20150821Reply Comments.pdf

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An IDACORP Company
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DONOVAN E. WALKER
Lead Gounsel
[e-mail]
August 21,2015
VIA HAND DELIVERY
Jean D. Jewell, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re: Case No. IPC-E-15-18
Contract Eligibility for Disaggregated 100 kW Solar Projects - ldaho
Power Company's Reply Comments
Dear Ms. Jewell:
Enclosed for filing in the above matter please find an original and seven
copies of ldaho Power Company's Reply Comments.
DEW:csb
Enclosures
1221 W. ldaho St. (83702)
PO. Box 70
Boise, lD 83707
DONOVAN E. WALKER (lSB No. 5921)
ldaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
[e-mail]
Attomey for ldaho Power Company
IN THE MATTER OF IDAHO POWER
COMPANY'S PETITION TO DETERMINE
PURPA CONTRACT ELIGIBILITY FOR
TEN DISAGGREGATED 1OO }(vV SOLAR
PROJECTS
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
GASE NO. IPC-E-15-18
IDAHO POWER COMPANY'S
REPLY COMMENTS
ldaho Power Company ("ldaho Powe/' or "Company''), in response to the Notice
of Petition and Notice of Modified Procedure issued in Order No. 33342 and in response
to the Comments of the ldaho Public Utilities Commission ("Commission") Staff ("Staff'),
Site Based Energy LLC ('Site Based Energy''), and the ldaho lnigation Pumpers
Association, lnc., filed on August 14, 2015, hereby respectfully submits the following
Reply Comments to the Commission.
ldaho Power respectfully disagrees with Staffs recommendation to allow Site
Based Energy's ten separate 100 kilowatt ('kW") projects to receive a2O-year contract
term. ldaho Power requests that the Commission limit the maximum contract term for
Site Based Energy's proposed ten 100 kW Public Utility Regulatory Policies Act of 1978
('PURPA") solar projects to two years.
IDAHO POWER COMPANY'S REPLY COMMENTS - 1
I. IDAHO POWER'S REQUESTED RELIEF
Staff misconstrues the requested relief that the Company seeks with its Petition.
Staffs Comments state:
Specifically, the utility asks the Commission to issue an
Order finding that Site Based Energy's ten 100 kilowatt (kW)
projects are actually a single 1 megawatt (MW) project
"disaggregated" into ten 100 kW projects. The issue of
whether this is a single Iarge project or ten smaller projects
wi!! determine which one of two avoided costs
methodologies is used to calculate the rate ldaho Power
must pay for power, as well as the appropriate length of the
PURPA contract(s). ldaho Power requests that the
Commission find that Site Based Energy's project is only
eligible for a single contract with a term of five years, or
whatever maximum contract term the Commission sets in
Case No. IPC-E-15-01, for which an Order is pending at the
time its Petition was filed in this case and when these
comments were prepared.
Staff Comments, pp. 1-2.
Nowhere in the Company's Petition does it ask the Commission to find that Site
Based Energy's proposed ten 100 kW projects be found to be one large project. !n fact
nowhere in the Company's Petition does it address any difference or objection to
contracting with ten separate 100 kW projects at published avoided cost rates, other
than objecting to the requested 20-year contract term. The Company's Petition is
squarely directed at and seeks the specific relief of requiring the ten 100 kW projects to
contract at the maximum contract term limitation determined appropriate by the
Commission in Case No. IPC-E-15-01. ln fact, the title of the Petition is "Petition to
Determine Contract Term Eligibility for Disaggregated 100 kW Solar Projects." Petition,
p. 1. The Petition states:
IDAHO POWER COMPANY'S REPLY COMMENTS - 2
ldaho Power Company . . . hereby respectfully petitions the
ldaho Public Utilities Commission ("Commission") for an
order determining that the ten 100 kilowatt ("kW") PURPA
solar projects, proposed by Site Based Energy as WRCE 1
through WRCE 10, be subject to the Commission's interim
relief approving maximum contract terms of five years as
directed in Order Nos. 33222 and 33253 and further, that
such projects also be subject to the Commission's ultimate
determination regarding maximum contract term in Case No.
