20170803Opening Comments.pdf

Gregory M. Adams (ISB No. 7454)
Peter J. Richardson (ISB No. 3195)
Richardson Adams, PLLC
515 N. 27th Street
Boise, Idaho 83702
Telephone : [phone]
Fax: [phone]
gre g@richardsonadams. com
peter@richardsonadams. com
Attomeys for Clark Canyon Hydro, LLC
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OT'THE APPLICATION )
oF rDAHO POWER COMPANY TO )
APPROVE OR REJECT ENERGY SALES )
AGREEMENT WITH CLARK CANYON )
HYDRO, LLC, FOR THE SALE AI\D )
PURCHASE OF ELECTRIC ENERGY )
FROM THE CLARK CANYON PROJECT )
CASE NO. IPC-E.14.I5
OPENING COMMENTS OF
CLARK CAI\YON HYDRO,
LLC
INTRODUCTION AND SUMMARY
Clark Canyon Hydro, LLC ("Clark Canyon") hereby submits its comments to the Idaho
Public Utilities Commission ("Commission") in the above-captioned matter. For the reasons
explained below, Clark Canyon respectfully requests that the Commission approve the Energy
Sales Agreement ("ESA") submitted by Idaho Power Company ("ldaho Power") in this docket
with a revised Scheduled Operation Dater of December 31,2019, instead of the previously
proposed date ofJune 1,2017.
' Cupitalized terms in these comments are intended to have the same meaning as defined in ESA
submitted for Comm ission approval.
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a
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1., .). I 1")ir ti.Ltur
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The revised date proposed by Clark Canyon corresponds with the delay of over two years
during which this docket was suspended to allow Clark Canyon to correct discrepancies that
occurred between Clark Canyon's Federal Energy Regulatory Commission ("FERC")
hydropower license and the terms of the ESA shortly after the ESA was submitted for
Commission approval. This Commission stayed the ESA approval case for the express purpose
of correcting those deficiencies. Clark Canyon had expended $9.4 million prior to the stay in
development efforts, interconnection construction, and securing equipment. During this
Commission's stay of the proceeding, Clark Canyon expended an additional $1.2 million in the
expectation that it would be able to preserve the right to sell the output of its hydropower facility
to Idaho Power under the rates in the submitted ESA if it acted diligently. Clark Canyon's total
development expenditures at risk are approximately $10.6 million. Under the circumstances
here, revision of the Scheduled Operation Date is consistent with the initial intent of the parties'
contractual arrangement to replace a prior ESA, applicable contractual doctrines, and this
Commission's past precedents. On the other hand, denial of Clark Canyon's request to correct
the Scheduled Operation Date in the 2014 ESA would work an unjust and undue hardship on
Clark Canyon, which would not have incurred the substantial expense to obtain a new FERC
license or may have been able to pursue other options to lock in pricing available in2014 if it did
not expect that its right to sell under the submitted ESA would be preserved.
BACKGROUND
Clark Canyon is a planned hydropower generation facility that would harness the energy
potential at the existing Clark Canyon dam on the Beaverhead River in Beaverhead County,
Montana. The dam is operated by the U.S. Bureau of Reclamation for irrigation purposes, but it
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does not currently have any electric generation installed. Affidavit of Alina Osorio at fl 3.2
Efforts to harness the electric energy output of the existing dam began several years ago. On
August 26,2009, the FERC issued the first license for the Clark Canyon project to construct and
operate a run-of-release hydropower facility, as Project No. 12429,128 FERC n 62,129. Id. atl
4.
Clark Canyon sought to sell the output of the proposed facility to Idaho Power, and on
July 19, 2071, the Commission approved an Energy Sales Agreement (the "20l I ESA") with
Idaho Power in docket number IPC-E-l l-09. As pan of this 2011 ESA, Clark Canyon agreed
that Idaho Power would own 50 percent of the renewable energy certificates ("RECs") produced
by the facility, id. atl5 - a major concession at the time and a right that the Commission has
subsequently denied Idaho Power in standard rate contracts beginningin2}l2. See Order No.
32697 at37-47.
On December 31, 2013, due to difficulties in development efforts by Clark Canyon's
owner at the time, Clark Canyon and Idaho Power entered into an agreement to amend the
Scheduled Operation Date in the 201I ESA with Idaho Power. Affidavit of Alina Osorio at fl 6.
As part of this agreement, Clark Canyon forfeited $211,500 in liquidated damages as a penalty
for missing the initial Scheduled Operation Date, and replenished the $211,500 amount held as
delay security going forward. Id. Clark Canyon's agreement to forfeit the security deposit was
also a significant concession on Clark Canyon's part, since other qualifying facilities ("QF") in
this time frame challenged the legality of an automatic forfeit of a delay security in the absence
of proof of any actual damages to Idaho Power by failure to timely bring the project online. See
2 Clark Canyon has concurrently filed the Affidavit of Alina Osorio to provide support for the
factual background in these opening comments.
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Order 32628 at 2-4 (approving settlement agreement where Exergy agreed to termination of six
power purchase agreements in exchange for Idaho Power returning over $3 million in security
deposits for four wind QFs); see also Order No. 32697 at25-33 (discussing dispute over
liquidated damages clause and eliminating the standard contract term that stated QFs
automatically forfeit a security deposit when power purchase agreements are terminated).
In this timeframe, Clark Canyon's ownership changed and the current upstream owner
was forced to take a more active managerial role in the project. Affidavit of Alina Osorio atn7.
Clark Canyon is an indirect wholly-owned subsidiary of ICP US Hydro Holdings, Inc. ("lCP").
Clark Canyon previously was owned by Symbiotics, LLC ("Symbiotics"), which also acted as
agent for Clark Canyon regarding FERC licensing and compliance matters, and ICP was a debt
investor in the parent of Symbiotics, Riverbank Power Corp. The convertible debt was advanced
for purposes of financing two hydropower projects, including the Clark Canyon project. During
2013, Symbiotics and its affiliates became insolvent, and ICP converted its debt to equity in
Clark Canyon. Initially, ICP retained the key Symbiotics employees that had been involved in
Clark Canyon, including the main principal and primary FERC contact with respect to Clark
Canyon. However, ICP determined that it needed to supplement these efforts with a more active
role in the projects due to issues that had arisen under the prior management oversight. 1d. Since
that time, Clark Canyon's leadership has acted in good faith to develop this project.
