20200821Supplemental Comments.pdf

Gregory M. Adams (ISB No. 7454)
Peter J. Richardson (ISB No. 3195)
Richardson Adams, PLLC
515 N. 276 Street
Boise,Idatro 83702
Telephone: [phone]
Fax: [phone]A4
[e-mail]
[e-mail]
Attorneys for Coleman Hydroelecti c, LIC
BEFORE THE IDAHO PT'BLIC LTTILTTMS COMMISSION
TN fi{E MAITER OF T}IE APPLICATION
OF IDAHO POWER COMPANY FOR
APPROVAL OR REIECTION OF AN
ENERGY SALES AGREEMENT WITH
COLEMAN HYDROELECTRIC LIf, FOR
THE SALE AND PT'RCHASE OF ELECTRIC
ENERGY FROM TI{E COLEMAN HYDRO
PROJECT
cAsENO. IPC-E-20-27
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SIIPPLEMENTAL COMMENTS OF
CoLEMAN ITYDROELECTRTC, LLC
Pursuant to Idaho Public Utilities Commission (*IPUC' or "Commission") Order No.
34756, Coleman Hydroelectric, LLC ("Coleman Hydro") hercby respectfully submits its
Supplemental Cornments through its counsel. Coleman Hydro requests that the Commission
approve the Energy Sales Agreement (or *ESA") containing the published avoided cost rates
established by Order No. 34350 and in effect prior to June l, 2020 (the "Order No. 34350
rates"), as submitted for approval by Idaho Power Company ("Idaho Power") in this proceeding.
As explained below, although the parties' written agreement was not finally executed prior to
June l, 2020, Coleman Hydro perfected its entitle'nrent to a legally enforceable obligation to the
Order No. 34350 rates prior to June 1,2020. Indeed, Idaho Power agred with such entitlement
to the Order No. 34350 rates and therefore executed the written agreement containing those rates.
SUPPLEMENTAL COMMENTS OF COLEMAN HYDROELECTRIC, LLC
tPc-E-20-27 - PAGE I
BACKGROUNI)
The Coleman Hydro Project is a planned hydroelectric project that will hamess the
waterpowerpotential of an existing inigation pipeline, which is currently unused and wastd.
See Whittafter Declaration at fl 3. The project would be located near Leadore, Idaho, in Lemhi
County, and would have a maximum capacity of 800 kilowatts (*kW").
The developers of the Coleman Hydro Project have beeir in discussions with ldaho Power
for over a year. Coleman Hydro representatives initially completed ldaho Power's Schedule 73
application for quali$ing facilities (*QF') for the project's current configrration and submitted
it to Idaho Power on May 8, 2019. In zubsequent discussions, Coleman Hydro revised the
initially proposed Scheduled Operation Date, clarified that Coleman Hydro sought the seasonal
hydropower rates since it will only produce en€rgy in the inigation season, and provided
additional information requested for the purpose of completing the Energy Sales Agreeme,lrt by
Idaho Power's representative, Jerry Jardine. Id. at\9 As of May l9,2020,Coleman Hydro had
agreed to all terms and conditions of the Energy Sales Agreemeirt and communicated to Idatro
Power that Coleman Hydro was ready to ex@ute the agreeme,nt. Id. at\ ll; accord ldaho
Paner's Reply Comments atp.2.
Bascd on Idaho Power's Reply Comments, tdaho Power had to then route the agreement
through its standard Sarbanes-Oxley compliance review, after which ldaho Power apparcntly
internally approved the agreement and sent the written documeirt for execution to Coleman
HydroonMay27,2020. IdohoPower'sReplyCommentsatp.2-3. Theagreementsentto
Coleman Hydro contained the Order No. 34350 rates and all other tenns and conditions to which
the parties had previously agreed. Because the parties are physically separated by quite a
distance, Idaho Power placed the executable agreement in the mail to Coleman Hydro.
SUPPLEMENTAL COMMENTS OF COLEMAN HYDROELECTRIC, LLC
TPC.E.2O-27 _PAGEZ
Wittaker Declaration at fl I l. Coleman Hydro executed it upon receipt on June 8, 2020, and
mailed it back to Idaho Power. Id. Idaho Power executed the agreement on June 19,2020.
