQUEST NO.1: Please see the attached Agreement for
Transfer of Ownership of Environmental Attributes.
The response to this Request was prepared by Donovan E. Walker, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 2
REQUEST NO.2: This Firm Energy Sales Agreement appears to be the first for
Idaho Power in which a separate agreement has been executed concerning
Environmental Attributes. Please explain why a separate agreement for Environmental
Attributes was executed. Please generally describe the ownership arrangement and
financial considerations between the parties as reflected in the Environmental Attributes
agreement.
RESPONSE TO REQUEST NO.2: With regard to Environmental Attributes, or
Renewable Energy Certificates ("RECs"), and Public Utilty Regulatory Policies Act of
1978 ("PURPA") contracts, the Commission has stated, "The utilty and the QFs are free
to voluntarily contract and negotiate the sale and purchase of such green tags should
environmental attributes be perceived by the contracting parties to have value. The
price of the same we find, however, is not a PURPA cost and is not recoverable as such
by the Company." Case No. IPC-E-04-16, Order No. 29577, p. 6. Idaho Power initially
proposed reservation of rights language for the contract that would preserve for Idaho
Power and its customers the right in this contract should the rules, regulations, laws, or
legal status as to the ownership of RECs in PURPA contracts be clarified or changed to
abide by such change in law. As an alternative to this reservation of rights, the parties
saw a mutual value to both the project and to Idaho Power and its customers in
clarifying the ownership of RECs and negotiated the separate agreement whereby the
project retains all RECs for the first ten years of the contract and Idaho Power owns all
RECs for the last ten years of the contract. There is no monetary payment for RECs in
the agreement. The project receives clarification as to ownership and retains RECs for
the first ten years to obtain what value it can to help offset development costs, etc.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 3
Furthermore, Idaho Power and its customers receive clarification as to the ownership
and get ownership of all RECs for the last ten years to either obtain what value it can for
the RECs, which flows back to customers, or retire such RECs in order to claim the
environment attributes of the energy on its system or to meet possible future renewable
portolio standards. A separate agreement was executed, as opposed to including all
terms and conditions within the PURPA agreement, because that was the preference of
the project.
The response to this Request was prepared by Donovan E. Walker, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 4
REQUEST NO.3: Please provide a map showing the location of the proposed
point of interconnection (Peterson substation) in relation to the location of the Clark
Canyon facilty and any other utilty substations and transmission facilities of 69 kV and
higher. Please clearly identify those facilties owned by Idaho Power and those owned
by other utilties.
RESPONSE TO REQUEST NO.3: The requested map is attached hereto.
Please note that north is to the top of the map. The solid colored lines running off the
map to the west from Bannock and Peterson are Idaho Power lines. The dashed lines
are owned by other utilties. The purple dashed line, furthest to the east, as well as the
dashed pink line running between Bannock and the purple dashed line on this map are
Northwestern lines. The orange dashed line is the AMPS line, owned by. Northwestern
and PacifiCorp. Clark Canyon has proposed to build its own line from its project to
interconnect with Idaho Power at Idaho Power's Peterson substation.
The information in the response to this Request was prepared by Jared Hansen,
Engineer II, T&D Planning, Idaho Power Company, in consultation with Donovan E.
Walker, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 5
REQUEST NO.4: Please provide a copy of the transmission feasibilty study
and any other transmission studies completed for this project.
RESPONSE TO REQUEST NO.4: A copy of the Feasibilty Study Report is
attached hereto. No System Impact Study was needed. The Facility Study is underway
and is due from Idaho Power by July 22, 2011.
The response to this Request was prepared by Donovan E. Walker, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 6
REQUEST NO.5: Reference the following prior Commission Cases and
associated Orders:
IPC-E-92-29 Earth Power Energy and Minerals, Inc. vs. Idaho Power
Company; Order Nos. 25174, 25249
UPL-E-93-4 Island Power Company, Inc. vs. PacifiCorp, dba Utah Power
& Light Company; Order Nos. 25245, 25528
WWP-E-94-6 Vaagen Bros. Lumber, Inc. vs. The Washington Water
Power Company; Order No. 25176
Please discuss whether Idaho Power considered any of these cases and orders
in determining whether:
a. The Idaho Commission has jurisdictional authority to approve a PURPA
agreement for a facilty not located in Idaho and not delivering power to an substation
located in Idaho, and
b. Whether Clark Canyon is entitled to published avoided cost rates in Idaho
when the facilty is not located in Idaho and does not deliver power to a substation
located in Idaho.