On March 31,2014, after discussions with representatives of Idaho Power regarding past
issues with the project and options available, Clark Canyon and Idaho Power executed a
Memorandum of Understanding ("MOU") to terminate 20ll ESA and execute a new ESA with
unique terms set forth in the MOU. Id. atll8-10. The MOU, which is attached to Idaho
Power's application in this docket, stated that the new ESA would preserve Idaho Power's right
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to ownership of 50 percent of the RECs produced by Clark Canyon. The MOU also called for
the execution of a new ESA containing the then-effective seasonal hydropower rates in all
months except for March and April, when the rates would instead be a surplus energy rate
calculated from a non-firm market price.
At the time of the MOU, the parties also discussed selection of an appropriate Scheduled
Operation Date to include in the new ESA. Id. atl I l. Ms. Alina Osorio was involved in
negotiations of the MOU and executed that agreement on behalf of Clark Canyon. At that time,
Ms. Osorio and her direct employees at Clark Canyon were unaware of any significant facts that
could likely impair the FERC license, and believed the project's construction could be completed
by 2017. Idaho Power expressed no concerns with the specific date that Clark Canyon selected
so long as it was a date by which the project could reasonably complete construction and begin
commercial operation. Id. At the time of execution of the MOU, the parties included a new
Scheduled Operation Date of January I ,2017 in the MOU.
In the days following execution of the MOU, the parties continued to discuss the
reasonable Scheduled Operation Date to include in the new ESA. Id. at\ 12. Ms. Osorio
discussed this issue with Mr. Randy Allphin and Mr. Jerry Jardine of Idaho Power. Ms. Osorio
and other decision-makers at Clark Canyon were still unaware of any latent defects in the FERC
license or the ongoing communications with FERC that might lead FERC to revoke the license
or otherwise cause a further delay in the construction of the facility, but wished to move the
Scheduled Online Date from January 1,2017 to June 1,2017 to avoid bringing the project online
in the winter. Idaho Power expressed no concerns with the specific date that Clark Canyon
selected and agreed to include in the new ESA (the "2014 ESA") a Scheduled Operation Date of
June l, 2017. 1d Thus, at the time of the MOU and final discussions of the 2014 ESA, the
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parties intended to select a Scheduled Operation Date that was reasonably achievable by Clark
Canyon, and based on information known to the representatives of Clark Canyon and Idaho
Power at that time the June I ,2017 date appeared reasonable. Id. at fl 13. Idaho Power provided
no indication it would have objected to a later Scheduled Operation Date such as one in2019,
had that been understood as necessary at the time to accommodate regulatory delays. See id.
The 2014 ESA also included provisions stating that Idaho Power will own 50 percent of
the RECs, carried through from the 201I ESA per the terms of the MOU. Additionally, Idaho
Power has retained the $211,500 security deposit previously posted by Clark Canyon, as delay
security for the 2014 ESA, id. atl14, unlike most ESAs where the security deposit is posted
only after the Commission approves the ESA. See Order No. 32697 at32. The 2014 ESA was
fully executed on May 30, 2014, and Idaho Power filed the 2014 ESA with the Commission for
approval on June 4,2014.
Importantly, by is time, Clark Canyon had proceeded through all the studies and
agreements necessilry with Idaho Power to interconnect the facility to Idaho Power's Peterson
substation. Affidavit of Alina Osorio at fl 16. Clark Canyon and Idaho Power had executed the
Generator Interconnection Agreement and by the time of execution of the 2014 ESA Clark
Canyon paid an initial deposit of $765,000 for the interconnection construction and paid
additional amounts in actual costs over a period of months, for total payment to Idaho Power of
$l,l14,545.29. To this date, Clark Canyon remains in ldaho Power's interconnection queue with
a fully executed Generator Interconnection Agreement, and the interconnection construction is
complete. Id. Clark Canyon has therefore fully performed its obligations in this regard.
However, on June 27,20l4,just weeks after selection of the new Scheduled Operation
Date and submittal of the 2014 ESA to the Commission, FERC Staff issued a Notice of Probable
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License Termination for failure to commence construction by the date required in the FERC
license, which was August25,2013. Id. atl17. FERC's Notice of Probable Termination was
unexpected to the leadership of Clark Canyon who had been involved in selecting the new
Scheduled Operation Date in the 2014 ESA.
As noted previously, when ICP took over ownership of Clark Canyon it retained the key
Symbiotics employees that had been involved in Clark Canyon, including the main principal and
primary FERC contact with respect to Clark Canyon. Id. atl18. Clark Canyon's leadership had
acted upon the belief that those individuals managing the contacts with FERC had maintained
adequate communications with FERC on the development activities. Id. at fl 19. Clark
Canyon's general understanding was that the project had met FERC's requirements for
commencement of construction by purchasing site-specific turbines for the facility, as opposed to
actual on-site construction. Although FERC later confirmed that Clark Canyon had the option to
commence construction through the purchase of turbines and components, FERC Staffhad
apparently taken issue with the completion of application materials and other correspondence to
commence construction in that manner under FERC regulations, which formed the basis of the
Notice of Probable Termination. Id.
Clark Canyon's leadership was doubly surprised by FERC Stafls Notice of Probable
Termination because FERC had not issued a letter to Clark Canyon in the month prior to
commencement of construction deadline in August 2013, which was understood to be the
agency's typical practice prior to terminating a license for failure to commence construction. Id.
at\20. In the absence of such a letter, at the time, Clark Canyon's leadership assumed that the
project had commenced construction when it executed an enforceable contract for the project-
specific turbines and other components. By the fall of 2013, Clark Canyon had even received
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much of the equipment fabricated by the manufacturer of the equipment, further supporting its
good faith belief of regulatory compliance. Clark Canyon had been in regular communication
with FERC Staff, and there had never been any indication relayed to Clark Canyon's leadership
that the project was in jeopardy of failing to meet the commencement of construction deadline.
ln sum, the Notice of Probable Termination issued by FERC Staff on June27,2014 was a
complete surprise to Clark Canyon. Id.
Had Clark Canyon's leadership been aware of the risk that FERC would terminate the
license or otherwise impose any other regulatory delays at the time of selection of the Scheduled
Operation Date in the2014 ESA, it would have included a Scheduled Operation Date in the 2014
ESA that allowed additional time in the future to allow a reasonable timeframe to resolve those
regulatory issues. Id. atl2l.
After FERC issued its Notice of Probable Termination, Clark Canyon promptly filed a
notice with FERC on July 4,2014, requesting that FERC change the contacts on file to ensure
that future communication breakdowns would not occur. Clark Canyon has remained in diligent
contact with FERC since that time. Id. at\22.