Notably, the project is in an advanced stage of development. Before June l, 2020,the
effective date of the avoided cost rate change at issue in this proceeding, the developers of the
project had expended approximately $2.35 million, including completion of the following critical
development steps: installation of six miles of 24-inch penstock; purchase of the Pelton turbine,
generator, and switch gear, all of which are now awaiting installation; completion of construction
of the project's powerhouse; and commencement of construction of the privately owned
segments of the interconnection tie line, which is almost completed. Id. at\\ 4-5,8, & Ex. 1.
The interconnection study process has advanced to the final step of executing the Generator
Interconnection Agreement and funding Idaho Power's interconnection construction with an
additional $300,000 expenditure. Id. atfl 7. The developers of the project will fund that
interconnection expenditure through third-party financing, which is ready to be promptly
deployed if the Commission approves the Energy Sales Agreement containing the Order No.
34350 rates. Id. Additionally, the project has necessary approval from the Federal Energy
Regulatory Commission ("FERC") of its status as a quali$ing in-conduit hydropower facility
exempt from the lengthy licensing process under the Federal Power Act. Id. at fl 6. In short,
Coleman Hydro merely awaits the Commission's approval of the Energy Sales Agreement to
timely complete construction and place the facility in service by the ESA's Scheduled Operation
Date of June 1,2021.
The commission should approve ffiT]I". oo*-ent containing the order No.
34350 rates, as submitted for approval by Idaho Power in this proceeding. The supplemental
SUPPLEMENTAL COMMENTS OF COLEMAN HYDROELECTRIC, LLC
IPC-E-20-27 _ PAGE 3
facts presented here regarding the steps taken by Coleman Hydro prior to June l, 2020,warrant a
finding that Coleman Hydro is entitled to a legally enforceable obligation containing those rates,
as memorialized in the finally executed written agreement submitted to the Commission by
Idaho Power for approval in this case. Although Staff s Comments suggest that a QF may only
be entitled to previously effective avoided cost rates in the case where the written agreement is
executed prior to the date of the rate change, such a suggestion is mistaken. The law is clear that
a legally enforceable obligation can - and in this case did - arise prior to final execution of a
wriffen contract between a QF and a utility.
A. A Legally Enforceable Obligation Can Entitle a QF to Rates that Were in
Effect Prior to the Date the Written Agreement is Formally Executed
Under FERC's regulations which this Commission implements, a QF is entitled to form a
legally enforceable obligation (or "LEO") to the rates and terms and conditions in effect at the
time that it commits itself to sell power to the utility. See 18 C.F.R. 5 292.304(dx2)(ii). FERC
has explained that each QF "has the right to choose to sell pursuant to a legally enforceable
obligation, and, in turn, has the right to choose to have rates calculated at avoided costs
calculated at the time that obligation is incurred." JD Wind l, LLC,129 FERC fl 61,148 atP 29
(2009). Under the LEO rule, o'a QF, by commiuing itself to sell to an electric utility, also
commits the electric utility to buy from the QF; these commitments result either in contacts or in
non-contractual, but binding, legally enforceable obligations." Virginia Electric and Power Co.,
151 FERC fl 61,038, P 25 (2015).
This Commission has implemented the LEO rule to uphold the rights of the QF to the
rates in effect prior to the date of execution of the written agreement, especially in cases like the
present case where both parties agree that all material terms were agreed to prior to the date of
the rate change. See Re Approval of a Firm Energt Sales Agreement with Yellowstone Power
SUPPLEMENTAL COMMENTS OF COLEMAN HYDROELECTRIC, LLC
IPC-E-20-27 - PAGE 4
Company, Case No. IPC-E-10-22,Order No. 32104, at12 (2010). InYellowstone Power,the
Commission approved an executed agreement containing rates that expired prior to execution of
the agreement despite "the apparent lack of any written documentation . . . evidencing that the
terms of a power purchase agreement were materially complete [before the rate changel." Id.
