20141223Reply Comments.pdf

3Effi*.
An IDACORP Company
DONOVAN E. WALKER
Lead Gounsel
December 23,2014
VIA HAND DELIVERY
Jean D. Jewell, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re: Case No. IPC-E-14-30
CIark Solar 3, LLC - ldaho Power Company's Reply Comments
Dear Ms. Jewell:
Enclosed for filing please find an original and seven (7) copies of ldaho Power
Company's Reply Comments in the above matter.
.rr-/'al*l\;' "'
-rc'"i,?" i"
?filq 0t[ ?3 Pffi r*: ?B
i ,ioi-1,,'t ....'
,_rf If ii. iUi-:liii.:,,r Ii,3i'; '
DEW:csb
Enclosures
Donovan E. Walker
1221 W. ldaho 5t. (83702)
P.O. Box 70
Boise, lD 83707
DONOVAN E. WALKER (lSB No. 5921)
Idaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
[e-mail]
Attorney for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
rN THE MATTER OF THE APPLICATION )
oF rDAHO POWER COMPANY FOR ) CASE NO. !PC-E-14-30
APPROVAL OR REJECTTON OF AN )
ENERGY SALES AGREEMENT WITH ) IDAHO POWER COMPANY'S
CLARK SOLAR 3, LLC FOR THE SALE ) REPLY COMMENTS
AND PURCHASE OF ELECTRIC ENERGY. )
)
Idaho Power Company ("!daho Powe/' or "Company"), in response to the Notice
of Application and Notice of Modified Procedure issued in Order No. 33166 and in
response to the Comments of the ldaho Public Utilities Commission ("Commission")
Staff ("Staff') and Clark Solar 3, LLC ("Clark Solar 3") filed on December 19, 2014,
hereby respectfully submits the following Reply Comments to the Commission. With
these Reply Comments, ldaho Power requests that the Commission affirm that the
avoided cost rates contained in this contract correctly utilize a first capacity deficit of
July 2021.
IDAHO POWER COMPANY'S REPLY COMMENTS - 1
I. STAFF'S RECOMMENDED RATES ADJUSTMENTS
1. On November 20, 2014, ldaho Power filed lnitial Comments in this matter
which submitted a "Replacement Appendix E" reflecting the Commission-approved rate
adjustments from the Grand View Solar and Boise City Solar cases. Order No. 33179
(Grand View Solar); Order No. 33180 (Boise City Solar).
2. On December 19, 2014, Staff filed Comments recommending the
incorporation of the avoided cost rated contained in Attachment 1 of ldaho Power's
November 20, 2014, lnitial Comments (Replacement Appendix E to the original
Agreement).
3. On December 19,2014, Mountain Home Solar, LLC; Pocatello Solar 1,
LLC; Clark Solar 1, LLC; Clark Solar 2, LLC; Clark Solar 3, LLC; and Clark Solar 4, LLC,
filed lnitial Comments. !n those lnitial Comments, Mountain Home Solar, Pocatello
Solar, and Clark Solar 1, Clark Solar 2, Clark Solar 3, and Clark Solar 4 each accepted
Staffs recommended adjustments to the contract pricing. (Staff recommended approva!
of pricing from ldaho Power's Response to the Third Production Request of Staff for
Mountain Home Solar, Pocatello Solar 1, Clark Solar 1, and Clark Solar 2. Staff
recommended pricing from ldaho Power's lnitial Comments for Clark Solar 3 and Clark
Solar 4.). The projects also provide argument that a 2016 capacity deficiency should
be used as opposed to Idaho Power's 2021 capacity deficiency.
4. For comparison purposes, the 20-year levelized rate for the Energy Sales
Agreement ('ESA") as originally submitted is $61.23lmegawatt-hour ("MWh") and the
rate from the Replacement Appendix E is $60.67/MWh. The estimated 2}-year
contractual obligation based upon the originally submitted prices is $103,602,890 and
IDAHO POWER COMPANY'S REPLY COMMENTS - 2
the estimated 20-year contractual obligation with the revised prices is $102,562,148.
The levelized integration charge contained in the ESA is the same in both instances at
$4.60/MWh.
5. Should the Commission determine to accept the recommended rate
adjustments, ldaho Power recommends incorporation and approva! of the Replacement
Appendix E with the approval of the ESA, rather than incorporating the same through a
contract amendment.