On July 31,2014, Mr. Rick Sterling, Commission Staff assigned to the ESA approval
proceeding, contacted Ms. Osorio, of Clark Canyon, by telephone to express concem with the
FERC Notice of Probable License Termination, which Mr. Sterling apparently discovered in
conducting due diligence on the2014 ESA application. Id. at\23. I|lIr. Sterling indicated that
the 2014 ESA contains a requirement that the FERC license be in effect and was concerned that
the new developments at FERC would compromise Clark Canyon's ability to meet its
obligations under the 2014 ESA as submitted. Mr. Sterling proposed suspending ESA approval
docket due to FERC Stafls termination notice to allow time to correct and clarify the
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discrepancies between the FERC proceedings and the 2014 ESA prior to Commission
consideration and approval. Clark Canyon agreed with Staff s proposal, and representatives of
Idaho Power also agreed to move to suspend the proceeding. Id.
On August 5,2014, the Commission issued its Order No. 33088, suspending the case for
approval of the 2014 ESA to allow for correction of the FERC licensing discrepancies. Id. atl
24. In the words of Commission Staff s motion: "Clark Canyon has informed Staff that it will
notify the Commission as soon as it resolves the pending matters. At that time, comment
deadlines can be reset and the Commission will be able to consider the Power Purchase
Agreement's terms based on the most accurate information available." Staff Motion to Suspend
Schedule, at 2 (filed July 31,2017).
The Commission granted the stay. In its Notice of Suspension, the Commission stated:
While reviewing the Application, Power Purchase Agreement and other pertinent
documents, some discrepancies were discovered between Clark Canyon's FERC
license and its Power Purchase Agreement with Idaho Power. In order to allow
the project an opportunity to correct the discrepancies and resolve some
underlying matters that have arisen with regard to its project,the parties request
that the Commission suspend the procedural schedule in this case. Idaho Power,
Clark Canyon and Commission Staff agree that it is reasonable to suspend the
schedule until Clark Canyon is able to resolve and/or clarify the discrepancies.
Order No. 33088 at I (emph. added). The Commission ordered: "ldaho Power and Clark
Canyon as parties to the Power Purchase Agreement are directed to notify the Commission as
soon as the discrepancies and underlying matters are resolved so that the Commission may
proceed in considering the Application filed on June 4, 2014." Id.
Clark Canyon diligently expended substantial expense and efforts to preserve the first
FERC license, but was unable to convince FERC not to terminate the license. On March 19,
2015, FERC terminated the license, 150 FERC'!J61,195. FERC's rehearing process amounted to
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a substantial delay, almost nine months just to receive the final termination order. In its order,
FERC expressed sympathy for Clark Canyon's situation, stating:
[W]e also recognize that Clark Canyon has, in recent months, renewed its efforts
to develop the project, and, while the licensee has not yet corrected the
deficiencies that compelled our holding here, it may be that its future efforts will
prove more successful. Although we are required to terminate the license, we are
sympathetic to efforts to develop the project - indeed, [FERC] previously issued
Clark Canyon a license because [FERC] concluded that the Clark Canyon project
was in the public interest - and those efforts need not end with our holding here.
150 FERC fl 61,195 at P 55. But ultimately FERC directed that Clark Canyon must obtain a new
FERC license or the United States Congress could enact legislation reinstating the prior license.
rd.
At this point, all activities to continue with construction at the site, including the 7.9-mile
69-kV project line from the facility to Idaho Power's Peterson substation, had to cease by
operation of law. To illustrate, the construction activities authorized by the initial license that
FERC curtailed through termination of the license included the following:
(a) installation of a steel lining in the existing concrete outlet conduit with a 9-
foot-diameter bifurcation to the new powerhouse; (b) construction of a 15-foot by
35-foot valve houSe at the end of the existing outlet conduit, with a 7-foot-
diameter flow-through valve on the outlet conduit and a 9-foot-diameter isolation
valve located on the penstock conduit; (c) installation of a 9-foot-diameter,25-
foot-long steel penstock bifurcated into an 8-foot-diameter, 4O-foot-long steel
penstock and a 6-foot-diameter, 30-foot-long steel penstock to direct flow to two
turbines; (d) construction of a 3O-foot by 5O-foot concrete powerhouse, located at
the toe of the dam adjacent to the spillway stilling basin, containing two vertical-
shaft Francis turbines with individual installed capacities of 3.0 and 1.7 MW, for a
combined installed capacity of 4.7 MW,[3] a minimum hydraulic capacity of 87.5
3 The project has notified ldaho Power and Commission Staff that the current plans are still to
construct a 4.7 MW facility, but with two 2.35 MW generators instead of the prior configuration in the
first FERC license. Affidavit of Alina Osorio atl32. Although the 4.7 MW nameplate capacity differs
from the plans set forth in Appendix B-l of the 2014 ESA to installtwo generators totaling 7.55 MW,
there is no contractual requirement in the 2014 ESA to construct a plant that precisely matches the 7.55-
MW configuration in that Appendix. Additionally, the currently proposed 4.7-MW configuration is
designed to supply Idaho Power with same monthly energy production profile as contained in the 2014
ESA at Article 6.2. See Affidavit of Alina Osorio atl32.
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cubic feet per second ("cfs"), and a maximum hydraulic capacity of 700 cfs; (e)
construction of a 3OO-foot-long project access road, extending from an existing
non-project access road, leading to a 30-foot by 30-foot concrete parking pad and
transformer adjacent to the powerhouse; and (f) construction of a 7.9-mile-long,
69-kilovolt overhead transmission line connecting to Idaho Power Company's
Peterson Flat substation.
Id. atP 4. Continuing with these activities without authorization would be a violation of the
Federal Power Act subjecting the project to penalties of up to $l million and five years'
imprisonment. See 16 U.S.C. $ 825o.
After FERC terminated the first license, Clark Canyon expended substantial resources on
two parallel fronts as FERC suggested: (1) to obtain legislative reinstatement of the license, and
(2\ to obtain a new license. Clark Canyon did all of this with the expectation that it would be
able to still sell to Idaho Power under the 2014 ESA's agreed-to rates. ffidavit of Alina Osorio
at\27. Additionally, Ms. Osorio of Clark Canyon had an additional update call with Mr.
Sterling informing him that Clark Canyon was seeking both a relicensing and legislative fix to
either have the old license reinstated or receive a new one, but that Clark Canyon had no further
updates on positive progress to report. Id. atl30. No party sought to terminate the proceeding
or lift the stay in this case due to the length of the delay, and Clark Canyon's diligent efforts
continued.
