20210125Settlement Stipulation.pdf

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DONOVAN WALKER
Lead Counsel
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January 25,2021
VIA ELECTRONIC FILING
Jan Noriyuki, Secretiary
ldaho Public Utilities Commission
11331 W. Chinden Boulevard
Building 8, Suite 201-A
Boise, ldaho 83714
Re Case No. IPC-E-20-28
Wood Hydro, LLC v. ldaho Power Company
Dear Ms. Noriyuki:
Attached for electronic filing in the above matter is a Settlement Stipulation and
Motion to Approve Settlement Stipulation. lf you have any questions about the enclosed
documents, please do not hesitate to contact me.
Very truly yours,
O*"€aetQ
Donovan Walker
DEW cld
Enclosures
DONOVAN E. WALKER (lSB No. 5921)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
[e-mail]
Attorney for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
WOOD HYDRO, LLC,
Complainant,
V.
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CASE NO. IPC-E-20-28
IDAHO POWER COMPANY,
SETTLEMENT STIPULATION AND
MOTION TO APPROVE
SETTLEMENT STIPULATION
RespondenUCross-
Complainant,
V
WOOD HYDRO, LLC,
Cross-Respondent,
ENEL GREEN POWER NORTH
AMERICA, INC.
Cross-Respondent,
V
CENTRAL RIVERS POWER US, LLC
Cross-Respondent.
tPc-E-20-28
Joint Settlement and Motion
1
This settlement stipulation ("Settlement Stipulation") is entered into between ldaho
Power company ("ldaho Powe/'or "company"); wood Hydro, LLC ("wood Hydro" or
"Mile 28"); central Rivers Power us, LLC ("central Rivers" or "Lowline #2"), and Enel
Green Power North America, lnc. ("Enel") and BP Hydro Associates (or "Rock Creek
#2")(hereafter jointly referred to as "Parties" or individually as a "Party"). The Parties
hereby agree as follows.
I. INTRODUGTION AND MOTION
1. The terms and conditions of this Settlement Stipulation are set forth herein.
The Parties agree that this Settlement Stipulation represents a fair, just, and reasonable
compromise of the dispute(s) between the Parties and that this Settlement Stipulation is
in the public interest. ldaho Power seeks to obtain Commission approval of the
Settlement Stipulation as a condition precedent to the Setttement Stipulation's
effectiveness; Mile 28, Rock Creek #2, and Lowline #2 have agreed to such condition
precedent to the effectiveness of the Settlement Stipulation, but in doing so and thus
joining in this Motion in support of Commission approval of the Settlement Stipulation,
Rock Creek #2 and Lowline #2 do not waive any objection to the Commission's subject
matter jurisdiction as challenged in the pending motions to dismiss discussed herein. The
Parties maintain that the Settlement Stipulation as a whole and its acceptance by the
ldaho Public Utilities Commission ("Commission") represent a reasonable resolution of
all issues between the Parties identified herein. Therefore, the Parties hereby respectfully
move the Commission, in accordance with RP 56 and RP 274-76, foran Order approving
the Seftlement Stipulation executed between the Parties and all of its terms and
conditions without material change or condition.
tPC-E-20-28
Joint Settlement and Motion
2
II. BACKGROUND
2. On June 25, 2020, Wood Hydro filed a Complaint with the Commission
alleging that ldaho Power had improperly withheld Net Firm Energy payments due to Wood
Hydro under its PURPAI Firm Energy Sales Agreement ('FESA). Complaint at p 1. On
July 13, 2020, the Commission issued a Summons to ldaho Power directing it to Answer
Wood Hydro's Complaint. On August 3,2O2O,ldaho Powerfiled its Answerto Wood Hydro's
Complaint, and additionally brought a Cross-Complaint against Wood Hydro/Mile 28,
Enel/Rock Creek #2, and Central Rivers/Lowline ff22 regarding the similar provisions
contained in each of the entities'Commission-approved FESAs under PURPA.
3. On August 27,2}2},the Commission issued Order No. 34764 directing Wood
Hydro to file a reply to ldaho Power's Answer and Cross-Complaint and directing
Summonses to be issued to Central Rivers and Enel. Wood Hydro filed its Reply on
September 17,2020. Central Rivers and Enel each filed separate Motions to Dismiss,
objecting to the Commission's jurisdiction on September 17, 2020. ldaho Power filed an
Answer to the Motions to Dismiss on October 1, 2020. This matter was submitted to the
Commission under the heading, Fully Submitted Matters, on the Commission's October 13,
2020, Decision Meeting.
