20140725REC Reply comments.pdf

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RENEW*.BLJE ENEseY coAIJTIoNz0r., jul :5 Pr'l 2: 08
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July 25,r 2fJ14
The Honorable tarsha H. $mith
The Honorable Paul Kfellander
The Honorable ilack A. Redfotd
ldaho Public Utilities Gommlsslon
472 West Washington $treet
Boise, lD 83720
RE: Gase Ho. IPG-E-{+O6, Order llo. 33O55
Dear Gommisslonerc Smith, (iellander, and Redford:
The Renewable Energy Goalltion (the'Goalitlon') ls providing the
following comments ln response to the reply eomments of the ldaho
Pubilc lftIlltles Gommlsslon (the'Gommlsslont) staff (c$taff") filed on
July ll8, 2o,14 ('Reply Gomments'). Staff responded to the Goalltionts
July 11, 2O,,,4 publlc commcnts (cPubllc Gomments") wlrlch support
approval of the April 23,, 20{4 Power Purchase Agreement (rArkoosh
Agreemenlf) between tr. ffilliam Arkoosh and ldaho Power Gompany
(rldaho Powel,). The Goalltlon ls submiftlng these commGnts to
correct the record and respond to Staf,Ps assertlon that the Goalltionts
Public Gommelrts wera rtnicleadlng.' The Goalltionts comments wcrc
not, and did not ln any way lntend to be, mlsleading.
lnitially, the Coalition would llke to correct the lmpreslon that
its comments are ln represontati,on of tlr. Arkoosh or other Goalltlon
members with slmilar contract terms awaiting Gommission approval.
The Goalltion ls not representing any speclfic member in the
negotiations with ldaho Power or as an lntervenlng party to thls caso.
Rather, all the Goalitlon's eomments in thls case are an expresslon of
the general interests and concerns of the Goalltionts multl.state
membership. Specifieally, the Goalition is concetrred about the
application of the performance deadband and its potential to severely
impact any hydroelectric prolecfs reyonues. ln addltlon, aa a result of
its approved applicatlon in ldaho, this concept has been proposed in at
least one other state. Therefore, the Goalltlonts lnterests on this issue
go well beyond a select few mernbers in ldaho with Immediate
eontracting needs.
ln support of the Adroosh Agreement, the Goalltlon clted the
Gommission-approved Bell tountaln Hydro profect Power Purchase
Agreemed (l3Bdl Hountain Agreenrentt). While a number of terms
between the Arkoosh and Bell tountain Agreements differ, they both
replace the standard historlcal$ applied 9O/{'lO performance
deadband with provlsions more uniquely situated to the operational
andor financial characteristics and consideratlons of the profects.
StafPs comments in support of the Bell Hountaln Agreement
repeated$ mentloned that the agreement was the result of
negotiations, and stated that the main two reasons for its support for
replacing the 9OI{{O perforrnaneB deadband wlth the techanical
Availabililr Guarantee (t'tAGt) was ebecause of the yer:y small slze of
the proied (zql kW), and because the contract rates and terms are
the result of negotiation and compromlse.' Staft now statcs that lts
support ior the Bell tountaln Agrcement ls because of, the small slze
of the proiect, and that agreement includsd a tAG in exces; of wind
proiectst requircrncnts and an lntcgratlon charge.
At least ln the case of the Arlroosh Agreement, ldaho Power has
explained that the proposed change should lmprove short-term
delivety estimatcs. ldaho Power negotlated an agreement that
provides greater benefits to both the company and the Arkoosh
prolect. StafPs comments comparlng improvements oyer the tAG as
applied to wind did not seem to add to the ratlonale for recommendlng
approval of the Bell tountaln Agreement. ln addltlon, most
hydroelectric profeets in ldaho selllng as Qualfylng Facllltles under a
published price also might be consldered veqy small prolects
The Goalition's Public Gomments state that we understand that
the tetrns ol the Artoosh Agreement may be the first of several
agreements negottated wlth ldaho Power that contain identlcal terms
and conditions rslated to the petformance deadband. Stdf agrees
with the fact that there are a number of similar contraets, but polnts
out that these contracts have been submitted but not yet approved.
The Goalition agrees, and we neyer implied or $uggested that these
contracts have already been approved. Our comments expressly note
that these addltional contracts are pendlng approval but that the
outcome of the approval of the Artoosh Agreemnnt could have
lmpllcatlons to both pendlng and exlstlng agreements.
The Goalition's Public Gomments referenee a studyr of, Goalltion
member prolects located in ldaho. Statr states it is unfortunate that
we dld not provlde thls analysis. $uch study was pettormed on a
sample of ldaho member profects for the purpose of measurlng the
potential magnltude of revenue loss reulting from penaltie
assoelated wlth dellverles outslde the performance deadband. ln
addltlon, the study measured the potential reycnuo losscs as
described above eompared to thore that mlght be expected lf the tlAG
approach was used including full wind integratlon charges, While thls
study wal not dcveloped and performed for publlc use, a similar and
more thorough study could most celtainly be completed for more
public purposes. The Goalition has made no attempt to quantltyz the
lmpllcations of the new and improved porformance deadband terms
under the Artoosh Agreement.
The Goalition appreciates the opportunity to comment on the
Gommissionts consideration of the Arlcoosh Agreement and continues
to recommend that lt be approved as it is clearly an improvement over
the status quo.
$incerely,
Q \
John Lowe
Executive Dlrector
Renewablc Energy Goalition