On the legislative front, the efforts were near achievement of fully enacted legislation in
the United States Congress reinstating the FERC license due to efforts of Congressional
delegations from both Idaho and Montana, with numerous bills introduced to save the Clark
Canyon project. Id. at\ 28. Senators Daines, Crapo, Risch, and Tester introduced Senate Bill
I 103, on April27,2015, which would have reinstated the original license (Project No. 12429)
and extended the time to commence construction until a three-year period after enactment of the
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bill. The same measure was also included as Section 3003, in Senate Bill2012, the Energy
Policy Modernization Act of 2016, which passed by the Senate, as amended, on April 20,2016.
Representatives Zinke, Labrador, and Simpson introduced companion language in H.R. 2080 in
the House of Representatives on April 28,2015, which eventually passed the House on March
14,2016. Idaho and Montana's Senators jointly introduced Senate Bill 491 on March 2,2017 ,
which also would have reinstated the license.
On the regulatory front, Clark Canyon worked expeditiously to obtain a new FERC
license in just over two years, which ultimately mooted the legislative efforts. Id. at\29. Clark
Canyon even resolved an appeal in Montana state court of the Montana Department of
Environmental Quality's Clean Water Act Section 401 certification by a local group, Upper
Missouri Waterkeeper, concerned with pre-existing water quality issues on the Beaverhead
River. On March 31,2017, FERC issued a new license, Project No. 14677, 158 FERC n 62,269.
On April 26,2017, Clark Canyon notified Idaho Power representatives of the new FERC license,
and has discussed the status of the project with Idaho Power and Commission Staff. Id at\32.
To date, Clark Canyon has expended substantial resources on its development efforts
both before and after the suspension of the schedule to approve the 2014 ESA. Id. at fl 33.
Total expenditures of approximately $9.4 million were made prior to signing the 2014
ESA, as detailed below:
Engineering
BOR Design Review Fees
Interconnection Fees
Turbine Purchase
Preconstruction/Penstock
LegallTravel/Admin
$ 3,000,000
$ 1,700,000
$ 1,100,000
$ 2,200,000
$ 800,000
$ 600,000
TOTAL $ 9,400,000
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Id. at\34.
Total expenditures and a summary of different expense items since the Commission's
August 5,2014 order staying20l4 ESA approval are approximately $1.2 million, as detailed
below:
Engineering
Legal/Advisory/Audit
Permitting/Licensing
Components
Travel/Admin
TOTAL $ 1,200,000
Id. at\35.
As noted earlier, Idaho Power accepted over $l million in interconnection construction
fees and completed the interconnection construction at the Peterson Substation. Additionally, all
turbine and generator components, which had to be uniquely designed for just this project, have
been manufactured by Dong Fang. Embedded parts have been shipped to the United States and
are being stored in the contractor's yard. Moving parts are ready for shipment from China. Clark
Canyon has spent over $2.2 million to date on these turbines and generators, as well as over $3
million in engineering designs for the facility. Id. atl36.
Clark Canyon has also reached an agreement with a lender to provide construction
financing to complete construction and bring the project online if the Commission approves the
2014 ESA with a Scheduled Operation Date that corresponds to the delay created by FERC's
termination of the FERC license and the suspension of the ESA approval case before the
Commission. Id. atl137. Additionally, Clark Canyon has an agreement with a contractor based
in Boise, Idaho to construct the project if the project moves forward. /d
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$ 500,000
$ 285,000
$ 265,000
$ 130,000
$ 20,000
With the new FERC license allowing resumption of on-site construction, Clark Canyon
estimates that it could bring the project to commercial operation by December 31,2019. Id. at\
38. That would be approximately a two-year delay from the initially proposed Scheduled
Operation Date in the2014 ESA submitted to the Commission, plus the delay expected in getting
the 2014 ESA approved by the Commission, which is necessary prior to further completion of
construction financing and activities to complete construction.
However, if the 2014 ESA were not corrected to accommodate the delay associated with
the unexpected termination of the FERC license and the ESA were terminated, Idaho Power's
currently effective avoided cost rates for a new ESA would not be economically viable for the
Clark Canyon project. Id. atl39. Efforts to power the Clark Canyon Dam would most likely be
abandoned and the Congressional efforts and FERC's expedited efforts to issue the new license
would have been for no purpose.
COMMENTS
This case presents the unique problem that the parties signed and presented for
Commission approval an ESA that contained a Scheduled Operation Date that was premised on a
mistake of fact that became uncovered prior to Commission approval of the ESA. However,
because the actual date selected for the Scheduled Operation Date was not a critical component
of the parties underlying proposal agreed to in2014, the proper course of action here is to simply
correct the Scheduled Operation Date and otherwise approve the submitted ESA.
A.The ESA Should be Approved with the Scheduled Operation Date Corrected to a
Date that Corresponds to the FERC Licensing Delay and this Commission's Stay of
this Proceeding - December 31r2019.
The terms of the parties' existing agreements and this Commission's order staying the
proceeding warrant revision to the Scheduled Operation Date to achieve a reasonable and just
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result. The critical elements of the parties' contractual obligations are established by the terms of
the MOU. The MOU effectively imposed a contractual obligation on the parties to enter into and
then seek approval of an ESA containing the significant terms agreed to in the MOU. See MOU
at 3 (after setting forth the broad MOU terms, stating "Idaho Power will file the new ESA with
the IPUC seeking approval" (emph. added)). Idaho Power and Clark Canyon have a binding
agreement to enter into and seek Commission approval of an ESA containing the critical terms
set forth in the MOU. Neither party has attempted to terminate that binding contractual
agreement to date.
The material components of that MOU are set forth in Idaho Power's application in this
docket. Idaho Power explained that its intent in the MOU was to "adhere[] to its PURPA
obligation to contract with this new proposed QF project, address[] the project's previous lack of
performance, satisfu[] the project's requests to contract and purchase in a timely and reasonable
manner, and maintain[] the value from the terminated FESA for Idaho Power and its customers
by requiring terms and conditions that would carry certain provisions from the terminated FESA
forward into the new ESA." Idaho Power's Application at 4-5.
Idaho Power listed the critical terms of the MOU as follows:
(a) Termination of the existing (previously approved) FESA;
(b) Collection by Idaho Power of Delay Liquidated Damages;
(c) Negotiation and execution of a new Seasonal Hydro ESA that retains the
Delay Liquidated Damages provisions of the previous FESA, requires the project
to post Delay Security for the new ESA at $45 per kilowatt of nameplate, and
allows the project to offset this Delay Security amount by the previously forfeited
Delay Security;
(d) Any energy deliveries to Idaho Power in the months of March or April will be
paid the market value of energy and not the Surrogate Avoided Resource ("SAR")
published avoided cost rate;
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(e) If the project fails to meet the Seasonal Hydro Project requirements (55
percent of generation delivered during the months of June, July, and August),
payments will be revised to reflect Non-Seasonal Hydro SAR published avoided
cost prices; and
(f) The provision from the terminated FESA whereby Idaho Power owns 50
percent of the Renewable Energy Certificates/Credits associated with the project
is carried forward to the new ESA.