1 Public Utility Regulatory Policies Act of 1978.
2 Wood Hydrb, LL-C owni/controls the Mile 28 hydroelectric QF. The Rock Creek #2 hydroelectric QF is
owned and controlled by BP Hydro Associates, and the counter party to ldaho Power under the Rock
Creek #2Firm Energy Sales Agreement is BP Hydro Associates. BP Hydro Associates is an ldaho
general partnership, and at the time ldaho Power filed the cross complaint in this matter, Enel Green
Power North America, lnc. and CHI ldaho LLC were the partners of BP Hydro Associates. Although ldaho
Power's cross complaint named only Enel Green Power North America, lnc. as a defendant with respect
to Rock Creek#2, both Enel Green Power North America, lnc. and BP Hydro Associates are parties to
this Settlement Stipulation. Central Rivers Power US, LLC owns/controls the Lowline #2 hydroelectric
QF.
tPC-E-20-28
Joint Settlement and Motion
3
4. Mile 28, Rock Creek #2, and Lowline #2, each have an old version of a 35-
year, levelized rate, mandatory purchase, PURPA QF contractwith ldaho Power.3 This type
of PURPA contract was in use by the Commission prior to 1993 and is no longer used today.
The disputed provisions of these FESAs were largely replaced by the 900/o1110% firmness
requirements that are in use today for more modem PURPA ESAs. ldaho Power has
approximately 20 outstanding contracts of this older vintage, the last of which expires in
2031. Each of the three projects in this case are in the later portions of their respective
contract terms: Mile 28 expires in June of 2029; Rock Creek #2 expires in April of 2024; and
Lowline #2 expires in April of 2023.
5. Because of the QF Projects' respective periods of non-generation, ldaho
Power, according to its interpretation of the FESAs, calculated lump sum repayment
amounts from the contracts, based upon what ldaho Power determined amounted to a
permanent curtailment of Annua! Net Energy amounts underthe terms of the contracts and
assessed the same in letters to the projects. Each project responded in writing objecting to
the allocation of a Lump Sum Repayment amount, alleging that there had been no
permanent curtailment of theirAnnual Net Energy estimates, and contesting the Lump Sum
Repayment amounts as unlawful liquidated damages under ldaho law. Additionally, Mile
28 provided citation to ldaho Power's representations in past proceedings-that led to the
establishment of the Commission's current 90o/o1110% firmness requirement-stating that
within the older PURPA FESAs involved in this matter there is no requirement for QF
developers to provide accurate estimates, or to actually deliver energy in the monthly
amounts they estimate they will provide in the FESA. Citing fo, IPC-E-04-08, IPC-E-04-10,
3 The contracts operate under a similar structure but are not identical
lPc-E-20-28 4
Joint Settlement and Motion
Post-Hearing Brief, p 4. Mile 28 also argued that replacement powertoday is much cheaper
for customers than what is contiained in the FESA, and thus there are no measurable
damages.
6. Lowline #2 and Rock Creek #2 both separately filed Motions to Dismiss
claiming the Commission lacks the proper jurisdiction to hear and decide the matters. They
argued the Commission lacksthe propersubject matterjurisdiction and that itdoes not have
jurisdiction over the construction and enforcement of contract rights, nor jurisdiction to award
damages. Both Lowline #2 and Rock Creek #2 also argued that even if the Commission
determines it has jurisdiction that it should deferjurisdiction to the courts, as questions about
the legal validity of liquidated damages, parol evidence, jury trials, and the award of
attorney's fees are only adjudicated properly with the courts.
7. ldaho Power maintains that the Commission properly has jurisdiction to interpret
and enforce contractual provisions contained in the Firm Energy Sales Agreements that it
requires and approves between a public utility and a QF entered into pursuant to PURPA.
ldaho Power argues that issues related to the Commission's jurisdiction over contractual
matters have been adjudicated before the ldaho Supreme Court several times, and most
recently in ldaho Power Co. v. New Energy Two, LLC,156 ldaho 462,465,328 P.3d 442,
445 (2014) and McNealv. ldaho Public Utilities Commission,l42ldaho 685, 689, 132P.3d
442,446 (2006).
