20120924Reply in Support.pdf

RECE!VED
2012 SEP 24 PM 4 1 00

ATTORNEY AT LAW
Tel: ?fl )38 9I1fl Fax: [phone]
P.O Box 7218 Bote, 10 83707 - 5 7 5N. 27th St. Boise, D 83702 UTLtT1E3 O0MMSiON
24 September 2012
Ms. Jean Jewell
Commission Secretary
Idaho Public Utilities Commission
472 W. Washington
Boise, ID 83702
RE: IPC-E-11-23
Dear Ms. Jewell:
Enclosed please find Kootenai Electric Cooperative, Inc.'s Reply in
Support of Motion to Supplement the Record submitted for filing in
the above-referenced docket. We have enclosed seven (7) copies, as well
as an additional copy for you to stamp for our records.
Sincerely,
Nina Curtis, Administrative Assistant to Greg Adams
Richardson & O'Leary PLLC
end.
RECEIVED
Peter J. Richardson (ISB # 3195)
Gregory M. Adams (ISB # 7454)
Richardson & O'Leary, PLLC
515 N. 27' Street
P.O. Box 7218
Boise, Idaho 83702
Telephone: [phone]
Fax: [phone]
[e-mail]
[e-mail]
Attorneys for Kootenai Electric Cooperative, Inc.
'1012 SEP 24 PM 4: 0 0
3AhC' PJJ 11E8 COMM1S0
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-11-23
IN THE MATTER OF IDAHO POWER

) KOOTENAI ELECTRIC
COMPANY'S PETITION FOR
) COOPERATIVE, INC.'S
DECLARATORY ORDER REGARDING REPLY IN SUPPORT OF MOTION TO
PURPA JURISDICTION. SUPPLEMENT THE RECORD
)
)
)
I. INTRODUCTION
Kootenai Electric Cooperative, Inc. ("Kootenai") hereby respectfully requests that
the Idaho Public Utilities Commission ("IPUC" or "Commission") accept and consider
this Reply in Support of Kootenai' s Motion to Supplement the Record. Kootenai
requests that the Commission accept this Reply because Idaho Power's Response to
Kootenai's Motion to Supplement the Record has triggered the need to clarify the record
and remind the IPUC that granting Idaho Power's request would violate the U.S.
Constitution. In its Response, Idaho Power argues that the Federal Energy Regulatory
REPLY IN SUPPORT OF MOTION TO SUPPLEMENT THE RECORD
IPC-E-1 1-23
PAGE - i
Commission's ("FERC") decision regarding point-tpoint transmission service across the
Oregon-Idaho state line that will occur prior to the sale of electricity to Idaho Power is
irrelevant to this matter. Then, Idaho Power misconstrues the FERC decision as
somehow endorsing Idaho Power's view that Kootenai cannot secure point-to-point
transmission service beyond Avista's Lolo Substation. In essence, Idaho Power proposes
a rule whereby Idaho qualifying facilities ("QFs") cannot sell to Idaho Power in Oregon
if their electricity first enters Idaho Power's control area at a location in Idaho— or worse
yet prohibits an out-of-state sale to Idaho Power by any QF located in Idaho. The IPUC
should not adopt such a rule because inserting itself as a barrier to an Idaho QF's access
to rates, terms and conditions available for QFs in a neighboring state would violate the
Dormant Commerce Clause of the U.S. Constitution.
II. ARGUMENT
The Dormant Commerce Clause prohibits states from impeding the free flow of
interstate commerce and prohibits states from hoarding resources by prohibiting the sale
of goods out-of-state. See Kootenai 's Answer and Motion to Dismiss at 19-22 (Nov. 25,
2011) (citing C&A Carbone, Inc. v. Town of Clarkstown, New York, 511 U.S. 383, 390-
95 (1994); South Central Timber Development, Inc. v. Wunnicke, 467 U.S. 82, 100
(1984); New England Power Co. v. New Hampshire, 455 U.S. 331, 339 (1982)). In yet
another case decided since the filing of Kootenai' s Answer, a federal court held that
California improperly implemented a regulatory scheme for carbon intensity of fuels that
regulated activities beyond its borders. Rocky Mountain Farmer's Union v. Goldstene, --
- F.Supp. -----, 2011 WL 6934797 at ** 12-14 (E.D. Cal., Dec. 29, 2011). The
Commerce Clause precludes a state from regulating commerce that takes place outside of
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IPC-E- 11-23
PAGE-2
the state's borders, whether or not the commerce has effects within the state. Id. (citing
cases). A state may not "force a merchant to seek regulatory approval in one State before
undertaking a transaction in another." Id. at * 14 (quoting Brown—Forman Distillers
Corp. v. New York State Liquor Auth., 476 U.S. 573, 579 (1986)).