RESPONSE TO REQUEST NO.5: The cases cited above establish that the
Idaho Public Utilties Commission ("Commission") has jurisdictional authority over
PURPA matters beyond the borders of the state of Idaho. The Commission has
established that it has federally derived jurisdiction pursuant to PURPA over any utilty
that it has ratemaking authority over. Additionally, the Commission has stated that this
federally derived jurisdiction over a multi-state utilty may exist concurrently with other
state regulatory authorities that also have ratemaking authority over the utilty. Through
the cases cited above, the Commission has discussed certain circumstances where it
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 7
determines whether it wil elect to exercise that jurisdiction or not. Idaho Power believes
these cases result in the simplest answer to both a. and b. above being "yes."
The Earth Power case, IPC-E-92-29, Order Nos. 25174 and 25249, concerned a
project and interconnection located in the state of Nevada attempting to enter into a
PURPA contract with Idaho Power pursuant to the Idaho Commission's rules,
regulations, and rates for PURPA Qualifying Facilties ("QFs"). At that time, Idaho
Power had retail electric service territory in both the state of Idaho and Nevada, and
was under the regulatory jurisdiction of both the Idaho and Nevada Commissions. The
Idaho Commission stated that it had concurrent jurisdiction with the Nevada
Commission, and initially declined to exercise such jurisdiction and deferred to the
Nevada Commission. The Commission discussed that its PURPA jurisdiction is derived
from federal law, which is not bounded by geographic limits. The Commission also
referenced the series of four different Idaho Supreme Court Afton Energy cases as
support for its decision. Order No. 25174 at p. 7, citing Afton Energy, Inc., v. Idaho
Power Co., 107 Idaho 781, 693 P.2d 427 (1984); 111 Idaho 925, 729 P.2d 400 (1986);
114 Idaho 852, 761 P.2d 1204 (1988); 122 Idaho 333, 834, P.2d 850 (1992). Noting
Afton's location in the state of Wyoming, the Commission stated:
The circumstances were different in Afton as compared to
Earth Power because Idaho Power Company did not have a
service territory in Wyoming that was regulated by the
Wyoming Public Service Commission. Therefore, the
Wyoming Commission did not have the jurisdiction conferred
by PURPA. This distinction does not relate to the question
whether we have jurisdiction. However, it did mean that
there could be no issue of whether we should exercise our
jurisdiction in that case.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 8
Both parties agree, and we concur, that the Nevada Public
Service Commission has jurisdiction concurrent with ours to
determine the rates for the Earth Power project and to
resolve disputes between the parties. Our record shows that
the Nevada PSC is actively asserting its jurisdiction. In this
circumstance, when a project is located within another state
and when the commission in that state is exercising the
jurisdiction conferred upon it by PURPA, we find that we
should decline to assert our jurisdiction. In circumstances
such as these we wil assert our jurisdiction only if the
commission of the other state declined for some reason to
exercise its jurisdiction. We also emphasize that we wil not
be a forum for relitigation of issues ultimately decided by the
Nevada PSC. We wil not entertain requests that we
second-guess the decision of another commission.
Order No. 25174, pp. 7-8 (emphasis in original). Upon the Nevada Commission's
subsequent dismissal of Earth Powets pending case before it and its deferral to the
Idaho Commission, Idaho chose to then exercise its jurisdiction.
The Island Power case, UPL-E-93-4, Order Nos. 25245 and 25528, concerned a
Montana OF proposing to sell its output to PacifiCorp ("UP&L") pursuant to the Idaho
Commission's rules, regulations, and rates for PURPA OFs. Similar to the facts in Earth
Power, UP&L had retail electric service territory in both the state of Montana and Idaho,
and was under the regulatory jurisdiction of both the Idaho and Montana Commissions.
However, unlike Earth Power, Island Power proposed to wheel its output from Montana
to either the Jefferson or Goshen substations, and make delivery to UP&L inside the
state of Idaho. The Idaho Commission found that it had jurisdiction, and under these
facts, that it would exercise such jurisdiction to require UP&L to contract with the OF
pursuant to Idaho rules, regulations, and rates. The Commission stated that it found it
reasonable to exercise its jurisdiction in this matter because, although the project is
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 9
sited in Montana, the proposed point of delivery to UP&L is in Idaho where the Idaho
Commission has established avoided cost rates for UP&L.