8. Rock Creek #2 algo sent ldaho Power a Notice of Default on September 18, 2020,
claiming that ldaho Power was in anticipatory breach of its obligation to make payment to
Rock Creek#2for Net Firm Energy delivered under the FESA by its assertion that it would
withhold payment to collect the disputed Lump Sum Repayment amount.
tPc-E-20-28
Joint Settlement and Motion
5
9. The Parties initiated settlement discussions on September 28,2020, and
reached agreement resolving the issues in this case and between the Parties. All QF
Parties'facilities have been brought back online, and they have committed to continuing
to generate through the remaining terms of the FESAs. Based upon the settlement
discussions; as a compromise of the respective positions of the parties; in order to provide
certainty and to avoid the uncertainties and cost of extended litigation before the
Commission, @urts, and otheradministrative bodies; and forotherconsideration as setforth
below; the Parties agree to the following terms, conditioned upon and subject to approval of
the following terms by the Commission:
III. TERMS OF THE SETTLEMENT STIPULATION
10. Lump Sum RepaymenULiquidated Damaoes - The Parties agree that each
Qualifoing Facility ('QF') Party shall pay a negotiated amount, as set forth below, to satisfy
ldaho Power's allegations that the QF Parties owe Lump Sum Repayments under their
respective FESAs.a ln the case of Rock Creek #2, such payment shall be made by BP
Hydro Associates, and in the case of Lowline #2, such payment may be made by Central
Rivers Power US, LLC. This negotiated amount is less than the Lump Sum Repayment
amount calculated by ldaho Power under the facility's respective FESAs, discounted by
90 percent for projects that come back online (based on the application of the discount
provisions contained in Mile 28's FESA), but is proportional across the QF parties in
relation to that larger amount:
a The QF Parties continue to maintain that the Lump Sum Repayment provisions do not apply under
these circumstances, and this Stipulation does not constitute a concession of that or any other argument
in this proceeding.
lPc-E-20-28 6
Joint Settlement and Motion
Mile 28 - $14,000
Lowfine #2 -$44,000
Rock Creek #2 - $50,000
These amounts will be accepted by ldaho Power in full satisfaction of the Lump Sum
Repayment amounts calculated for the historic periods of non-generation that are the
subject of the current dispute between the Parties. To the extent ldaho Power has already
offset any amounts against energy payments under the FESAs and/or offsets such
amounts after execution of this Settlement Stipulation, those amounts shall be trued-up
against the negotiated settlement amount, with any overage refunded by ldaho Power,
and any underage payable to ldaho Power, within 45 days following approval of the terms
of this Settlement Stipulation. lf ldaho Power has not offset any amounts against energy
payments under the FESAs, the settlement amounts shall be provided to ldaho Power
within 45 days following approva! of the terms of this Settlement Stipulation. Further,
ldaho Power will within 45 days following approval of the terms of this agreement release
any security taken by reason of its allegations concerning permanent curtailment,
including but not limited to letters of credit.
11. Permanent Curtailment Definition - The Parties agree that, from the date of
approval of this Stipulation through the end of the term of each QF's FESA, the term
"Permanent Curtailment" as used in each QF's respective FESA shall mean a failure to
deliver Net Energy for the entire remaining term of the FESA, and failure to deliver for a
period of time less than the entire remaining term will not be a permanent curtailment.
tPC-E-20-28
Joint Settlement and Motion
7
12. Full and Complete Settlement - The Parties agree that this Settlement
Stipulation, subject to and conditioned upon approval by the Commission, is a full and
complete settlement of al! rights, claims, damages, enforcements, objections, etc. arising
from the facts presented in IPC-E-20-28, related to each respective QF's non-delivery of
generation under the above-referenced FESAs through the date of this Setflement
Stipulation. No party shall bring additional actions at the Commission or elsewhere
seeking to enforce the FESA, claiming any damages therefrom, or arising from the facts
involved between ldaho Power and each respective QF through the date of execution of
this Settlement Stipulation.
13. The Parties submit this Settlement Stipulation to the Commission and
recommend approval in its entirety pursuant to RP 274-76. The Parties shall support this
Settlement Stipulation before the Commission and shall not appeal a Commission order
approving the Settlement Stipulation or an issue resolved by the Settlement Stipulation.
lf this Settlement Stipulation is challenged by anyone who is not a Party, then each pafi
reserves the right to file testimony, cross-examine witnesses, and put on such case as
they deem appropriate to respond fully to the issues presented, including the right to raise
issues that are incorporated in the settlements embodied in this Settlement Stipulation.