!PC-E-15-01 , which is currently scheduled for technical
hearing on June 29,30, and July 1,2015.
Petition, p. 1. Further, the Company's Request for Relief from the Petition states:
A proposed solar QF project over 100 kW is only eligible for
a contract with a maximum contract term of five years. Site
Based Energy's proposed ten 100 kW projects are
specifically disaggregated into 100 kW increments using a
common design scheme and nomenclature in an attempt to
manipulate the Commission's rulings to inappropriately gain
access to 20-year contracts. The practice of disaggregating
projects in order to manipulate the Commission's rules has
been rejected and disapproved by the Commission in the
past. ldaho Power asks that the Commission direct its
interim relief, maximum contract term of five years, as well
as any determination as to the maximum contract term
resulting from Case No. IPC-E-15-01, be applicable to the
ten 100 kW projects identified as WRCE 1 through 10
proposed by Site Based Energy.
Petition, pp.4-5.
Staff appears to agree that there is a problem with, and questions the validity of,
Site Based Energy's requests for contracts and whether such requests satisfy the
"intent of Commission orders."1 Staff Comments, p. 7. Staff correctly identifies that
' "While there is room for debate about whether it is necessary for a project to satisfy both the
letter and the intent of commission orders, nonetheless, Staff believes this case presents questions that
need to be addressed. SBE's project is just the first to be proposed consisting of multiple 100 kW pieces.
Because solar can be developed in such small increments, Staff believes it is probable that additional
similar proposals will follow as interest in solar grows and costs continue to decline. Staff believes that
prior Commission orders are insufficient to properly address the emergence of co-located solar projects.
Staff believes the Commission needs to further refine and develop more specific rules that can be more
effectively applied to the myriad of solar project configurations that may be proposed in the future.' Staff
Comments, p.7.
IDAHO POWER COMPANY'S REPLY COMMENTS - 3
there is an unintended problem with the Commission's 100 kW published rate eligibility
cap as a remedy for disaggregation when it comes to solar Qualifying Facility ('QF')
projects.2 Staff Comments, p. 6. lt is clear that Staff recognizes Site Based Energy's
proposed configuration as a manipulation of the Commission's rules to gain access to
20-year contracts because it recommends that the Commission hold any other
additional solar projects proposed under the surrogate avoided resource methodology
pending the Commission's decision in a new docket for the purpose of developing rules
for managing co-located projects. Staff Comments, p. 9. However, despite this
acknowledgment, Staff ultimately recommends that Site Based Energy's ten 100 kW
projects be given 2O-year contracts at published avoided cost rates "because the
proposal does not appear to violate FERC rules nor technically violate prior Commission
orders." Staff Comments, p. 11. ldaho Power submits that Staff correctly identified that
there is a problem with PURPA solar projects being able to configure themselves into
100 kW increments in order to gain access to more favorable rates or contract terms-a
problem that does not comport with the Commission's past prohibition of projects
configuring themselves into smaller increments in order to manipulate eligibility under
the Commission's rules. However, it does not follow that Site Based Energy be allowed
to enter into 20-year contracts under this manipulation and harmful practice.
It is important to note, as the Company, the ldaho lnigation Pumpers
Association, and Staff do, the similarities with the Commission's past determinations
prohibiting wind and solar projects from disaggregating into ten average megawatt
'"ln its comments filed in that case [Case No. GNR-E-11-03], the Commission Staff believed that
a 100 kW cap would be small enough to prevent disaggregation of wind and solar projects. While this
seems to have proven true for wind projects, it may not be true for solar projects. This is because the
smallest practical increment for solar is about 0.3 kW, the approximate capacity of a single solar panel,
and because typical solar projects consist of clusters of many 0.3 kW panels." Staff Comments, p. 6.