Idaho Power's Application at 5.
Idaho Power did not list the Scheduled Operation Date as one of the critical components
of the MOU. And there was in fact no reason for the actual operation date to be a critical
component of the agreement to Idaho Power because Idaho Power was at the time of the MOU,
and to this day remains, in a resource suffrcient state. Idaho Power's lack of concern regarding
the specific Scheduled Operation Date, at the time of execution of the MOU and the 2014 ESA,
is funher evidenced by Idaho Power's agreement to change the MOU's proposed Scheduled
Operation Date of January 1 ,2017 to the 2014 ESA's date of June 1,2017. If the Scheduled
Operation Date had been a critical component of the parties' MOU, Idaho Power would not have
agreed to change it days later in the 2014 ESA. Additionally, if the parties had known of the
impending FERC licensing issues, Clark Canyon would have requested that the licensing delay
be incorporated into the Scheduled Operation Date in the new ESA. There is no reason to
believe that Idaho Power would not have agreed in2014 to a later Scheduled Operation Date to
preserve the benefits carried forward from the 201I ESA.
The 2014 ESA itself is a preliminarily binding agreement, but it is not too late to correct
the erroneous Scheduled Operation Date to achieve the intent of the MOU. The very first line of
the2014 ESA provides: "THIS ENERGY SALES AGREEMENT ('AGREEMENT'), entered
into on this 30th day of May 2014 between CLARK CANYON HYDRO, LLC (Seller), and
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IDAHO POWER COMPANY . . . ." Likewise, Article 1.12 defines the "Effective Date" as
"[t]he date stated in the opening paragraph of this Energy Sales Agreement representing the date
upon which this Energy Sales Agreement was fully executed by both Parties," and Article 5.1
provides "this Agreement shall become effective on Effective Date and shall continue in full
force and effect for a period of twenty (20) Contract Years from the Operation Date." Thus, to
suggest there is no binding contractual alrangement would be incorrect.
As with all Idaho Power's PURPA contacts, the2014 ESA contains a condition
subsequent to execution that must be satisfied before the parties' full performance. Article 2l of
the 2014 ESA provides: "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 shall be allowed as prudently
incurred expenses for ratemaking purposes." The Commission indeed retains authority to review
every submitted ESA to ensure its rates and terms are fair and just. But in this case the
Commission's approval, modification, or rejection of the submitted ESA is simply a condition
subsequent to the creation of the previous contractual obligations. That is, Commission approval
is a condition that must be met for full performance to go forth under the initial agreement to
contract for the sale of the net output at the 2014 avoided cost rates, as set forth in the MOU and
its material terms imported to the 2014 ESA. See, e.g., Restatement 2d of Contracts, $ 224,
comment e; 17 A Am. Jur. 2d, Contracls at $ 464 (2004) (discussing conditions subsequent to an
enforceable agreement).4 However, that condition subsequent in the submitted ESA does not
a [n contrast, a condition precedent is an event that must occur before any contractual duties arise.
Weisel v. Beover Springs Owners Ass'n,152 Idaho 519,528,272P.3d 491, 500 (2012) (holding there was
no condition precedent where agreement demonstrates parties' intent that "terms take immediate effect.")
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negate the existence of the underlying agreement by Idaho Power and Clark Canyon under the
MOU to achieve Commission approval of an ESA with the critical terms of the MOU.
The parties began performing their respective obligations under these agreements by
submitting the2014 ESA for Commission approval. Additionally, unlike most QF projects,
Clark Canyon has already supplied delay securityprior to the Commission's approval of the
2014 ESA, and has fully funded the interconnection construction, which is already constructed.
When the mistake as to the FERC license was discovered, the parties continued their
performance in good faith by seeking and obtaining the Commission's stay of the proceedings to
allow for correction of the identified discrepancies. Idaho Power agreed to this stay -
presumably because it was interested at that time in preserving the benefits of the 201I ESA
carried through into the MOU and the 2014 ESA.
As noted above, the Commission stayed the ESA approval process due to the FERC
licensing issues occurring during ESA approval in order "to allow the project an opportunity to
correct the discrepancies and resolve some underlying matters that have arisen with regard to its
project. . ." Order No. 33088 at I (emph. added). "Idaho Power, Clark Canyon and Commission
Staff agreefd] that it [wa]s reasonable to suspend the schedule until Clark Canyon is able to
resolve and/or clarify the discrepancies." Id. Clark Canyon understood this as an opportunity to
cure the licensing issues and modify the ESA if necessary to, in the Commission's words,
"correct the discrepancies" before the final memorialization of the previously agreed-to material
terms of the MOU became finally effective in a manner that would become more difficult to
amend.
There is no condition precedent here because the plain terms of the MOU and the 2014 ESA demonstrate
that both agreements have been immediately effective ever since their execution. See id.
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Furthermore, correction of the Scheduled Operation Date would recognize Clark
Canyon's reliance on the material terms of the MOU and the parties' agreement to stay this
proceeding to correct the errors and deficiencies before FERC. Clark Canyon expended
substantial amounts of time and money in good faith to correct the licensing defect, as detailed
above. Had this proceeding and the 2014 ESA simply been terminated at the time the initial
FERC Staff Notice of Probable Termination, as Idaho Power could have pursued under Article
3.3 of the ESA, Clark Canyon would not have expended another $1.2 million in conecting the
deficiencies in the FERC license. Alternatively, had Idaho Power attempted to terminate the
MOU and20l4 ESA in 2014, Clark Canyon could have sought to obtain a replacement ESA
with another utility under the market conditions at that time. See, e.g., Order No. 33041 at
Attachments (containing PacifiCorp's seasonal hydropower rates available in late 2014).
However, Idaho Power did not move to terminate the proceeding or the ESA at any point prior to
issuance of the second FERC license. Idaho Power has also fully constructed the interconnection
facilities on its own system with Clark Canyon's funding, further evidencing the parties' reliance
interests.
In the absence of notice to the contrary in2014,2015, or 2016, Clark Canyon had no
reason to expect that if it corrected the licensing deficiencies, Idaho Power would seek to enforce
the extreme remedy of termination of the 2014 ESA after a new FERC license was obtained.
The ESA itself does not mandate termination if the Seller fails to achieve the Scheduled
Operation Date (June 1,2017), and instead it provides Idaho Power with the discretion to
terminate, in Article 5.8, if the Seller fails to achieve the Operation Date within Delay Cure
Period, just as it provides Idaho Power discretion to seek termination if Clark Canyon fails to
maintain its FERC license as required in Article 3.3. Idaho Power's prior agreement to allow for
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a correction to the discrepancies was reasonably understood as Idaho Power's agreement not to
enforce this termination right if the FERC licensing issues were reasonably cured.
