20150630Comments (3 Total).pdf

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Idaho Public Utilities Commission
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RE:Case Nos.IPC-E-15-01 /AVU-E-15-B1 /PAC-E-15-03 —Comments on Petition to Modify Terms and Conditions of PURPA 2 —
Purchase Agreements
Dear Commissian and Staff:
I write on behalfof Pristine Sun,LLC to provide these comments on the above-referenced petitions to reduce the duration of
Qualifying Facility (OF)contracts to as low as 2 years.The Public Utility Regulatory Policies Act of 1978 (PURPA)created an obligation
for electric utilities to offer to purchase power from,and interconnect with,qualifying generation projects.Avoided cost (the cost a
utility avoids as a result of the OF)forms the basis for determining OF purchase pricing.
As discussed below,Pristine Sun urges the Commission to approve a modified version of the pending proposals,maintaining the 20-
year contract term,but allowing the avoided cost rate to be adjusted after year 10 of the agreement.Thin modification is necessary
to avoid the significant market disruption that the existing proposals would create while fully protecting Idaho’s ratepayers.
Background on Pristine Sun
Pristine Sun isa leading developer of small (1-3 MW)utility-scale photovoltuic energy projects in the U.S.Pristine Sun developed and
built over $100 million (26 MW DC)of projects in 2013 and 2014 with an additional 550 MW+of projects expected to break ground
by the end of 2016.Pristine Sun hun approximately 20 projects with full site control in development in Idaho,with an average size of
about 2 MW AC each.Of these,approximately S projects are undergoing active project management,preliminary permitting efforts,
and preliminary site design and engineering today.
A Modified Proposal Is Necessary to Avoid Unnecessary Market Disruption While Protecting Idaho Ratepayers.
Reducing the contract length for OF projects to 2-S years will cause Pristine Sun to halt all present and future development work in
Idaho.Thin is because such a short contract length will make it impossible to recover the substantial up-front costs needed to plan,
permit,construct,and interconnect the company’s projects.Long-term contracts are necesuary to allow the substantial up-front
investments in these systems (including large capital espnnditures)to be financed and recovered.In particular,20-year contracts are
necessary to secure financing under sufficiently favorable terms to make these substantial investments worthwhile.We especially
believe thin in critical for small projects on distribution feeder circuits (rather than transmission lines)of up to 3 MW.
Further,long-term contracts serve an important role in hedging against short-term price volatility in the wholesale energy markets.
In California,the absence of long-term energy contracts was a significant cause of the state’s wholesale energy market crisis of 2000-
2001.See,e.g.,Causes and Lessons of the California Electricity Crisis at 21-22,Congressional Budget Office (September 2001),
ovoiloble at http://www.cbo.gov/siteu/default/filns/
californiaenergy.pdf (last visited June 2S,201S)(hereinafter “Causes and Lessons”);see also Michael A.yuffee,California’s Electricity
Crisis:How Best to Respond to the “PeifectStorm”,22 Energy L.J.65,69-70)2001)(noting that California would have experienced
less severe rate fluctuations had it allowed utility companies to purchase some oftheir electricity through long-term contracts
instead of relying solely on the spot market for purchases).Then,as here,the utilities opposed entering long-term,fixed-price
energy contracts because long-term prices were expected to be higher than the spot prices available in wholesale markets.Causes
and Lessons at 22.However,ax spot prices increased due to tightening of wholesale supplies in the summer of 2000 (driven in part
by a prolonged drought in the Pacific Northwest),the inability of California utilities to enter long-term energy contracts contributed
to lack of available generating capacity and worsened price escalation,resulting in massive price spikes that ultimately cost the
state’s ratepayers billions of dollars,Id.The point herein not that Idaho will experience a similar crisis,but rather that a balanced
energy policy should provide for a hedge against short-term energy price volatility by protecting the kind of long-term energy
contracts that PURPA provides.