The Vaagen Brothers case, WWP-E-94-6, concerned a OF project located in the
state of Washington, with an interconnection to Washington Water Power ("WWP") in
the state of Washington. Vaagen Brothers had a 1979 power sales agreement with
WWP that had expired in 1994. Vaagen Brothers filed a complaint with the Idaho
Commission seeking a contract with WWP pursuant to the Idaho avoided cost
methodology and rates. WWP had retail electric service territory in both the state of
Washington and Idaho, and was under the regulatory jurisdiction of both the Idaho and
Washington Commissions. Under the facts of this case, the Commission found that it
had concurrent jurisdiction with Washington, but that it would decline to exercise such
jurisdiction and defer to Washington. The Commission distinguished this case from the
Earth Power and Island Power cases stating, "Vaagen is an existing facilty sited in the
Washington service territory of the utilty that it wishes to sell to, the Washington Water
Power Company. The established point of delivery is in the state of Washington." The
Commission further stated that the Washington Commission had established a
regulatory framework for PURPA in Washington, and that although Idaho did have
concurrent jurisdiction with the Washington Commission, "common sense dictates that
there are some instances when we should elect not to exercise our jurisdiction."
Clark Canyon is somewhat different than the other three cases discussed above.
Clark Canyon is a OF located in the state of Montana with a point of interconnection to
Idaho Power's facilties in the state of Montana. However, Idaho Power has no retail
electric service territory in the state of Montana and therefore the Montana Commission
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY -10
has no regulatory framework for PURPA that is applicable to Idaho Power. Clark
Canyon is delivering its power to Idaho Power's facilty at Idaho Power's Peterson
substation, where it directly interconnects with Idaho Power. Although Idaho Power's
Peterson substation is located in the state of Montana, there is not a different
interconnecting utilty and subsequent wheel of the power in order to reach Idaho
Power. Under these facts, and pursuant to the direction provided by the previously
discussed Commission Orders above, Idaho Power is of the opinion that the Idaho
Commission would find that it has jurisdiction in this matter and, additionally, that it
would choose to exercise that jurisdiction to require a PURPA contract under Idaho's
rules, regulations, and rates applicable to PURPA.
The response to this Request was prepared by Donovan E. Walker, Lead
Counsel, Idaho Power Company.
DATED at Boise, Idaho, this 23'" ~1f ~
DONOVAN E. WALKER
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 11
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 23rd day of June 2011 I served a true and
correct copy of the within and foregoing IDAHO POWER COMPANY'S RESPONSE TO
THE FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO
POWER COMPANY upon the following named parties by the method indicated below,
and addressed to the following:
Commission Staff
Kristine A. Sasser
Deputy Attorney General
Idaho Public Utilties Commission
472 West Washington
P.O. Box 83720
Boise, Idaho 83720-0074
Clark Canyon, LLC
Kim L. Johnson
Executive Vice President, Business
Development
Clark Canyon Hydro, LLC
c/o Symbiotics, LLC
2000 South Ocean Boulevard #703
DelRay Beach, Florida 33438
Peter J. Richardson
Gregory M. Adams
RICHARDSON & O'LEARY, PLLC
515 North 27th Street
P.O. Box 7218
Boise, Idaho 83702
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email Kris.Sasser(Çpuc.idaho.gov
Hand Delivered
-- U.S. Mail
_Overnight Mail
FAX
-- Email kim.johnsoncariverbankpower.com
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email petercarichardsonandoleary.com¿;;;~m
Donovan E. Walker
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY -12
BEFORE THE
.IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-11-09
'IDAHO POWER COMPANY
RESPONSE TO STAFF'S P.RODUCTION
REQUEST NO. 1
AGREEMENT FOR TRANSFER OF OWNRSHIP OF ENVIRONMENTAL ATTRffUTES
This Agreement for Transfer of Ownership of Envionmental Attbutes ("Agreement") is
entered into this -2dayof &v ,201 I, between Clark Canyon, LLC, an Idaho. Limitedi
Liabilty Company, ("Clark Canyon") and Idaho Power Company, an Idaho corporation
("Idaho Power" or "Company"), hereinafter sometimes refered to collectively as the "Pares" or
individually as a "Pary."
WITNSSETH:
WHEREAS, Clark Canyon is the owner and operator of a to-be-built 4.7 megawatt
("MW") small hydro generation project.
WHEREAS, the Pares entered into that cerain Firm Energy Sales Agreement between
Clark Canyon, LLC and Idaho Power Company dated Ala-v:l , 2011 whereby IdahQi
Power would purchase the energy output of the Facilty.