(emphasis in original). The Commission did so because the QF had familiarity with the standard
terms of Idaho Power's power purchase agreements and both parties agreed as to the material
terms of the agreement prior to the effective date of the rate change. Id.; see also FERC v. Idaho
PUC, Case 1:13-cv-00141-EJL-REB, Doc. No.49-1 (D. Ct. Id., Dec. 24,2013) (memorandum
of understanding agreeing that a LEO may predate the execution of a contract)
This Commission has also looked to the maturity of the project and level of commitrnent
of the QF developer to completion of the project in detennining whether to approve the use of
pre-existing rates. See In the Matter of Cassia Wind to Determine Exemption Status, Case No.
IPC-E-05-35, OrderNo. 29954, 2-4 (2006). For example,inCassia Wind,the Commission
found that a QF was entitled to pre-existing rates based on the maturity of development of
project when it had merely submitted a completed application for interconnection study,
including the applicable fee, and had performed wind studies, commenced preliminary
permitting and licensing activities, and made efforts to secure sites to place turbines. Id.
Notably, FERC's recently issued Order No. 872 reaffirmed its prior LEO precedent and
confirmed that a QF may be entitled to previously effective avoided costs in the absence of an
executed written contract. Although that new rule is not effective yet, FERC's commentary is
insffuctive here. See Qualifying Facility Rates and Requirements; Implementation Issues lJnder
the Public Utility Regulatory Policies Act of 1978, OrderNo. 872, 172 FERC fl 61,041, at P 685
SUPPLEMENTAL COMMENTS OF COLEMAN HYDROELECTRIC, LLC
IPC-E-20-27 _ PAGE 5
(July 16, 202q.r That new rule adopts a more onerous LEO standard than previously existed by
requiring the QF to demonstrate commercial viability and financial commiftnent to construct the
facility to create a LEO, through such steps as obtaining site control, applying for all local
permitting and zoning, and applying for interconnection. Id. But FERC clarified the state
cannot require the QF to receive interconnection studies, id., and "[o]btaining a PPA or financing
cannot be required to show proof of financial commitment." Id. at P 687. Coleman Hydro
unquestionably satisfies even the more stringent test recently created for commercial viability,
which FERC created to "rais[e] the bar to prevent speculative QFs from obtaining LEOs," id. at
P 688, even though that new test does not apply yet.
However, OrderNo. 872 is also notable for its assessment of the current state of the law.
In explaining its new commercial viability rule, FERC listed the following requirements that it
has previously found to be inconsistent with the LEO rule. Those unlawful LEO requirements
included: "a requirement for a utility's execution of an interconnection agreement or power
purchase agreement, or requiring that QFs file aformal complaint with the state commission, or
limiting LEOs to only those QFs capable of supplying firm power, or requiring the QF to be able
to deliver power in 90 days." Id. atPP 689-90 (emphasis added) (footrotes omitted). In so
explaining, FERC specifically cited Grouse Creek Wind Park, LLC,142 FERC fl 61,187, atP 40
(2013), for the proposition that requiring the QF to file a complaint to establish a LEO is
unlawful. In sum, therefore, FERC has reiterated that requiring a QF to obtain a fully executed
power purchase agreement or to file a complaint at the state commission are not lawful
prerequisites to creation of a LEO, and are instead unreasonable barriers to amicable contract
formation by a QF and a utility.
I Order No. 872 states that the new rules become effective 120 days after publication of the Order
in the Federal Register. Id. atP 753.
SUPPLEMENTAL COMMENTS OF COLEMAN HYDROELECTRIC, LLC
IPC-E-20-27 - PAGE 6
B. The Commission Should Approve the Energy Sales Agreement Executed by
Coleman Hydro and Idaho Power containing the Order No.34350 Rates
In this case, under any fair application of the above LEO criteria, Coleman Hydro created
a LEO prior to June 1, 2020, andthe Commission should approve the Energy Sales Agreement
as executed and submitted by Idaho Power in this proceeding. As noted above, the Energy Sales
Agreement was fully negotiated prior to the rate change. Coleman Hydro's representative,
Jordan Whittaker, understood that Idaho Power and Coleman Hydro had completed negotiation
of the Energy Sales Agreement, including the rates contained therein, and both parties were
committed to that agreement prior to June 1, 2020. Idaho Power's Reply Comments state that
the only element absent at the time of the June I rate change was the actual signatures on the
Energy Sales Agreement, which occurred on June 8, and June 19, 2020, and,Mr. Whittaker
agrees with that assessment. Whittaker Declaration at fl 9. As Mr. Whittaker explains, "[b]oth
parties had resolved all material terms before June I and all that remained was the actual
signatures on the written agreement." Id. atfl 10. All that remained to be done as of the last days
before the rate change occurring on June 1,2020, was the mere "formality of executing the
written agreement, including the rates, to which both parties had previously agreed." Id. atl Il.