IDAHO POWER COMPANY'S REPLY COMMENTS - 4
("aMW") increments in order to gain access to published rates and Site Based Energy's
present manipulation of project configuration designed to get access to 2O-year
contracts. Staffs acknowledgment of the problem but subsequent recommendation to
allow ten 20-year contracts to proceed is harmful to customers and unnecessary. In
past cases involving primarily QF wind generation, the Commission was put in the
difficult position of having to disapprove signed contracts because the contracts were for
published rates with disaggregated projects at ten aMW, which ran contrary to the
Commission's ruling reducing the published rate eligibility cap to 100 kW for wind and
solar. This was after severa! hundred megawatts of disaggregated wind projects
already had signed and approved, long-term, fixed rate, 2O-year contracts obligating
ldaho Power customers to those rates on a long-term basis. Here, the Commission has
the opportunity to grant relief prior to the harm and consequent price risk being locked-
in for customers for the next 20 yearc.
During the course of this case, the Commission released its final order on August
20,2015, in Case No. IPC-E-15-01 regarding the maximum contract term. Order No.
33357. ln that Order, the Commission granted ldaho Powe/s request to reduce the
maximum contract term for PURPA QF projects that exceed the published rate eligibility
cap from 20 years to two years. ln so ordering, the Commission found:
Based upon our record, we find that 2O-year contracts
exacerbate overestimations to a point that avoided cost rates
over the long-term period are unreasonable and inconsistent
with the public interest. We find shorter contracts
reasonable and consistent with federal and state law for
multiple reasons.
We find that a change in contract length aligns with the intentof PURPA, is consistent with FERC regulations and
IDAHO POWER COMPANY'S REPLY COMMENTS - 5
achieves an appropriate balance between the competing
interests of protecting ratepayers and developing QF
generation.
Order No. 33357 , pp. 23,25. The Commission also qualified this limitation, "We further
find that on a case-by-case basis, there may be justification for !RP-based contracts in
excess of two years." ld., p.26. Just as the Commission acknowledges that there may
be instances, on a case-by-case determination, where a longer-term contract may be
appropriate, the Commission can similarly determine, on a case-by-case basis, whether
there are instances where an otherwise qualified published rate QF project should be
subject to the same two-year contract limitation as QF projects that exceed the
published rate eligibility cap. This particular factual situation at issue in this case is
precisely one of those instances where the Commission must step in to protect
customers from the same Iong-term price risk and harm that it just recently determined
to prevent in Order No. 33357. lt would be untenable to immediately allow a group of
ten 100 kW proposed solar projects to manipulate its configuration in such a way as to
"technically" qualify for 20-year contracts and impose the long-term harm upon
customers that the Commission has just announced is harmful and not in compliance
with PURPA.
The Commission has authority, under its case-by-case implementation of
PURPA for the state of ldaho, to determine whether it is just and reasonable to ldaho
Power customers and in the public interest to allow a practice such as that proposed by
Site Based Energy here-a practice that it has determined elsewhere to be improper
and harmful to customers. It is not necessary to determine whether Site Base Energy's
proposed projects are really ten projects or a single project. It is clearly apparent from
IDAHO POWER COMPANY'S REPLY COMMENTS - 6
the particular facts and circumstances of this particular case that Site Based Energy is
purposefully configuring its project in such a way as to manipulate the very rules
designed to protect customers, in order to avoid application of the Commission's
contract term limitation for solar QFs. Staffs recommendation, which recognizes and
acknowledges the inherent problem and ability of solar QFs to disaggregate, falls short
of adequately protecting customers, by recommending that Site Based Energy's ten
projects be allowed to contract for 20 years, thereby locking in harmful price risk for
customers. The Commission should direct that Site Based Energy's ten 100 kW
projects be subject to the Commission's two-year contract term limitation directed by
Order No. 33357.
