20141030J.R.Simplot Comments.pdf

Peter J. Richardson (ISB No. 3195)
Gregory M. Adams (ISB No. 7454)
Richardson Adams, PLLC
515 N.27th Street
Boise,Idaho 83702
Telephone: [phone]
Fax: [phone]
peter@ richardsonadams. com
gre g@ richardsonadams. com
Attorneys for J. R. Simplot Company
SCHEDULE 73, COGENERATION AND
SMALL POWER PRODUCTION.
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BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
IDAHO POWER COMPANY FOR )
APPROVAL AND IMPLEMENTATION OF )
CASE NO. IPC-E.14-24
COMMENTS OF THE J. R. SIMPLOT
COMPANY
)
)
)
)
)
INTRODUCTION AND BACKGROUND
Pursuant to the Idaho Public Utilities Commission's ("IPUC" or "Commission") Notice
of Application Order No. 33136, the J. R. Simplot Company ("Simplot") respectfully submits
these Comments on Idaho Power's proposed Schedule 73 for contracting processes applicable to
qualifuing facilities ("QF") under the Public Utility Regulatory Policies Act of 1978 ("PURPA").
Simplot appreciates the opportunity to comment on ldaho Power's proposed Schedule 73.
Simplot is the owner of two QF projects in Idaho, the Magic Dam small power
production QF and the Don Plant cogeneration QF. Simplot's operations in Idaho contain
significant potential for additional QF development that could be self-certified as small power
production facilities under the PURPA. See 18 C.F.R. 5 292.201 et seq. Simplot is currently
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COMMENTS OF J. R. SIMPLOT COMPANY
PAGE I
in negotiations with ldaho Power for a renewed contract at its Don Plant and is also likely to
again negotiate for sale of the output of its other QF (and potential future QFs) to Idaho Power
and is hence directly impacted by the outcome of this proceeding.
Simplot agrees with the concept advanced by several parties in IPUC Case No. GNR-
E-l l-03, and identified in ldaho Power's application here, that it would be in the public
interest to develop fair and reasonable contracting procedures and rules for Idaho utilities. As
discussed below, Idaho Power has made an effort to develop a fair and reasonable set of
contracting procedures, but Simplot recommends a limited number of improvements that it is
hopeful Idaho Power will agree to implement or the Commission will otherwise adopt.
COMMENTS
Simplot has no objection to the overall structure of Idaho Power's proposed Schedule
73, but rather recommends a couple of changes to clarify the tarifls language or ensure that
the tariff is fully compliant with applicable law and sound policy.
l. Legally Enforceable Obligation
Idaho Power has proposed to create a new set of criteria for how a QF may create a
legally enforceable obligation ("LEO") under l8 C.F.R. 5 292.304(d)(2). Specifically, ldaho
Power's Tariff Language at Section l(d) under "Contracting Procedures" states as follows:
D. The indicative pricing proposal provided to the Customer pursuant to Section
1.c. will not be final or binding on either party. Prices and other terms and
conditions will become final and binding on the parties under only two
conditions:
i) The prices and other terms contained in an ESA shall become final and
binding upon full execution of such ESA by both parties and approval by
the Idaho Public Utilities Commission, or
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ii) The applicable prices that would apply at the time a complaint is filed by a
Qualifuing Facility with the Commission shall be final and binding upon
approval of such prices by the Commission and a final non-appealable
determination by the Commission that:
a. a "legally enforceable obligation" has arisen and, but for the conduct of
the Company, there would be a contract, 41!,
b. the Oualifring Facility can deliver its electrical output within 365 days
of such determination.
(underline and bold added).
This tariff language, if approved by the Commission, could constitute a major policy
change in the Commission's implementation of PURPA and determination of how a QF may
create a LEO. Under FERC's regulations implemented by the IPUC, "if the electric utility
refuses to sign a contract, the QF may seek state regulatory authority assistance to enforce the
PURPA-imposed obligation on the electric utility to purchase from the QF, and a non-
contractual, but still legally enforceable, obligation will be created pursuant to the state's
implementation of PURPA." JD Wind l, LLC,129 FERC fl 61,148, atP 25 (November 19,
2009). Existing IPUC decisions establish that the Commission will find that the QF created a
LEO if the QF can o'demonstrate that'but for' the actions of [the utility, the QF] was otherwise
entitled to a power purchase contract." Earth Power Resources, Inc. v. Washington Water Power
Company, Case No. WWP-E-96-6, Order No.27231 (1997); see also Blind Canyon Aquaranch
v. Idaho Power Company, Case No. IPC-E-94-1, Order No. 25802 (1994). The Commission has
also used other tests, including the pre-filed complaint test, under which the QF can file a
complaint with the Commission, at which time the Commission will make a determination as to
whether and when a legally enforceable obligation arose. See A.W'. Brown v. Idaho Power Co.,
121 ldaho 812, 816, 828P.2d 841, 845 (1992).