WHEREAS, the FESA Aricle 8 specifies that ownership of Environmental Attbutes is
detenined by a separate agreement;
WHEREAS, the Paries desire to enter into ths Agreement to transfer the ownership of
the Environmental Attbutes that result from electc generation at the Facilty begiing in
Contract Year eleven (11) of the FESA.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
Paries agree as follows:
1. Definitions. The following term as used in this Agreement shall be defined as
follows:
I
1.1. "Environmental Attbutes" meas any and all credits, benefis, emissions
reductions, offsets, and allowances, howsoever entitled, attrbutable to the generation
from the Fací1ty, and its avoided emssion of pollutants. Environmental Attnbutes
include but ar not limited to: (1) any avoided emission of pollutats to the air, soil or
water such as sulfu oxides (SOx), nitrogen oxides (NOx), carbon monoxide (CO) and
other pollutants; (2) any avoided emissions of cabon dioxide (C02), methane (CH4),
nitrous oxide, hydrofluorocabons, perfluorocarbons, sulfur hexafluoride and other
greenhouse gases (GHGs) that have been deterined by the United Nations
Intergoverental Panel on Climate Change, or otherse by law, to contrbute to the
actual or potential theat of alterng the Earh's climate by trapping heat in the
atmosphere; (3) the reporting nghts to these avoided emissions, such as and without
limitation, REC (as that ter is defined herein) reportng rights. REC reportng rights are
the right of a REC owner or purchaser to report the ownership of accumulated RECs in
compliance with federal or state law, if applicable, and to a federal or state agency or any
other pary at the REC owner's/purchaser's discretion, and includes, without limitation,
those REC reporting rights accruing under Section l605(b) of The Energy Policy Act of
1992 and any present or future federal, state, or 10cal law, reguation or bil, and
international or foreign emissions trading program. Environmental Attnbutes are
accumulated on a MW basis and one REC represents the Environmental Attnbutes
associated with one (1) megawatt hour ("MWh) of energy. Environmental Attnbutes do
not include (i) any energy, capacity, reliabí1ty or other power attbutes from the Facílity,
(ii) production tax credits associated with the constrction or operation of the Facílty and
other fiancial incentives in the form of credits, reductions, or allowances associated with
2
the Facilty that are applicable to a state or federal income taxation obligation, (iii) the
cash grant in lieu of the investment tax credit pursuant to Section 1603 of the Amencan
Recover and Reinvestment Act of 2009, or (iv) emission reduction credits encumbered
or used by the Facilty for compliance with local, state, or federal operating and/or air
quality perits.
1.2. "Contract Year" shall have the same meaning as defined in the FESA.
1.3. "Facilty" shall have the same meaning as defined in the FESA.
1.4. "Renewable Energy Cerificate" or "REC" means a cerficate, renewable
energy credit or any other credit, allowance, Green Tag, or other transferable indicia,
howsoever entitled, indicating generation of all renewable energy by the Facilty, as
deterned by any and all federal and/or state law or reguation, and includes alI
Environmental Attbutes ansing as a result of the generation of electncity by the
Facility. One REC represents the Environmental Attbutes associated with the
generation of one thousand (1,000) kWh of Net Energy (as that term is defined in the
FESA).
2. For good and valuable consideration receipt of which the Paries hereby
acknowledge, Clark Canyon agrees to transfer to Idaho Power ownerhip of all Environmental
Attbutes associated with the Facility beginnng with the first hour of the first day of the 11th
Contract Year and for the remaining ter of the FESA.
3. Environmental Attnbute Accountig and Transfers. The Pares shal cooperate to
ensure that all Environmental Attbute cerfications, nghts and reportng requirements are
created, maintained and completed by the responsible Pares.
3
3.1. Accounting for Environmenta Attbutes. Each Par, at its sole expense,
will be responsible to establish and maintai a Western Renewable Energy Generation
Information System ("WRGIS") account or other Environmental Attrbute account
and/or tracking and reportng system that enables the Environmental Attrbutes associated
with the Facilty to be created, cerfied, validated, tranfered and reported.
3.2. Transfer of Ownerhip Rights to Idaho Power. For the term of the FESA,
the Pares shall cooperate, provide furter assurances, and take alI necessar
commercially reasonable actions to document, record, create, effect and enable the
transfer of the Environmental Attrbutes associated with the Facilty to Idaho Power's
WREGIS account or any other Environment Attbute accounting and trackig system
selected by the Paries.
3.3. Ownership Rights. Each Par shall report under Section 1605(b) of the
Energy Policy Act of 1992 or under any applicable program only the Environmental
Attbutes that such Par own, and shall at all other times refrain from reorting the
Environmental Attbutes owned by the other Party.
3.4 Right of Peaceful Ownership: Neither Pary will cause or suffer to be
caused any petition, litigation, action, proceeding or cause, whether before courts,
commissions, legislative bodies, trbunals, councils or any other place that would have
the effect or purose to take away or diminish the value of the other's ownership of the
Envionmental Attbutes.