Notwithstanding this reservation of rights, the Parties agree that they will continue to
support the Commission's adoption of the terms of this Settlement Stipulation.
14. lf the Commission or any reviewing body on appeal rejects any part or all of
this Settlement Stipulation or imposes any additional material conditions on approval of
this Settlement Stipulation, then each Party reserves the right, upon written notice to the
Commission and the other Party to this proceeding within fourteen (14) days of the date
of such action by the Commission, to withdraw from this Settlement Stipulation. ln such
lPc-E-20-28 I
Joint Settlement and Motion
case, no Party shall be bound or prejudiced by the terms of this Settlement Stipulation
and each Party shall be entitled to seek reconsideration of the Commission's order, file
testimony as it chooses, cross-examine witnesses, and do all other things necessary to
put on such case as it deems appropriate, including the right to contest the jurisdiction of
the Commission to resolve the underlying contract dispute.
15. The Parties agree that this Settlement Stipulation is in the public interest and
that all of its terms and conditions are fair, just, and reasonable.
16. No Party shall be bound, benefited, or prejudiced by any position asserted
in the negotiation of this Settlement Stipulation, except to the extent expressly stated
herein, nor shall this Settlement Stipulation be construed as a waiver of rights unless such
rights are expressly waived herein. Except as otherwise expressly provided for herein,
execution of this Settlement Stipulation shall not be deemed to constitute an
acknowledgment by any Party of the validity or invalidity of any particular method, theory,
or principle of regulation or cost recovery. No Party shall be deemed to have agreed that
any method, theory, or principle of regulation or cost recovery employed in arriving at this
Settlement Stipulation is appropriate for resolving any issues in any other proceeding in
the future. No findings of fact or conclusions of law other than those stated herein shall
be deemed to be implicit in this Settlement Stipulation. This Settlement Stipulation sets
forth the complete understanding of the Parties, and this Settlement Stipulation includes
no other promises, understandings, representations, arrangements or agreements
pertaining to the subject matter of this Settlement Stipulation, or any other subject matter,
not expressly contained herein.
17. The obligations of the Parties are subject to the Commission's approval of
this Settlement Stipulation in accordance with its terms and conditions and upon such
rPc-E-20-28
Joint Settlement and Motion
I
approval being upheld on appeal, if any, by a court of competent jurisdiction. All terms
and conditions of this Settlement Stipulation are subject to approval by the Commission,
and only after such approval, without material change or modification, has been received
shall the Seftlement Stipulation be valid.
18. This Settlement Stipulation may be executed in counterparts and each
signed counterpart shall constitute an original document.
IV. PROCEDURE
19. Pursuant to RP 274, the Commission has discretion to determine the
manner with which it considers a proposed settlement. ln this matter, the Parties have
reached agreement on a final resolution to this case. This Settlement Stipulation is
reasonable and in the public interest. The Parties request that the Commission approve
the Settlement Stipulation without further proceedings.
20. ln the alternative, should the Commission determine that further
proceedings are required to consider the Settlement Stipulation, pursuant to RP 201, the
Parties believe the public interest does not require a hearing to consider the issues
presented by this Motion and request it be processed as expeditiously as possible by
Modified Procedure, without waiving the right to a hearing on the previously disputed
matters in this proceeding should the Commission reject the setflement.
V.REOU RELIEF
NOW, THEREFORE, the Parties respectfully request that the Commission enter its
Order approving the Settlement Stipulation without material change or condition, and
without further prcceed ings.
Respectfully submitted this 25th day of January 2021.
tPc-E-20-28
Joint Settlement and Motion
10
IDAHO POWER COMPANY
furil*L
DONOVAN E. WALKER
Attorney for ldaho Power ComPanY
WOOD HYDRO, LLC
C. THOMAS ARKOOSH
Attorney for Wood Hydro, LLC
CENTRAL RIVERS POWER US, LLC
PRESTON N. CARTER
Attorney for Centra! Rivers Power US, LLC
ENEL GREEN POWER NORTH AMERICA,
rNc.
GREGORY M. ADAMS
Attorney for Enel Green Power North America,
lnc.
BP HYDRO ASSOCIATES
Signature
Name:
Title:
tPc-E-20-28
Joint Settlement and Motion
11
IDAHO POWER COMPANY
Medaw*.