There is also precedent for the Commission correcting discrepancies in a submitted ESA
where the result of the terms agreed to by Idaho Power and QF would be unjust. Notably, in the
Interconnect Solar orders the Commission directed correction of an error underlying the rates in
the agreement submitted. Order No. 32384 at l-2. Additionally, the Commission also stated in
a passage directly relevant to Clark Canyon's request in this case: "We share the concerns of
Commission Staff and Idaho Power regarding Interconnect Solar's choice of a Scheduled
Operation Date that precedes Idaho Power's estimated date for completion of the Project's
interconnection. The Project's optimism may prove to be foolhardy." Order No. 32384 at 10.
Ultimately, Interconnect Solar's ESA was terminated due to issues related to the Scheduled
Operation Date with which Staff had expressed concem, and Idaho Power's termination of the
agreement led to additional disputes. See, e.g., Order No. 32531 at2-5. Clark Canyon simply
seeks to avoid the same fate as Interconnect Solar, and it accordingly acted on Staff s invitation
to correct the inconsistencies at issue in the FERC license and the 2014 ESA.
Additionally, this extension of time has not been a free option to Clark Canyon. Instead,
it already made substantial expenditures to correct the deficiencies it experienced, and it
previously provided Idaho Power substantial rights in the MOU and2014 ESA that were not
otherwise available in2014, including Idaho Power's ownership of 50 percent of the RECs, as
well as posting of a liquid security and completion of interconnection construction prior to
Commission approval of the agreement.
Therefore, the Commission should approve the 2014 ESA with a correct Scheduled
Operation Date, consistent with the parties' past conduct and course of dealing under the unique
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circumstances here and consistent with this Commission's prior determination to suspend the
proceeding to allow for such correction. Doing so would be consistent with the intent of the
parties in2014 to select an achievable Scheduled Operation Date and would be a proper exercise
of this Commission's authority to review and correct errors in submitted ESAs. Any other result
would arbitrarily penalize Clark Canyon's good faith efforts to correct the discrepancies with its
FERC license and the 2014 ESA in response to this Commission's stay of the proceedings.
B. Contract Law Requires Correction of the Scheduled Operation Date.
Although Clark Canyon submits that the Commission should correct the Scheduled
Operation Date to act consistently with its past order and to achieve a just result, there are also
independent bases to correct the Scheduled Operation Date under contract law doctrines.
As noted above, the MOU constitutes a binding contractual arrangement between Clark
Canyon and tdaho Power to enter into arrangements for Clark Canyon to sell its output to Idaho
Power at the 2014 avoided cost rates for season hydropower projects, while retaining the benefits
of the 2011 ESA for Idaho Power. Clark Canyon has in fact performed in large part under that
arrangement, but the final memorialization of all underlying terms and conditions of the
agreement in the 2014 ESA contains an impractical Scheduled Operation Date that was the result
of a mistake of fact as to the lack of any regulatory delays.
Under analogous circumstances, Idaho courts have applied the contractual doctrine of
mistake of fact "to eliminate the effect of the mistake by supplying a new term or otherwise
modifying the agreement as justice requires, thus protecting the parties' reliance interests."
Thieme v. Worst, I l3 Idaho 455, 459,745 P.2d 1076, 1080 (Ct. App. 1987). The mistake-of-fact
doctrine results in "reshaping the contract duties to achieve a just result, consistent with the
parties' intent." Id. In Thieme, for example, the parties contracted for the sale of land and water
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from a nearby canal but suffered from a "common mistake of fact" at the time of contracting by
assuming that there was a water delivery system to deliver water to the property. Id. The
purchasers discovered there was in fact no functioning water delivery system only after they
acted in reliance by beginning construction of a house and planting a garden and crops. The
Idaho Court of Appeals held that a mistake is ooan unintentional act or omission arising from
ignorance, surprise, or misplaced confidence," and found that a mutual mistake occurred as to a
basic assumption upon which the contract was made . Id., | 13 Idaho at 458-59. The court further
held that reshaping the contract "to create a duty on the [the sellers] to provide a water system for
the land as contemplated by the parties at the time of contracting" was the correct remedy. Id. at
459. The court explained the "result here protects the parties'reliance interests existing at the
time the sale agreement was entered into." Id.
Idaho courts have also applied the mistake-of-fact doctrine to modify contracts where
each party had a different mistaken belief about the same basic fact and where the course of
conduct under the contract supports such modification. See Leydet v. Mountain Home,ll9
Idaho 1041, 1045,812P.2d755,759 (Ct. App. 1991). In Leydet, the Court of Appeals addressed
a contract between Henry Leydet and the city of Mountain Home to have the city deliver treated
wastewater to Leydet's farm for irrigation. The parties were mistaken for distinct reasons: the
city's misconception was that it could produce the contracted amount of effluent, and Leydet's
different misconception was that it would need to the contracted amount of effluent. Id.,7l9
Idaho at 1044. The court held that, in Idaho, unlike some other states, "the doctrine of mutual
mistake also includes situations where the parties proceed with different misconceptions
conceming the same basic assumption or vital fact." Id. The court also found the parties
engaged in a course of conduct different from the contract that warranted modification -
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"[b]ecause Leydet requested and accepted less than the contract amount of treated wastewater
per year and because the record indicates that he received what he was capable of using, his
conduct modified the contract." Id. at 1046.
The mistake-of-fact doctrine applied by the Idaho courts warrants correction of the
parties' mistaken belief here that no regulatory delays were likely to preclude Clark Canyon from
completing construction and bring the project online by June 1,2017. Clark Canyon was
unaware of the latent defects in its prior owner's regulatory compliance under the FERC license.
Neither party here considered the Scheduled Operation Date to be a critical component of the
MOU, although the ability to achieve that deadline was a basic assumption upon which the
contract was based. However, the intent of the MOU and20l4 ESA was simply to pick a
Scheduled Operation Date that was reasonably achievable. Resetting the operation date to a
reasonably achievable date was the entire reason for replacing the 201I ESA under the terms of
the MOU. As in Thiemes, correction of the Scheduled Operation Date would recognize Clark
Canyon's reliance on the material terms of the MOU and the parties' agreement to stay this
proceeding to allow Clark Canyon to correct the errors and deficiencies before FERC.