Nonetheless,Pristine Sun recognizes the need to protect ratepayers against unnecessary price risk when entering long-term
contracts.Accordingly,Pristine Sun urges the Commission to adopt a decision that does three things:
1.Maintains a 20-year contract length for PURPA energy purchase agreements.As noted,this contract length is critical to
ensuring that small,distributed solar projects can be financed.
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3.Provides a buffer against adjustments that have no material affect on the contract price.Pristine Sun advocates a buffer of
20%,meaning the price term would not adjust unless the new avoided cost rate was 20%more or less than the original contract
price.A buffer like this will ensure that the time,espense,and risk associated with a change in contract price is not incurred without
some material change in the avoided cost.
The price adjustment at year 11 ofthe contract (or later)will fully protect Idaho’s ratepayers in the event that the avoided costs end
up being lower in the future than they are today.However,this adjustment should not occur any earlier than year 11 ofthe
agreement.Otherwise,the resulting price uncertainty will result in too much instability and risk to make a project financeable.
Pristine Sun thanks the Commission for considering these comments.
Sincerely,
/s/Troy Helming
Troy Helming
CtO,Pristine Sun,LLC
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2.Allows the price term to adjust after 10 years (commencing in year 11),or longer,to the avoided cost rate at that time.This
modified price term would be allowed to adjust upwards or downwards.
I
——Randolph MannIVicePresident
4 •NRG Renew LLC
4 5790 Fleet Street,Suite 20011t®LlJi JU[30 Ph I.L,Carlsbad,CA 92008-4703
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June 30,2015
Idaho Public Utilities Commission
P.O.Box 83720
Boise,Idaho 83720-3762
Re:Idaho Power —Petition to Modify Terms and Conditions of
Prospective PURPA Energy Sales Agreements,Docket No.
IPC-E-15-0 1
Dear Commissioners:
NRG Energy,Inc.(“NRG”)writes in opposition to Idaho Power’s proposal to
limit contracts entered into under the Public Utility Regulatory Policies Act of
1978 (“PURPA”)to two years from the current 20 years.
NRG is one of the leading developers,owners and operators of renewable
power plants across the country,with over 3,000 MW of wind and solar
assets under management.In addition,NRG pioneered the use of “Yield”
companies designed to bring new,lower cost,capital into the renewables
markets.NRG is,in fact,actively investigating renewables development in
Idaho.
NRG urges the Commission to deny Idaho Power’s request to limit new
contracts to two years for the following reasons:
Adopting two-year contracts will increase the costs of renewables by
denying developers access to low cost capitaL
Providing less than a ten year contract makes it extremely difficult for
renewables developers to access capital.Investors in the energy space
simply do not consider two-year contracts to be financeable.The end result
is to either significant inhibit renewables development and to increase the
cost of bringing the relatively few renewables projects that survive to
market.
One of the greatest innovations in renewable energy finance was NRG’s
creation of NRG Yield,an investment vehicle designed to bring non
traditional sources of capital into the renewable energy sector.Adopting a
two-year contract structure would completely cut renewable developers off
from innovative new sources of low-cost capital that have become available
with the advent of Yield vehicles.NRG Yield has brought several billion
dollars of additional investment in renewables,and given renewables
developers the ability to access a lower cost source of capital than traditional
investment structures.
NRG Yield,as well as other Yield-type vehicles,generally requite contracts
with a 10 —20 tenor.A two-year contract,by contrast,would not be eligible
for inclusion in most Yield structures,thus denying Idaho ratepayers access
to this capital.
Jobs and in vestment in Idaho will suffer if two-year contracts
become the standard.
If the Commission approves the Idaho Power request,the natural tendency
will be for renewables developers to look elsewhere to site renewable
generation projects.Making Idaho less attractive to business will drive jobs
and economic development opportunities away from Idaho.As the
Commission knows,renewabtes development has brought much-needed
money into the Ida ho economy.Sending these jobs elsewhere benefits
nobody.
Less radical changes are available.