In this case, Idaho Power openly acknowledges that the issue is "whether the
Idaho Commission has primary jurisdiction over a QF located in Idaho proposing to
wheel power across state lines." Idaho Power's Response to Kootenai 'S Motion to
Supplement the Record at 2. Idaho Power then asks the IPUC to control conduct beyond
Idaho's border - a sale of electricity occurring in the state of Oregon pursuant to the
Public Utility Commission of Oregon's ("OPUC") implementation of the Public Utility
Regulatory Policies Act of 1978 ("PURPA") and Oregon's related policies regarding
ownership of non-energy environmental attributes of generation of the electricity. Idaho
Power's proposed rule would prohibit Idaho QFs selling to Idaho Power from utilizing
the rules and terms available for sales in Oregon, without regard to the location to which
the QF actually pays to deliver the electricity for sale. This rule would violate the
Dormant Commerce Clause because the IPUC cannot force Kootenai to seek regulatory
approval in Idaho before undertaking a transaction in Oregon. That Idaho Power's
customers are primarily located in Idaho is not important because the sale for resale of
electricity will occur in Oregon.
As demonstrated by the Western Electricity Coordinating Council ("WECC")
map attached in Attachment No. 1 to this Reply,' Idaho Power's control area (or
balancing authority) boundary spans across the entire Idaho-Oregon state border.
1 W. Elec. Coordinating Council, Western Interconnection Balancing Authorities (2009), available
at h x/fwww .wecc.biziljbrarv/WECC%20Documents/PUbliCatiOflS/Balaflciflg%20Autl0r1ties.Pdif
(illustrating the location and relationships between all the NERC Balancing Authorities in North America).
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IPC-E-1 1-23
PAGE-3
Kootenai respectfully requests that the Commission take official notice of the map, or
otherwise consider its impact on this case. Idaho Power's control area is vast and
includes electrical lines owned by other utilities. Idaho Power has acknowledged that its
control area includes 17 different utilities within its metered boundaries. According to
Idaho Power's proposed rule, even if an Idaho QF built, owned and operated its own
interconnection line that crossed the Oregon border to directly interconnect to Idaho
Power's system in Oregon, that QF would still be ineligible for an OPUC power purchase
agreement ("PPA") with Idaho Power. Such a QF's electricity would first be metered
and thus enter Idaho Power's control area at the point where it first entered the QF's own
interconnection line, and, according to Idaho Power, the IPUC would insert itself to
prohibit the sale in Oregon. The IPUC cannot endorse a rule that completely walls off
the border to the Oregon market for Idaho Power.
It is for the OPUC to determine whether its tariff applies in the first instance
based upon the facts developed in the OPUC proceeding, many of which Kootenai set
forth in its June 20, 2012 letter filing to the IPUC. To summarize, it is undisputed that,
for deliveries over the Lob-Oxbow line, Avista is responsible to Idaho Power for line
losses up to the point in change in ownership near Imnaha, Oregon. In turn, Avista's
Open Access Transmission Tariff ("OATT") passes that cost onto Kootenai, as a
transmission customer, who would pay Avista under its OATT for transmission rates and
line losses for point-to-point service all the way to the point in change in ownership near
Imnaha, Oregon. Consistent with these arrangements, Idaho Power's Oregon PPA
likewise requires Kootenai to accept responsibility for line losses up to the point where
the electricity reaches Idaho Power's electrical system. The Oregon PPA does not allow
REPLY IN SUPPORT OF MOTION TO SUPPLEMENT THE RECORD
IPC-E-1 1-23
PAGE-4
a QF to simply arrange to have its electricity enter Idaho Power's control area, without
paying all costs and line losses associated with delivering to Idaho Power's electrical
system.
As demonstrated by Avista's tendered point-to-point agreement and FERC's
decision, Avista will provide point-to-point transmission service all the way to the point
of interconnection near Imnaha, Oregon. Avista can only transmit Kootenai's output to
Idaho Power pursuant its OATT as point-to-point transmission service. Here, the point-
to-point service will continue all the way past Avista's Lolo Substation for delivery of
electricity to the point near Imnaha, Oregon. Simply put, the electricity will not merely
be delivered to the Lolo Substation.
Finally, Idaho Power incorrectly argues that FERC "specifically rejected
Kootenai's argument that the point in change in ownership is the 'only location to which
Avista will deliver the QF output for Idaho Power's purchase and use. . ." Idaho
Power's Response to Kootenai Motion to Supplement the Record at 2 (quoting Avista
Corporation, 140 FERC ¶ 61,165, ¶ 21(2012)). This is misleading. The quoted sentence
of FERC's order actually stated in full:
Finally, we find that Kootenai's requested clarification that the term "near
Imnaha, Oregon" be in the description of the POD or, alternatively, that
the order state that Imnaha, Oregon is the only location to which Avista
will deliver the QF output for Idaho Power's purchase and use i s
unnecessary in light of our finding that Avista 's proposed language meets
the standards set forth in both the NAESB and NERC guidelines.
Avista Corporation, 140 FERC ¶ 61,165 at 121 (emphasis added).