Furthermore, as in Leydet,ldaho Power is not harmed by the delay and its course of
conduct was consistent with a revision to the original on-site construction plans to bring the
project online. If anything, Idaho Power has benefited from the delay because, contrary to
assumptions at the time of execution of the 2014 ESA, Idaho Power became resource sufficient
more quickly than anticipated and will not truly need the energy that would have been supplied
in the period between the prior Scheduled Operation Date in 2017 and a revised Scheduled
Operation Date in 2019. [t also has retained a security deposit, eliminating any harm that it
might incur during any short-term shortfalls or market price spikes. That the parties may have
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had different bases for the underlying mistake in the 2014 ESA is immaterial under Idaho law.
Both parties also agreed to stay approval of the 2014 ESA to correct deficiencies as soon as the
mistake regarding the FERC licensing procedures was uncovered and took no contrary steps to
such correction prior to the point when Clark Canyon obtained a new license. Thus, the initially
agreed-to course of conduct - to seek prompt approval of the 2014 ESA and commence on-site
construction at the dam in that year - was altered by agreement of the parties. Idaho Power
made no objection prior to the extended stay of this proceeding or any other time prior to Clark
Canyon's expenditure of substantial sums (along with numerous Congressional enactments) that
had fully cured the cause of regulatory delay. This course of conduct justifies the revised
Scheduled Operation Date.
Additionally, and separately, the related doctrine of impossibility or impracticality of
performance warrants excusing strict application of the June 1,2017 Scheduled Operation Date.
Idaho courts have applied the impossibility doctrine to excuse performance where changed
circumstances make performance of a particular contract term impossible. Landis v. Hodgson,
109 Idaho 252, 256-58, 706 P.2d 1363, 1367 -69 (Ct.App. l985). "Where, after a contract is
made, a party's performance is made impracticable without his fault by the occurrence of an
event the non-occurrence of which was a basic assumption on which the contract was made, his
duty to render that performance is discharged, unless the language or the circumstances indicate
the contrary." Id., 109 Idaho at 256 (internal quotation omitted). The Idaho Court of Appeals
has specifically recognized that "[o]ne such superseding event has been the
goverrlment imposition of a new law, regulation or order which makes the performance of a duty
impractical." Id. at257 (intemal quotation omitted). ln Landis, the state's unexpected
termination of a lease for property used to operate a resort business excused the lessee's
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obligation to make payments in its purchase of the resort business from a third party. Id. at257-
58.
As noted above, FERC's unforeseen actions legally baned on-site construction at the
Clark Canyon Dam for over two years shortly after execution of the 2014 ESA. The facts here
fit within the doctrine of impossibility because FERC took no action to commence revocation of
the license until long after the date that FERC found construction to be delayed in August 2013
and after the parties here selected the Scheduled Operation Date in the 2014 ESA. As in Landis,
FERC Staff s Notice of Probable Termination and FERC's subsequent termination order
constituted "an event the non-occurrence of which was assumed at the time the contract was
made," and therefore Idaho courts would hold Clark Canyon "will be relieved of [it]s duty" to
achieve the Scheduled Operation Date of June 1,2017 due to the impossibility of lawfully doing
so. Id.,l09 tdaho at257. All parties essentially recognized this barrier to lawful performance
when this ESA approval proceeding was placed in a stay. However, Clark Canyon has
expeditiously completed significant tasks it was authorized to complete, as discussed above in
detail, demonstrating its good faith. Additionally, the faults found by FERC that caused the
license revocation were the faults of the prior owners and management of Clark Canyon, not the
owners and leadership that negotiated the 2014 ESA in an effort to correct the prior owners'
shortcomings under the prior ESA, and Clark Canyon has now rectified those prior errors,
consistent with the intent of the MOU.
Therefore, Clark Canyon should be excused from achieving a Scheduled Operation Date
of June 1,2017, as a matter of basic contract law in equity, and the Scheduled Operation Date
should be tolled during the time period that the FERC license was revoked and this proceeding
suspended - approximately two and half years.
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C.Revising the Scheduled Operation Date Would Be Consistent with Legislative
Efforts by ldaho and Montana's Congressional Delegations, as Well As Policies in
Place to Harness the Power Potential of Existing Dams
As noted above, the Congressional delegations of Idaho and Montana worked diligently
to restore the FERC license. Both the U.S. Senate and the House or Representatives enacted
legislation that would have reinstated the FERC license and extended the deadline to commence
construction until three years after such reinstatement. Thus, Congressional intent fully supports
the extension of the obligations to complete construction and operation under the2014 ESA at
issue here in step with the delays caused by FERC's license revocation.
These Congressional efforts are consistent with long-standing and bi-partisan support for
efforts to power existing dams. Federal and state policies are intended to encourage small power
production, especially small hydropower at existing dams without the need for a new
impoundment. For example, in the Hydropower Regulatory Efficiency Act of 2013, Congress
recently declared that "only 3 percent of the 80,000 dams in the United States generate
electricity, so there is substantial potential for adding hydropower generation to nonpowered
dams." See P.L. ll3-23 at $ 2. That law, which was unanimously enacted by Congress,
directed FERC to study the possibility of developing a two-year licensing process to promote
hydropower development at nonpowered dams, and expanded previously available exemptions
from licensing for such projects. See P.L. 113-23 at $$ 3 & 6. In the case of Clark Canyon,
FERC in fact expedited the issuance of the second license and issued the license in significantly
less than two years. See Clark Canyon Hydro, LLC, 158 FERC n 62,269 at P I (application filed
November 23,2015 and license granted March 31,2017).
This Commission also promotes small hydropower projects that can deliver energy when
most in need through seasonal hydropower rates that Clark Canyon has committed to in this case.
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Honoring the initial intent of the MOU to preserve the opportunity for Clark Canyon to fully
perform on its longstanding efforts to power the Clark Canyon Dam is necessary to reach a result
consistent with these federal and state policies.
D.An ESA With a Revised Scheduled Operation Date Would Be Consistent with the
Commission's Precedent.
Revision of the Scheduled Operation Date is reasonable and required under the
circumstances here for the reasons set forth above. Clark Canyon understands that the
Commission may have concerns whether the length of time between the initial execution date of
the 2014 ESA and a Scheduled Operation Date five years later falls within its precedent, and
whether Clark Canyon should be required to sell under the currently effective avoided cost rates,
which have decreased since execution of those 2014 agreements. However, neither
consideration warrants disapproval of the 2014 ESA with a new Scheduled Operation Date in
2019.