DONOVAN E. WALKER
Aftorney for ldaho Power Company
WOOD HYDRO, LLC
C. THOMAS ARKOOSH
Attorney for Wood Hydro, LLC
CENTRAL RIVERS POWER US, LLC
PRESTON N. CARTER
Attorney for Central Rivers Power US, LLC
ENEL GREEN POWER NORTH AMERICA,
tNc.
GREGORY M. ADAMS
Attorney for Enel Green Power North America,
lnc.
BP HYDRO ASSOCIATES
Signature
Name:
Title:
lPc-E-20-28
Joint Settlement and Motion
11
IDAHO POWER COMPANY
furildw
DONOVAN E. WALKER
Attorney for ldaho Power ComPanY
WOOD HYDRO, LLC
C. THOMAS ARKOOSH
Attorney for Wood Hydro, LLC
CENTRAL RIVERS POWER US, LLC
.P 2-L:--
PRESTON N. CARTER
Attorney for Central Rivers Power US, LLC
ENEL GREEN POWER NORTH AMERICA,
rNc.
GREGORY M. ADAMS
Attorney for Enel Green Power North America,
lnc.
BP HYDRO ASSOCIATES
Signature
Name:
rPc-E-20-28
Joint Settlement and Motion
11
IDAHO POWER COMPANY
fuzddte--
DONOVAN E. WALKER
Attorney for ldaho Power Company
WOOD HYDRO, LLC
C. THOMAS ARKOOSH
Attorney for Wood Hydro, LLC
CENTRAL RIVERS POWER US, LLC
PRESTON N. CARTER
Attorney for Central Rivers Power US, LLC
ENEL GREEN POWER T{ORTH AMERIGA,
M, ADAMS
for Ene! Green Power North America,
lnc.
BP HYDRO ASSOCIATES
Signature:
Name:
Title:
tPc-E-20-29
Joint Settlement and Motion
11
IDAHO POVUER COMPANY
-L-)*'r*', ? g-ia-g&t*
DONOVAN E. WALKER
Aftomey for ldaho Power Company
WOOD HYDRO, LLC
C. THOMAS ARKOOSH
Attorney forWood Hydro, LLC
CENTRAL RIVERS POWER US, LLG
PRESTON N. CARTER
Attomey for Central Riverc Power US, LLC
ENEL GREEN POWER NORTH Ai'IERICA,
tNc.
GREGORY M. ADAMS
Attorney for Enel Green Power North America,
lnc.
BP HYDRO ASSOCIATES
tPc-E-20-28
Joint Settlement and Motion
11
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 25h day of January 2021 I served a true and
correct copy of the SETTLEMENT STIPULATTON AND MoTtoN To AppRovE
SETTLEMENT STIPULATION upon the following named parties by the method indicated
below, and addressed to the following:
Wood Hydro, LLG
C. Thomas Arkoosh
ARKOOSH LAW OFFICES
802 w. Bannock St. Suite LP 103
P.O. Box 2900
Boise, ldaho 83701
Email [e-mail]
_Hand Delivered
_U.S. Mail
_Overnight Mail
_FAXX Email
erin.ceciltO .com
ldaho Public Utilities Gommission Staff
Edward Jewell
Deputy Attorney General
_Hand Delivered
_U.S. Mail
_Overnight Mail
_FAXX Email
Email: edward.iewel puc.idaho.oov
Ene! Green Power North America, !nc.
Gregory M. Adams
Richardson Adams PLLC
515 N.27th Street
Boise, lD 83702
_Hand Delivered
_U.S. Mail
_Overnight Mail
_FAXX Email
Email:oreotOrichard nadams.com
Randald Bartlett
Sr. Director, Hydro O&M
Emai!: [e-mail]
[e-mail]
BP Hydro Associates
Hydroland, lnc.
Tim Carlsen, CEO
Mike Hopkins
_Hand Delivered
_U.S. Mail
_Overnight Mail
_FAXX Email
Email: [e-mail]
miketOhvcl dcoro.com
lPc-E-20-28
Joint Seftlement and Motion
12
Central Rivers Power US, LLC
Preston N. Carter
Givens Pursley LLP
601 W. Bannock St.
Boise, lD 83702
Email: prestoncarter@qivenspurslev'com
-Hand
Delivered
_U.S. Mail
_Overnight Mail
_FAXX Email
Matthew Stanley
VP and General Manager
Email: [e-mail]
Christy Davenport, Legal Secretary
tPc-E-20-28
Joint Settlement and Motion
13