II. CAPACITY SUFFICIENCY
6. ldaho Power maintains that the correct capacity sufficiency period for
purposes of calculating the appropriate avoided cost rate for this contract is July of
2021. This is the capacity sufficiency period included in the rates set forth in Appendix
E, Replacement Appendix E, and the Second Replacement Appendix E. Clark Solar 3
maintains its strained argument that the Commission should adopt and approve a
capacity sufficiency period of July 2016 for the associated rates in its contract. The
2016 capacity deficiency is included in the alternative Appendix F, which should be
rejected by the Commission.
7. The Commission has already decided this issue, and determined that
ldaho Power's 2021 capacity deficiency is appropriate for use in determining avoided
costs pursuant to the lncremental Cost Integrated Resource Plan Methodology ("lRP
Methodology") used for the determination of rates in this contract. "We find that ignoring
the Company's demand response contribution in calculations under the IRP
methodology would unjustly inflate avoided costs paid to QFs and harm ratepayers by
IDAHO POWER COMPANY'S REPLY COMMENTS.3
requiring them to pay for capacity provided by a QF that the utility does not need."
Order No. 33159, p. 8.
Inclusion of ldaho Power's demand response produces a
more accurate avoided cost and, therefore, more closely
aligns with the intent and requirement of PURPA and FERC
regulations. Therefore, we find it just and reasonable to
include the capacity provided by Idaho Power's demand
response programs in calculation made under the IRP
methodology. We further find that the capacity provided by
demand response is sufficient to meet the Company's needs
until July 2021.
lT IS HEREBY ORDERED that ldaho Power's Application is
approved. We confirm July 2021 as the Company's capacity
deficiency period for use in the incremental cost IRP
methodology.
Order No. 33159, p. 9.
8. On July 30, 2014, the Commission issued Order No. 33084 that directed
ldaho Power to utilize July 2021 as its first capacity deficit to be used in the Company's
surrogate avoided resource methodology for the determination of published avoided
cost rates. Case No. !PC-E-13-21, Order No.33084, p.5. The Company's 2013 IRP
contained a first capacity deficiency of 2016. However, subsequent to the filing of the
2013 !RP, the Company entered into a stipulation requiring the acquisition of up to 440
megawatts ("MW") of demand response ("DR"). ldaho Power subsequently enrolled
over 400 MW of DR program participants for the 2014 season. Case No. IPC-E-13-21
examined and established that the appropriate capacity deficiency period for
determining published avoided cost rates is July 2021 with the inclusion of ldaho
Powefs DR programs.
9. On August 13, 2014, ldaho Power filed an application with the
Commission seeking an order confirming the use of a July 2021 capacity deficiency
IDAHO POWER COMPANY'S REPLY COMMENTS - 4
period in the approved IRP Methodology. Case No. !PC-E-14-22, ldaho Power's
Application, incorporated herein by this reference. As referenced and quoted above,
the Commission approved ldaho Power's Application and confirmed July 2021 as the
Company's capacity deficiency period for use in the IRP Methodology. Order No.
33159, p.9.
10. Because Clark Solar 3 is unable to establish any legally enforceable
obligation under ldaho law to avoided cost rates using a 2016 capacity deficit, See,
ldaho Power Co., v. ldaho Public Utilities Comm'n., 155 ldaho 780, 316 P.3d 1278
("Grouse CreeK'), it now argues ineffectively that the contract in this matter, which was
signed by the parties on October 13,2014, was "binding between the parties" prior to
the Commission's final order confirming use of the 2021 capacity deficit in the IRP
Methodology. Initial Comments of Clark Solar 3, ef al., pp. 4-5. This contention is
absolutely incorrect. Under this Commission's implementation of the Public Utility
Regulatory Policies Act of 1978 ("PURPA") for the state of ldaho, the Commission
utilizes a case-by-case implementation where it requires that each separate contract
and/or obligation for purchase be separately and distinctly approved by the Commission
prior to its effectiveness. ln fact, Clark Solar 3 acknowledges that its contract contains
the provision in Article 21.1 which states:
Idaho Power shall file this Agreement for its acceptance or
rejection by the Commission and resolution of the disputed
Solar Facility Pricing Schedule as described in paragraph
7.1. This Agreement shall only become finally effective upon
the Commission's approval of all terms and provisions
hereof without change or condition and declaration that all
payments to be made to Seller hereunder shal! be allowed
as prudently incurred expenses for ratemaking purposes.