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COMMENTS OF J. R. SIMPLOT COMPANY
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However, the underlined and bolded "and" in Idaho Power's proposed tariff language
appears to suggest that, in the absence of a fully executed contract, the QF must not only prove
that it obligated itself to sell to the utility but must also prove that it could start delivering power
within 365 days. This has never been a requirement for Idaho Power QFs. This new
requirement would frustrate QF development because most QFs rely on the contract to finance
and then build the project. It is often difficult for an un-built project to commence operations
within 365 days of Commission-approval of the contract. Even with resource types that could be
constructed within 365 days, there are many legitimate reasons that the contract may be signed
well prior to the project's actually commencing construction, including financing processes and
availability of generation or interconnection equipment and construction crews. Additionally, in
the circumstance of having the entire development process halted by the uncertainty that arises
when a complaint must be filed against the utility, the QF's ability to commence deliveries
within 365 days would be even further compromised.
In sum, Idaho Power's proposal may be acceptable if demonstrating ability to deliver
within 365 days were one way, but not the only way, to create a non-contractual LEO. However,
Simplot doubts very many QFs would seek to create a LEO by commencing deliveries unless
they were already built. Thus, Simplot recommends that Idaho Power should delete the entire
underlined language or at the bare minimum delete the underlined and bolded o'and" and replace
it with the word o'or."
2. Interconnection Study Requirement
Simplot recommends revisions to the requirements for completion of interconnection
studies. Idaho Power's proposed Tariff Language at Section 1(k) under "Contracting
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Procedures" details the requirements a QF must meet in order to obtain a final executable
When both parties are in full agreement as to all terms and conditions of the draft
ESA, including the price paid for delivered energy, and the Customer provides
evidence that all relevant interconnection studies are complete and that
interconnection is to occur on or prior to the requested first energy date, and any
applicable Transmission Agreements have been executed and/or execution is
imminent, the Company shall prepare and forward to the Customer, within l0
business days, a final, executable version of the ESA.
Because the IPUC has never required QFs to progress through the interconnection
process prior to executing a contract, this section of ldaho Power's tariff would impose a new
requirement upon QFs. The Commission's PURPA implementation already requires QFs to
keep the utility and its customers whole by including liquidated damages provisions and
termination damages provisions in Idaho PURPA contracts. In addition, and significantly,
Avista removed this requirement for obtaining a draft contract at the recommendation of
intervenors in its recent PURPA compliance filing. See AVU-E-14-03.
Interconnection studies provide construction time and cost estimates by the utility.
While Simplot generally agrees that a responsible developer will have obtained interconnection
studies to the point where it is confident it can achieve its online date, imposing this as a
requirement to receive a contract will be an unnecessary hurdle in many circumstances. For
example, a project's configuration could change slightly from that proposed in a prior
interconnection request with which the developer possesses a study with acceptable cost and
time estimates. However, even a slight modification of a proposed interconnection configuration
may render the existing study invalid for the project, thus necessitating a re-study after the fact.
A good the developer should be responsible to be reasonably certain of the costs and time to
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construct.
This language is also ambiguous as to what kind of interconnection study the QF must
obtain. Typically, the process includes a feasibility study first, then only for some but not all
projects a system impact study, and finally a facilities study. The ambiguity in tdaho Power's
proposal would likely lead to disputes over how far the QF must progress through the
interconnection process. Thus, Simplot recommends that Idaho Power should delete this
requirement, or as a compromise, if the Commission is inclined to adopt this new requirement,
Simplot recommends it be specific to require that the QF has obtained only afeasibility study.
CONCLUSION
Simplot appreciates the opportunity to comment on Idaho Power's proposed Schedule 73,
and recommends the clarifications and changes set forth herein.
RESPECTFULLY SUBMITTED this 30ft day of October,2Ol4.
RICHARDSON ADAMS, PLLC
Peter J. Richardson
Of Attorneys for
J. R. Simplot Company
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COMMENTS OF J. R. SIMPLOT COMPANY
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 30th day of October,2Dl4, a true and correct copy of
the within and foregoing COMMENTS OF THE J. R. SIMPLOT COMPANY was served as
shown to:
Jean D. Jewell, Secretary X Hand Delivery
Idaho Public Utilities Commission _U.S. Mail, postage pre-paid4T2WestWashington _ Facsimile
Boise, Idaho 83702 X Electronic Mail
ieanj [e-mail]. gov
Donovan Walker X Hand Delivery
Idaho Power Company _U.S. Mail, postage pre-paid
1221 West Idaho Street _ Facsimile
Boise, Idaho 83702 X Electronic Mail
dwalker@ idahopwer. com
dockets@ idahopower. com\
Randy Allphin X Hand Delivery
Energy Contracts Administrator _U.S. Mail, postage pre-paid
Idaho Power Company Facsimile
1221 West Idatro Street X Electronic Mail
Boise,Idaho 83702
rallphin@ idahopower. com
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