A Scheduled Operation Date of Five Years After Execution Is Reasonable
and Well Within the Commission's Existing Precedent
The Commission's longstanding precedent establishes that an operation date set five
years after the year of contracting is appropriate. The Commission established this rule early in
its implementation of PURPA in 1989, declaring:
Avoided cost rates calculated under the methodology prescribed herein represent
"...avoided costs calculated at the time the obligation is incurred." Although we
recognize the risks (both "upside" and "downside") we believe that long lead time
QFs should receive full benefit of avoided costs as estimated "at the time the
obligation is incurued. " Therefore, we find it reasonable that avoided costs
computed under the methodology prescribed herein shall be published for six
years, including the year of computation.
Order No. 22636 at 59 (emph. added). To this date, all three of ldaho's investor-owned utilities
publish existing rate schedules that reflect the option to elect an operation date that is five years
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I
into the future, including levelized rates available today that are calculated for an online date of
2017,2018,2019,2020,2021, and2022.s The rates contained in Clark Canyon's 2014 ESA
likewise contain rates throu gh 2039 in Exhibit E, and the 2014 ESA thus allows for a 20-year
period of payments if the project were to initially achieve operation in2019. Thus, no
amendment is needed to the rates in the 2014 ESA to accommodate Clark Canyon's request and
the original intent of the MOU. This policy makes good sense because an electric generation
facility, particularly a hydropower project, will often require several years to complete permitting
and construction activities before coming online.
There is even precedent for Idaho Power entering into a power purchase agreement with a
guaranteed online date approximately eight years after the date of execution. In that case, the
extended development period was justified by the developer's need to complete exploration and
drilling for the underlying geothermal resource. See IPUC Case No. IPC-E-09-34 (approving the
Neal Hot Springs Geothermal contract, which was signed in 2009 and contained a Scheduled
Operation Date of no later than December 31,2017). The Commission approved the agreement
after noting this eight-year period between contract execution and the guaranteed online date.
See Order No. 3 1087 at 3.
The Commission's precedent also supports an extension of a scheduled operation date
under similar circumstances of a delay in finalizing FERC licensing, even after Commission
approval of the initial ESA. In Order No. 24918, the Commission considered amendments to the
Horseshoe Bend hydropower project and approved extension of the default date from I I months
to 20 months from the scheduled operation date. The Commission found the extension
55 See http:llwww.puc.idaho.gov/fileroom/fileroom.htm (containing published avoided cost rates).
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appropriate due to almost l2 months of construction delay caused by litigation related to the
FERC license. The reasoning of that extension applies with even more force here where the
change would be made prior to final Commission approval of the ESA.
These precedents recognize the reality that the development process can be quite lengthy.
This is particularly the case with FERC's hydropower licensing process, which has a well-
documented reputation of being notoriously long, burdensome, and unpredictable in its duration.
Clark Canyon's proposed five-year period between contract execution and the Scheduled
Operation Date is therefore entirely warranted and reasonably within the Commission's
precedent.
The Decrease in Avoided Costs Since the MOU and 2014 ESA Does Not
Justiff Rejection of a Revised Scheduled Operation Date
Approval of the 2014 ESA is necessitated in this case due to the unique circumstances of
the prior MOU and the parties' course of conduct thereunder, which Clark Canyon acted in
reliance upon. The more recent decreases in avoided cost estimates available to projects
approaching Idaho Power without any prior contractual commitments, or reliance thereon, does
not warrant rejection of Clark Canyon's proposal here.
First of all, the currently available avoided cost rates are not directly relevant to this
proceeding because Clark Canyon acted in reliance upon the rates contained in the 2014 ESA. If
the2014 ESA were not corrected to accommodate the delay associated with the unexpected
termination of the FERC license and the ESA were terminated, Idaho Power's currently effective
avoided cost rates for a new ESA would not be economically viable for the Clark Canyon
project. Affidavit of Alina Osorio at fl 39. Efforts to power the Clark Canyon Dam would most
likely be abandoned and the Congressional efforts and FERC's expedited efforts to issue the new
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7
license would have been for no purpose. A comparison to the current avoided cost rates would
therefore have little relevance to the actual legal issues before the Commission because without
approval of the 2014 ESA as proposed here there would be no sale of the projects' output under
currently available rates.
Second, even if it were relevant to attempt to compare the value of the 2014 ESA to the
currently available rates and ESA terms otherwise available to Clark Canyon, such a comparison
would be difficult due to the unique features of the 2014 ESA. Specifically, Clark Canyon
agreed to supply Idaho Power with 50 percent of the RECs from the project, which would offset
the rate impact of payments under the2014 ESA. The RECs from a QF project may even be
more valuable to Idaho Power than to another entity since Idaho Power may be able to resell the
RECs bundled with energy at a higher value than just an unbundled REC, and should be able to
access markets that have an express bundled delivery requirement for the purchasing utility.
Additionally, the 2014 ESA ensures that Idaho Power will have no obligation to overpay
Clark Canyon for power when it is least needed because, as read together in Articles 1.26,1.29,
1.44 and 7 .4, the contract prices the output at a Surplus Energy Price (approximately 70 percent
of the Mid-Columbia index prices) for any deliveries in the months of March and April. This
provision too was included to preserve the benefits of the 2011 ESA for Idaho Power. Thus, the
Commission should be careful not to assume that the delay of time or approval of the 2014 ESA
harms Idaho Power's customers because the 2014 ESA contains terms with material benefits to
Idaho Power as compared to other PURPA agreements.
CONCLUSION
For the reasons explained below, Clark Canyon respectfully requests that the
Commission approve the Energy Sales Agreement submitted by ldaho Power in this docket with
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a revised Scheduled Operation Date of December 31,2019, instead of the previously proposed
date ofJune 1,2017.
Dated August 3,2017
By:
M. Adams (ISB No. 7454)
Richardson Adams, PLLC
515 N. 27th Street
Boise, ID 83702
Telephone: 208.938.223 6
Fax: [phone]
greg@richardsonadams. com
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Ir\
CERTIFICATE OF SERVICES
I HEREBY CERTIFY that on the 3'd day of August 2017, a true and correct copy of the within
and foregoing OPENING COMMENTS OF CLARK CANYON HYDRO , LLC in ldaho
Public Utilities Commission Docket No. IPC-E-14-15 was served by electronic mail and First-
Class mail, postage prepaid, to:
Diane Hanian (hand delivery)
Idaho Public Utilities Commission
472 W. Washington Street
Boise,Idaho 83702
[e-mail]. gov
Daphne Huang
Deputy Attorney General
Idaho Public Utilities Commission
472 W . Washington Street
Boise, Idaho 83702
daphne.huang@puc. idaho. gov
Adams
Clark Canyon Hydro, LLC
Donovan Walker
Idaho Power Company
l22l W.Idaho Street
Boise, Idaho 83702
dwalker@idahopower. com
dockets@idahopower. com