Furthermore, this Commission has previously acknowledged that pre-existing rates
should apply in the case where the facility has matured to the level that demonstrates the QF's
commitrnent to the project, and Coleman Hydro unquestionably satisfies such test. The
developers have expended $2.35 million dollars in development of the facility and are merely
awaiting the funding and commencement of Idaho Power's construction of the interconnection
until the assurance of this Commission's approval of the Energy Sales Agreement. Id. at flfl 4-8.
Staff s Comments recommend against use of the Order No. 34350 rates. According to
Staff s Comments, a "QFs cannot lock-in a certain rate until the QF has: (l) signed to sell at that
SUPPLEMENTAL COMMENTS OF COLEMAN HYDROELECTRIC, LLC
IPC-E-20-27 _PAGE7
rate, or (2) a meritorious complaint alleging the project is mature and the QF has attempted and
failed to negotiate a contract with the utility; that is, there would be a contract but for the utility's
conduct." Snff's Comments at3-4. Without the benefit of the additional facts supplied in Idaho
Power's Reply Comments and these Supplemental Comments, Staff s Comments concluded that
"the Company's proposed published avoided cost rates for the ESA - the old rates set by Order
No. 34350 - are unavailable because the ESA was fully executed and effective after the new
rates took effect on June 1,2020 per Order No. 34683.- Id. at 4.
Coleman Hydro respectfully disagrees with Staff s conclusion, which was not fully
informed by the additional facts supplied with these Supplemental Comments. As noted above,
the requirement that a QF obtain an executed contract prior to the rate change or file a complaint
against the utility is not a lawful test under FERC's precedent. OrderNo. 872, t72 FERC fl
6I,04l,at PP 689-90. Furthermore, the complaint requirement has no reasonable applicability to
the facts in this case where both the QF and the utility agreed,prior to the rate change, which
rates would apply to the finally executed written agreement. In other words, there would have
been no basis for Coleman Hydro to file a complaint in light of its understanding - which was
mutually held by Idaho Power - that the parties both agreed that there was nothing left to
negotiate or dispute and the Order No. 34350 rates would apply.
The parties' inability to execute the written agreement prior to June l, 2020, even though
both parties had approved it for signature by May 27,2020, was due to the parties' physical
separation, the resulting need to mail the document back and forth, and likely further delayed by
ongoing remote working conditions caused by a global pandemic. Under the facts of this case, it
would be unjust to deny Coleman Hydro - which has already expended $2.35 million to develop
its small hydro facility - of the benefits of the Energy Sales Agreement that Idaho Power agreed
SUPPLEMENTAL COMMENTS OF COLEMAN HYDROELECTRIC, LLC
IPC-E-20-27 _ PAGE 8
to execute and submit for approval. Accordingly, Coleman Hydro respectfully requests that the
Commission approve the agreement as submitted by Idaho Power with the Order No. 34350
rates.
CONCLUSION
For the reasons set forth above, Coleman Hydro requests that the Commission approve
the Energy Sales Agreement containing the Order No. 34350 rates, as submitted for approval by
Idaho Power in this proceeding.