NRG recommends that,if the Commission feels that it is necessary to reduce
the term of new PURPA contracts,that it considers reducing the term to 10
years,instead of two years.A 10-year contract still provides many of the
finance-ability benefits of a longer term contract without driving renewables
development out of Idaho.
Sincerely,
Randolph Mann
Jean Jewell
From:[e-mail]
Sent:Tuesday,June 30,2015 10:08 AM
To:Beverly Barker;Jean Jewell;Gene Fadness
Cc:[e-mail]
Subject:Case Comment Form:Brian Formusa P.E.
Name:Brian Formusa P.E.
Case Number:IPC-E-15-O1
Email:bkformusamsn.com
Telephone:[phone]
Address:108 S.3rd Ave
Hailey Idaho,83333
Name of Utility Company:IPCo
Acknowledge public record:True
Comment:Dear Commissioners Kjellander,Redford,and Raper,
As an Idaho consulting engineer,a solar system engineer for over 34 years and having been
involved in most of the larger solar projects in Blame County.I am well versed in many of
the technical and economic issues regarding solar development.
From Feb 2014 through March 2015 I had been meeting monthly with Idaho Power’s
tec—-----hnical and advisory staff as part of a steering committee on local renewable
planning.
As a result I have been privy to many of the technical arguments you will hear as part of the
hearing regarding base-loading,peak load planning,the ‘duck’curve (over-generation risk),
solar integration challenges and other salient solar generation topics.
In short,I understand Idaho Power’s point of view in desiring to limit the uptake of future
solar generation.
However the existing Idaho Power structure of vetting and pricing for potential solar
projects is more than adequate as-is and does not require an overarching ruling that would
basically eliminate the consideration of any future mid/large scale solar projects.
To be fair,any developer of any energy resource requires long term pricing agreements.The
need for limiting the rate term,or renegotiating it every two years is certainly not part of
Idaho Power’s or any utility’s pricing negotiation structure.
For any generation project whether it be coal,gas turbine,wind or solar,long term pricing
structures are part and parcel for financial planning.I urge the commission to explore
whether PURPA 20 yr contracts is risky business for customers or simply business as usual.
I encourage the P.U.C.to explore Idaho Power’s existing and exhaustive process of vetting
for future solar projects.
Their ‘avoided cost’procedures include long term planning methods,detailed costs for grid
integration and various other costs for integrating additional PURPA capacity.
These Idaho Power studies are required before a solar PPA is offered and are more than
adequate to protect the utility from unwarranted solar development.
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It is not in the best interest of the public for the P.U.C.to eclipse potential low-cost
reliable power generation strategies.
P.v.solar is a fast evolving industry with increasingly competitive costs.Utility
compensation strategies to eliminate any adverse solar generation affects (on base and peak
power generation)are well understood and yet ever progressing.
If the solar or other generation opportunities develop such that the avoided cost is far
below peak fossil fuel alternatives,then Idaho Power should have an open door to these
solutions,otherwise other utilities will reap these benefits,and Idaho Power customers
would miss out on potential lower energy costs.
In the PUC’s role as economic regulators,there is a duty to keep these PURPA options open
and integrate low cost power strategies when Idaho Power’s existing avoided cost analysis
proves solar generation is amenable.
Having heard Idaho Power’s arguments while spending considerable time with Idaho Power’s
strategic planning staff,in my opinion,reducing the solar PURPA term to two years is an
unnecessary relief from the technical challenge or burden of integrating additional low-cost
solar capacity.It may be that Idaho Power simply needs to work a little harder.
Idaho Power’s current planning,vetting and pricing practices are more than adequate at this
time.They do not need additional P.U.C.protection from solar or other future power
generation opportunities.
One last point,as public economic stewards,the P.U.C.may want to consider the potential
cost of defending an unpopular decision.Undermining a high profile Federal statute such as
PURPA is an unwarranted legal liability.
Thank you for your consideration,
-Brian Formusa P.E.(mechanical)
Unique Identifier:71.37.171.5
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