II. RULES FOR CO.LOCATION AND COMMUNITY SOLAR
As stated above, Idaho Power does not believe that additional rules, nor
additional proceedings, are necessary for the Commission to resolve the issue identified
in this matter-whether Site Based Energy's ten 100 kW projects are eligible for 2O-year
contracts. The Commission should apply its two-year contract term limitation to Site
Based Energy's ten projects. The Company is not opposed to Staffs recommendations
that the Commission initiate proceedings to consider rules for community solar projects.
However, ldaho Power does not believe it is necessary for the Commission to develop
specific co-location rules and that the Commission can determine on a case-by-case
basis whether any particular project configuration is designed to manipulate its rules to
the detriment of customers, as Site Based Energy has in this instance. With regard to
community solar projects, the Company agrees and supports the request for the
Commission to address whether it makes sense to have a separate way, outside of
IDAHO POWER COMPANY'S REPLY COMMENTS - 7
PURPA, to develop community solar projects while protecting customers. ln its 2015
lntegrated Resource Plan ("!RP"), recently filed with the Commission,3 the Company
expressed its desire to "explore the risks and opportunities of, and potential designs for,
a community-based solar project by continuing to work with interested parties." 2015
lRP, p. 8. The Company also stated, "Because there is no identified resource need in
the near-t€ffi, o project of this nature would be pursued outside the traditional needs-
based regulatory framework and would focus on meeting changing customer
preferences with regard to where and how the energy they use is produced." /d. The
Commission recently stated in its final order on limiting contract terms to two-years:
In direct response to public concerns, we note that PURPA
is not the only avenue to develop renewable resources. As
Dr. Don Reading testified at our technical hearing, utilities
have and will probably continue to develop non-PURPA
renewable resources in the future through a variety of
means. Tr. at 868-70. Indeed, as several witnesses pointed
out in our hearing, the utilities have developed or purchased
hundreds of MW of non-PURPA renewable[s] as part of their
generation portfolio. Tr. at 931, 11, 177-78. Moreover,
acquiring more renewables while maintaining low rates is
consistent with the State's 2012 Energy Plan.
Order No. 33357, p. 9 (footnote omitted). Consistent with the Commission's recent
statements from Case No. IPC-E-15-01, as well as the Company's statements in its
2015 lRP, ldaho Power believes it is reasonable for the Commission to "consider
whether specific rules are necessary or desirable for community solar projects" as
recommended by Staff. Staff Comments, p. 11.
t Case No. IPC-E-15-19.
IDAHO POWER COMPANY'S REPLY COMMENTS - 8
ilt. coNcLustoN
A proposed solar QF project over 100 kW is only eligible for a contract with a
maximum contract term of two years. Site Based Energy's proposed ten 100 kW
projects utilize a common building site, developer, construction, design scheme, and
nomenclature, but are specifically configured into 100 kW ownership increments in a
blatant attempt to manipulate the Commission's rulings to inappropriately gain access to
2O-year contracts. The practice of disaggregating projects in order to manipulate the
Commission's rules has been rejected and disapproved by the Commission. ldaho
Power asks that the Commission direct that the maximum contract term of two years be
applicable to the ten 100 kW projects identified as WRCE 1 through 10 proposed by
Site Based Energy.
Respectfully submitted this 21s day of
Attomey for ldaho Power Company
IDAHO POWER COMPANY'S REPLY COMMENTS - 9
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 21st day of August 2015 ! served a true and
conect 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
Daphne Huang
Deputy Attomey General
ldaho Public Utilities Commission
472 W est Washington (83702)
P.O. Box 83720
Boise, Idaho 83720-007 4
Site Based Energy LLG
Leif Elgethun, PE, LEED AP
Site Based Energy LLC
P.O. Box 7354
Boise, ldaho 83707
ldaho lrrigation Pumpers Association, lnc.
Eric L. Olsen
ECHO HAWK & OLSEN, PLLC
505 Pershing, Suite 100
P.O. Box 6119
Pocatello, ldaho 83205-61 1 I
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IDAHO POWER COMPANY'S REPLY COMMENTS - 1O