Respectfully submitted this 21.1day of August2020,
RICHARDSON ADAMS, PLLC
Greoorv Iv{ A
Gregory M. Adams (ISB No. 7454)
Peter J. Richardson (ISB No. 3195)
515 N.27ft Street
Boise,Idaho 83702
Telephone: [phone]
Fax: [phone]
[e-mail]
[e-mail]
Afforneys for Complainant Coleman Hydroelectric,
LLC
SUPPLEMENTAL COMMENTS OF COLEMAN HYDROELECTRIC, LLC
IPC-E-20-27 _ PAGE 9
CERTIFICATE OF SERVICE
I HEREBY certit/ that I have on this 21st day of August 2020, served the foregoing
Supplemental Comments of Coleman Hydroelectric,LLC and Declaration of Jordan Whittaker
in Case IPC-E-20-27, by electronic mail to the following:
JanNoriyuki
Commission Secretary
Idaho Public Utilities Commission
P.O. Box 83720
Boise,lD 83720-0074
j an.noriyuki@puc. idaho. gov
Donovan Walker
Regulatory Dockets
PO Box 70
Boise,ID 83707-0070
dwalker@idahopow er. com
dockets@idahopower. com
John R. Hammond
Deputy Attorney General
Idaho Public Utilities Commission
P.O. Box 83720
Boise,ID 83720-0074
j ohn.hammond@puc. idaho. gov
Energy Contacts
Idaho Power Company
PO Box 70
Boise,ID 83707-0070
energycontracts@idahopower. com
Bv: Gresorv M. Adams
Gregory M. Adams (ISB No. 7454)
SUPPLEMENTAL COMMENTS OF COLEMAN HYDROELECTRTC, LLC
LPC-E-20-27 - PAGE 10
Oregory M. Adams (ISB No. 7454)
Peter J. Richardson 0SB No. 3195)
Richardson Adams, PLLC
515 N.27m Street
Boise,Idalro 83702
Telephone: [phone]
Fax: [phone]
greg@richardsonadams. com
peter@ichardsonadams. com
Attomeys for Coleman Hydroelectric, LLC
BEFORE THE IDAHO PUBLIC UTILITIES COMMTSSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
APPROVAL OR REJECTION OF AN
ENERGY SALES AGREEMENT WITH
COLEMAN HYDROELECTzuC LLC, FOR
THE SALE AND PURCHASE OF ELECTRTC
ENERGY FROM THE COLEMAN HYDRO
PROJECT
DECLARATION OF JORDAN
WHITTAKER
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I, Jordan Whittaker, declare under the penalty of perjury as follows:
l. This declaration is based on my personal knowledge and, if called to testi$ to the
following facts, I could and would competently do so. I submit this declaration in sripport of
Coleman Hydroelectric, LLC's rcquest that the ldaho Public Utilities Commission (.'IPUC" or
"Commission") approve the Energy Sales Agreemcnt submitted by lde*ro Power Company
("ldaho Power") in this proceeding.
2. I am one of the developers of the hydroelectric facility at issue in this proceeding
(the "Coleman Hydro Project"), which is owned by Coleman Hydroelectric, LLC.
3. The Coleman Hydro Project is a planned hydroelectric project that will use the
motive force of an existing irrigation pipeline, the LTC-Tyler pipeline, running to inigation
}ECLARATION OF JORDAN WHITTAKER
IPC.E-20.27 - PAGE I
ditches, near Leadore, Idaho, in Lemhi County. The Coleman Hydro Project would harnEss the
waterpowor from the LTC-Tyler pipeline and would operate only during the inigation season
when the pipeline is used to deliver water to irrigators. Currently, the pipeline supplies water to
a ditch" and the power potential is thus wasted. The Coleman Hydro Project would divert a
portion of the water from the terminus of the pipeline to convey it under pressure to a new
powerhouse containing a Pelton turbine and generator with a capacity of 750 kW. Water leaving
the powerhouse would continue to be used for inigation purposes. The project will be located on
a mnch owned by my famity and would use existing water rights, and therefore site control and
water rights are already secured"
4. The Coleman Hydro Project is in an advanced stage of development. Before the
June l, 2020 effective date of the avoided cost rate change at issue in this proceeding, I and the
other developers of the Coleman Hydro Project had taken a number of steps to commit to the
development of the project, which include:
a. We installed six miles of 24-inch penstock in May 2018 ttrough October
2018;
b. We purchased the turbine, generator, and switch gear on or before the summer
of 2019, and all of these critical project components are awaiting installation;
c. We completed all cement work for the powerhouse in August 2019, and the
powerhouse itself was constructed between December 2019 and May 2020;
and
d. We have commenced construction of the privately owned $egmonts of the
interconnection powerline, and it is almost completed.