IDAHO POWER COMPANY'S REPLY COMMENTS - 5
11. Contrary to Clark Solar 3's assertions that the parties' signatures on the
contract make it "binding between the parties" the parties' signatures on a PURPA
contract simply means that both parties have reached agreement as to the terms and
conditions contained therein. However, it is of no binding effect and is not "finally
effective" unless and until it is reviewed and approved by the Commission. Additionally,
in the case of this particular contract, the parties agreed to terms and conditions that
expressly state that there is not agreement upon the proper capacity sufficiency period
to be used in the contractual rates, and the parties agreed to abide by what the
Commission would decide with regard to that matter. Contrary to Clark Solar 3's
argument that a subsequent Commission decision could not affect the determination,
the agreement expressed in the contract itself anticipates and specifically provides that
the Commission will decide the matter, subsequently, and that the parties will abide by
that decision. Article 7.1 provides:
The Solar Facility Pricing Schedule to be included in this
Agreement is disputed by the Parties. ldaho Power believes
Appendix E is the appropriate Solar Facility Pricing as it
includes an ldaho Power capacity deficit period beginning in
2021. The Seller believes Appendix F is the appropriate
Solar Facility Pricing Schedule and it includes an ldaho
Power capacity deficit period beginning in 2016. Both of
these pricing schedules were calculated using the
Commission approved lncremental Cost IRP Avoided Cost
Methodology, with the only difference being the starting date
of the Idaho Power capacity deficit period. The Parties have
agreed to all other terms and conditions of this Agreement
and hereby agree to submit this Solar Facility Pricing
Schedule dispute to the Commission for resolution. The
Parties may submit to the Commission written argument or
Comments in support of their respective positions, in
accordance with a procedural schedule mutually agreeable
to the Parties and the Commission. The Parties agree to
abide and be bound by the Commission's decision on this
issue. The final Order of the Commission resolving this
IDAHO POWER COMPANY'S REPLY COMMENTS - 6
dispute will be included and become an integral part of this
Agreement, which the Parties agree to support and uphold.
Case No. IPC-E-14-22, seeking the Commission confirmation that 2021 was the correct
capacity deficiency to be used in the lRP Methodology, was pending at the time Clark
Solar 3's contract was signed by the parties. lntermountain Energy Partners, LLC
(managing member for Mountain Home Solar, Pocatello Solar, Clark Solar 1, Clark
Solar 2, Clark Solar 3, and Clark Solar 4) directly participated in Case No. IPC-E-14-22
advocating tor a 2016 capacity deficiency determination that was denied.
12. As stated above, the Commission has already decided this issue, and
determined that ldaho Power's 2021 capacity deficiency is appropriate for use in
determining avoided costs pursuant to the IRP Methodology used for the determination
of rates in this contract. ldaho Power asks that the Commission affirm that July 2021 is
the proper first capacity deficit for the calculation of avoided cost rates for Clark Solar
3's contract.
Respectfully submitted this 23'd day of December 2014.
DONOVAN E. WALKER
Attorney for ldaho Power Company
IDAHO POWER COMPANY'S REPLY COMMENTS - 7
CERTIFICATE OF SERVICE
! HEREBY CERTIFY that on the 23'd day of December 20141 served a true and
correct copy of IDAHO POWER COMPANY'S REPLY COMMENTS upon the following
named parties by the method indicated below, and addressed to the following:
Commission Staff
Kristine A. Sasser
Deputy Attomey General
ldaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
GIark Solar 3, LLC
Dean J. Miller
McDEVITT & MILLER, LLP
420 West Bannock
Boise, ldaho 83702
Mark van Gulik
Clark Solar 3, LLC
P.O. Box 7354
Boise, Idaho 83707
X Hand Delivered
U.S. Mail
Overnight Mail
FAXX Email [e-mail]
Hand DeliveredX U.S. Mail
_Overnight Mail
_FAXX Email [e-mail]
Hand Delivered
U.S. Mail
Overnight Mail
FAXX Email [e-mail]
Bearry, LegalAssistant
IDAHO POWER COMPANY'S REPLY COMMENTS - 8