4. Facilty Operation. Clark Canyon shall operate the Facility pursuant to
commercially reasonable business practices and prudent utility practice so as to not jeopardize
the current or futue Environmental Attrbutes created by the Facilty.
4
5. Miscellaneous.
5.1. Several Obligations. Excet where specifically stated in this Agreement
to be otherwise, the duties, obligations and liabilties of the Pares are to be sever and
not joint or collective. Nothing contained in this Agreement shall ever be constred to
create an association, trst, parerhip or joint ventue or impose a trst or parerhip
duty, obligation or liability on or with regard to either Pary. Each Pary shall be
individually and severally liable for its own obligations under ths Agreement.
5.2. Waiver. Any waiver at any time by either Par of its nght with respect to
a default under this Agreement or with respect to any other matters ansing in connection
with this Agreement shall not be deemed a waiver with respect to any subsequent default
or other matter.
5.3. Choice of Law and Venue. This Agreement shall be consted and
interreted in accordance with the laws of the State of Idaho without reference to its
choice of law provisions. Venue for any litigation ansing out of or related to this
Agreement wil be in the Distrct Cour of The Four Judicial Distrct ofIdao in and for
the County of Ada.
5.4. Default. If either Pary fails to pedorm any of the ters or conditions of
this Agreement (an "Event of Default"), the non-defaulting Pary shall cause notice in
wnting to be given to the defaulting Pary, specifyng the maner in which such default
occurred. Ifthe defaulting Party shall fail to cure such default withn sixty (60) days after
serce of such notice, or if the defaulting Pary reasonably demonstrates to the other
pary the default can be cured within a commercially reasonable time but not withi such
sixty (60) day penod and then fails to diligently pursue such cure, then, the
5
non-defaulting Pary may, at its option, terinate this Agreement and/or pursue its legal
or equitable remedies.
5.5. Successors and Assigns. Ths Agreement and all of the ters and
provision hereof shall be binding upon and inure to the benefit of the respective
successors and assign of the Pares hero, excet that no assignent hereof by either
pary shall become effective without the wrtten consent of both Pares being fist
obtaied. Such consent shall not be uneasonably witheld. Notwithstading the
foregoing, any pary which Idaho Power may consolidate, or into which it may merge, or
to which it may conveyor tranfer substantially alI of its electrc utilty assets, shal
automatically, without fuer act and without need of consent or approval by Clark
Canyon, succee to all of Idaho Power's nghts, obligations and interests under this
Agreement.
5.6. Modification. No modification to this Agreement shall be valid uness it
is in wnting and signed by both Pares and subsequently approved by the Commission.
5.7. Notices. All written notices under this Agreement wil be directed as
follows and shall be considered delivered when faxed, emailed and confirmed with
deposit in the U. S. Mail, first class, postage prepaid, as follows:
6
...
To Clark Canyon:
Onginal document to:
Clark Canyon Hydr, LLC
C/O Symbiotics, LLC
Kim Johnson
2000 S. Ocean Blvd #703
DelRay Beach, Florida 33438
Telephone:[phone]
E-mail: vince.1amar(fsymbioticsenergy.com
E-mail copy:kim.johnsonafverbankower.com
To Idaho Power:
Ongínal docuent to:
Vice President, Power Supply
Idaho Power Company
POBox 70
Boise, Idaho 83707
Email: Lgrow~dahopower.com
Copy of document to:
Cogeneration and Small Power Production
idaho Power Company
POBox 70
Boise, Idaho 83707
E-mail: rallphinßYidahopower.com
5.8. Severability. The invalidity or unenforceability of any term or provision
of this Agreement shall not affect the validity or enforceabilty of any other ters or
provision and this Agreement shall be constred in all other respects as if the invalid or
unenforceable ter or provision were omitted.
7
II,
5.9. Counterars. Ths Agreeent may be executed in two or more
counterars, each of which shal deeed an origial but alI of which together shall
constitutes one and the same instrment.
5.10. Entire Agreement. Unless otherse provided for herein, this Agreement
constitutes the entire Agreement of the Parties concering the subject matter hereof and
supersedes all pnor or contemporaneous oral or wrtten agreements between the Paries
concering the subject matter hereof
IN WITNESS WHEREOF, The Paries hereto have caused this Agreement to be
executed in their respective names on the dates set forth below:
Idaho Power Company Clark Canyon, LLC.
By
F Gli~~A)
Sr. Vice President, Power Supply
Dated 5-2-0-/1 Dated t;- 18- "
"Idaho Powef'"Seller"
8