DECLARATION OF JORDAN WHITTAKER
IPC-8.20.27 - PAGE 2
5' Attachod in Exhibit t to this Declaration are photographs ofths powerhouse and
scveml itsns of above-rpftrenccd equiprnent.
6. Additionally, on April l,20l9,the Fedaal Energy Rceutaiory Commission
iesued a later stating that the project meets the criteria of a quali$ing conduit hydropower
facility cxempt from licersing under section 30(a) of the Fodcral power Act.
7. We have also procoeded through the interconnection study process to the point of
being offered a Generator lntcrconnection Agreement. Upon execution of *rc Gcuerator
Interconnection Agreement, we must fimd a deposit for inrcrsonnection consrrucdon of
approximately $300,000. Unlike the other expendifi,res to date that were madc out,of-poeket
with furds of the developers of the Coleman Hydro Project, this $300,000 expenditure for
interconnection construction will be secured by third-parry financing, and we are waiting to
securc such finaneing until afterthe Commission approves the Energy Sales Agremeat, We
plan to rnove forward with such financing and the interconnection construction promptly upon
Commission approval of the Energy Sales Agreement.
8. In total, I estimate that as of June l,2021,the developers ofthe Coleman Hydro
Project had expended the $2,350,000 in the development efforts set furth above.
9. I have reviewed the timeline of events set forth in the Reply Comments of ldaho
Power, filed on August 13,2A20, regarding the negotiation of the Energy Sales Agreemcnt.
Idaho Power's description ofthe events leading the Energy Sales Agreement are generally
consistent with my resollection of those events. To summariT-qwe initialty completed the
Schedule 73 application for the project's current configuration and submitted it to Idaho power
on May 8,2019. In subsequent discussions, we revised the proposed Scheduled Operation DaIe
to May l,202l,clarified that we sought the seasonat hydropower rates, and provided additional
DECLARATION OT JORDAN WHITTAKER
IPC.E-20.27 _ PAGE 3
information rrquestod for ttn pwposc of somplaing thc agrcGmcnt by ldaho Powet'l
rcNcnhtivc. Jury Jrdine. We had tgrccd to all teims and condition* of ths Encrgy Saler
Agmunurf and communicated to ldaho Powcr \rt wcrt rcrdy for cxccution on or nbout Mry 19,
A0!0. whieh is &e lrrt drtc of communiertion on ldaho Power's list of evcnu.
10. As of May 19" t020, I underctsod that wo had complaed nogotiation of ths
Eneqy Srtus Agrccment, including thc nates containd thercin, and both partier wcrc committcd
ro that agrcqncnt. lddro PowEr's Reply Commcnts statc that thc only clcmcnt absqnt tl thc time
of the June I rato change ums the actual signaturcs on the ESA, which occuncd or Junc 8, and
Junc lg, ?020. I uSrce that both parties had rcsolvcd atl mateiialtcrmr bcforo Junc I and all thal
renrained was the achral signatwts on the uritten ageement.
I l. Idaho Powcr's Rcply Commcnts state thnt ldnho FowEr sont thc cxecutablc
Encrgr Sales fureoment to Coteman Hydm on May 27,2020. I would dd that ldaho Power
ssnt tlre document to us in papcr format via the mail, not email, and I eannot confirm the precise
dute ldaho Power placed it in the mail. To the best of my recolloction, I sxscutcd a$[ccment
upon receipt on Junc 8, 2020, and I mailed it back to ldaho Powcr for its cxecution, I under*ood
this to be a formality ol'executing thc written agrsement, including the rates, to which both
parties had prcviously a$ted.
I hereby declare that the above slstements arc true to the best of my knowledge ud
belief, and that I understand they arc made for use a$ cvidence in the ldatro Public Utilities
Commission and alt subject to penalty of perjury.
DATED this llltday of August 2020.
Whitlaker
DECLARATIOI.; OF JORDAN WHII-IAKER
IPC-8.20.27. PAGE 4
By
EXHIBIT 1
Generator
Exhibit 1
Page 1 of6
Larse Valve
Exhibit I
Page2 of 6
*.
Exhibit I
Page 3 of6
Powerhouse
Exhibit I
Page 4 of6
Tail Race/Powerhouse
Exhibit 1
Page 5 of6
Private Power Line
Exhibit 1
Page 6 of6