FERC did not "reject" Kootenai's argument. FERC found Kootenai's requested
clarification unnecessary because FERC agreed with Avista that Idaho Power was
incorrect that the NERC guidelines mandated the only possible point of delivery is Lob
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IPC-E- 11-23
PAGE-5
Substation. See id. at ¶ 15 (noting Idaho Power's reliance on the NERC guidelines for
Idaho Power's assertion that "the only designated POD for the Lob-Oxbow line is the
Lolo Substation").
FERC determined it was entirely appropriate for Avista to deliver to the point on
the Lob-Oxbow 230 kilovolt ("kV") transmission line where the 230 kV facilities of
Idaho Power Company and Avista are interconnected. Again, Avista's description of the
Point of Delivery, accepted by FERC, was as follows:
The point on the Lob-Oxbow 230 kV Transmission Line where the 230
kV facilities of Idaho Power Company and Avista are interconnected, and,
for scheduling purposes, the LOLO POD.
Id. atJ2.
FERC specifically stated, "we conclude that Avista's description of the POD provides
Kootenai non-discriminatory transmission service all the yay across Avista 's
transmission system, because the description incorporates the entirety ofAvista 's
transmission assets on the Lob-Oxbow line." Id. at ¶ 21 (emphasis added). That Avista
must schedule the deliveries to the designated scheduling point described as the "LOLO
POD" is not important because Kootenai will pay for, and Avista will provide, point-to-
point service for delivery of the electricity all the way to the point of interconnection near
Imnaha, Oregon —just as the Oregon PPA requires. The IPUC should not attempt to
erect a barrier excluding Kootenai from the Oregon market under these circumstances.
III. CONCLUSION
Kootenai again respectfully requests that the IPUC dismiss Idaho Power's petition
for lack ofjurisdiction.
REPLY IN SUPPORT OF MOTION TO SUPPLEMENT THE RECORD
IPC-E-1 1-23
PAGE-6
Respectfully submitted this 24th day of September 2012.
RICHARDSON AND O'LEARY, PLLC
GregorM. Adams (ISB No. 7454)
Attorney for Kootenai Electric
Cooperative, Inc.
REPLY IN SUPPORT OF MOTION TO SUPPLEMENT THE RECORD
IPC-E-1 1-23
PAGE-7
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 24 th day of September, 2012, a true and correct
copy of the within and foregoing REPLY IN SUPPORT OF MOTION TO
SUPPLEMENT THE RECORD BY KOOTENAI ELECTRIC COOPERATIVE, INC.
was served by ELECTRONIC MAIL and HAND DELIVERY, to:
Donovan E. Walker
Jason Williams
Idaho Power Company
1221 West Idaho Street
Boise, Idaho 83707-0070
[e-mail]
iwi11iams(iiidahoDower.com
Jean Jewell
Commission Secretary
Idaho Public Utilities Commission
472 West Washington
Boise, Idaho 83702
Jean. iewell(puc.idaho. gov
REPLY IN SUPPORT OF MOTION TO SUPPLEMENT THE RECORD
IPC-E- 11-23
PAGE-8
KOOTENAI'S REPLY IN SUPPORT OF MOTION TO
SUPPLEMENT
ATTACHMENT NO. 1
B
a
Alberta Electric System Operator (AESO)
Arizona Public Service Company (AZPS)
Avista Corporation (AVA)
Balancing Authority of Northern California (BANC)
Bonneville Power Administration -Transmission
(BPAT)
British Columbia Hydro Authority (BCHA)
California Independent System Operator (CISO)
Corn isión Federal de Electricidad (CFE)
Arlington Valley, LLC (AVBA)'
El Paso Electric Company (EPE)
Gila River Power, LP (GRMA)'
Griffith Energy, LLC (GRBA)*
Idaho Power Company (IPCO)
Imperial Irrigation District (lID)
Los Angeles Department of Water and Power (LDWP)
NaturEner Power Watch, LLC (GWA)
Nevada Power Company (NEVP)
New Harquahala Generating Company, LLC (HGBA)
North Western Energy (NWC)
PacifiCorp - East (PACE)
PacifiCorp - West (PACW)
Portland General Electric Company (PGE)
Public Service Company of Colorado (PSCO)
Public Service Company of New Mexico (PNM)
PUD No. 1 of Chelan County (CHPD)
PUD No. 1 of Douglas County (DOPD)
PUD No.2 of Grant County (GCPD)
Puget Sound Energy (PSE)
Salt River Project (SRP)
Seattle City Light (SCL)
Sierra Pacific Power Company (SPPC)
City of Tacoma, Department of Public Utilities (TPWR)
Tucson Electric Power Company (TEP)
Turlock Irrigation District (lID)
Western Area Power Administration,
Colorado-Missouri Region (WACM)
Western Area Power Administration,
Lower Colorado Region (WALC)
Western Area Power Administration,
Upper Great Plains West (WAUW)
'Generation-only, controls no load
Revised 2/8/2012