20120727First Amended Complaint.pdf

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ATTORNEYS AT LAW J1ttHlL, L(
Tel: [phone] Fax: [phone]
P.O. Box 7218 Boise, ID 83707 * 515 N. 27th St. Boise, ID 83702
July 27, 2012
Ms. Jean Jewell
Commission Secretary
Idaho Public Utilities Commission
472 W. Washington
Boise, ID 83702
RE: PAC-E-10-08 - FIRST AMENDED FORMAL COMPLAINT FROM XRG-
DP-7, XRG-DP-8, XRG-DP-9, XRG-DP-10, LLC
Dear Ms. Jewell:
Enclosed please find the prepared First Amended Formal Complaint from XRG-DP-7,
XRG-DP-8, XRG-DP-9, XRG-DP-10, LLC. Per the Commission's Rules of Procedure,
we have enclosed and original and seven (7) copies.
Sincerely,
Chynna C. Tipton
Richardson & O'Leary PLLC
end.
Peter J. Richardson
Gregory M. Adams
Richardson & O'Leary, PLLC
515 N. 27' Street
P.O. Box 7218
Boise, Idaho 83702
Telephone: [phone]
Fax: [phone]
[e-mail]
greg21richardsonandoleary.com
R c r r s r i r' rLLr 4
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Attorneys for Complainants XRG-DP-7, XRG-DP-8, XRG-DP-9, XRG-DP-10, LLCs
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
XRG-DP-7, XRG-DP-8, XRG-DP-9, XRG-DP-)
10, LLCs, ) Complainants, )
)
VS. )
) PACIFICORP, DBA ROCKY MOUNTAIN )
ENERGY, ) Defendant.
Case No. PAC-E-10-08
FIRST AMENDED FORMAL
COMPLAINT
1 INTRODUCTION
2 This is a First Amended Formal Complaint filed by XRG-DP-7, XRG-DP-8, XRG-DP-
3 9, XRG-DP- 10, LLCs (collectively "XRG") with the Idaho Public Utilities Commission (the
4 "Commission") pursuant to Idaho Administrative Rules 31.01.01.054. Prior to March 16, 2010,
5 XRG requested, that PacifiCorp, DBA Rocky Mountain Power ("Rocky Mountain Power" or the
6 "Company"), execute standard Public Utility Regulatory Policies Act of 1978 ("PURPA")
7 power purchase agreements ("PPAs") for qualifying facilities ("QFs") under 10 average monthly
8 mega-watts ("aMW) for XRG's wind energy QFs near Malta, Idaho. Because Rocky Mountain
9 Power rejected XRG's attempt to obligate itself to the terms of a standard PPA at the published
Page 1 - First Amended Formal Complaint of XRG
I avoided cost rates effective prior to March 12, 2010, XRG respectfully requests that the
2 Commission issue a declaratory judgment that XRG is entitled to such PPAs and further requests
3 that the Commission order Rocky Mountain Power to enter into PPAs at the rates in effect prior
4 to March 12, 2010. Alternatively, if the Commission determines XRG is not entitled to the rates
5 in effect prior to March 12, 2010, XRG expressly requests the alternative relief that the
6 Commission issue a declaratory order that XRG is entitled to the rates from Order No. 31025
7 that were in effect at the time XRG filed its original Complaint.
8 PRELIMINARY MATTERS
9 Copies of all pleadings and other correspondence in this matter should be served upon
10 counsel for XRG at:
11 Peter J. Richardson
12 Gregory M. Adams
13 Richardson & O'Leary, PLLC
14 515 N. 27th Street
15 P.O. Box 7218
16 Boise, Idaho 83702
17 Telephone: [phone]
18 Fax: [phone]
[e-mail]
19 2reiza.richardsonandolearv.com
21 In support of this Complaint, XRG alleges as follows:
22 IDENTITY OF PARTIES
23 1. PacifiCorp does business in Idaho as Rocky Mountain Power. Rocky Mountain
24 Power is an electric company and a public utility subject to the jurisdiction and regulation of the
25 Idaho Public Utilities Commission pursuant to I.C. § 61-129. Rocky Mountain Power is subject
26 to the jurisdiction of the Commission, the Public Utility Commission of Oregon, and the Federal
27 Energy Regulatory Commission ("FERC").
Page 2— First Amended Formal Complaint of XRG
1 2. XRG are Idaho limited liability companies, and the address of its principle place
2 of business is XRG 802 West Bannock Street, Boise, Idaho.
3 JURISDICTION
4 3. This case involves PURPA's avoided cost provisions and FERC implementing
5 regulations thereto, which PURPA directs states to implement. See 16 U.S.C. § 824a-3 (a)-(g);
6 FERC v. Mississippi, 456 U.S. 742, 751 (1982). In Idaho, the Commission possesses jurisdiction
7 over complaints regarding rates of public utilities, including PURPA rates. I.C. §§ 61-129, -501.
8 -502, -503, -612; see also Afton Energy Inc. v. PacflCorp Co., 111 Idaho 925, 929, 729 P. 2d
9 400, 404 (1986). The Commission has jurisdiction to issue declaratory judgments regarding
10 utility contracts pursuant Idaho's Declaratory Judgment Act, I.C. § 10-1203. See Utah Power
11 and Light v. Idaho Pub. Utilities Commission, 112 Idaho 10, 12, 730 P.2d 930, 932 (1986).
12 APPLICABLE LAWS AND REGULATIONS
13 4. Section 210 of PURPA requires electric utilities to purchase power produced by
14 small power producers that obtain QF status under section 201. 16 U.S.C. § 824a-3(a)(2). FERC
15 rules provide QFs with the option of selling electricity and capacity to a utility based on the
16 utility's "avoided costs" at the time the QF incurs a legally enforceable obligation to deliver
17 energy or capacity over a specified term. See 18 C.F.R. § 292.304(d)(2)(ii). Thus, "a QF, by
18 committing itself to sell to an electric utility, also commits the electric utility to buy from the QF;
19 these commitments result either in contracts or in non-contractual, but binding, legally
20 enforceable obligations." JD Wind 1, LLC, "Notice of Intent Not to Act and Declaratory Order,"
21 129 FERCJ 61,148, at p. 10-11 (November 19, 2009).
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Page 3 - First Amended Formal Complaint of XRG
I FACTUAL BACKGROUND
2 5. XRG has been actively engaged in the development of a 4 wind energy projects
3 near Malta, Idaho for the past several years.
4 6. Three of the four XRG projects will be nameplate 20 MW and the fourth will be
5 nameplate 10 MW, and each is a self-certified QF under PURPA.
6 7. XRG must secure a power purchase agreements with Rocky Mountain Power -
7 the nearest utility, and XRG therefore initiated contact with Rocky Mountain Power in 2007.
8 8. Over the three years since initiating contact with Rocky Mountain Power, XRG
9 has incurred substantial expenses. Rocky Mountain Power has indicated that interconnection
10 and transmission capacity may be an issue, but XRG does not believe it is insurmountable.
11 9. XRG has also had extensive contact with Rocky Mountain Power regarding PPAs
12 for the project, and in response to XRG's request, Rocky Mountain Power delivered one draft
13 PPA to XRG in May 2009, containing the avoided cost rates contained in Order No. 30744. But
14 Rocky Mountain Power has not delivered any of the other three contracts to XRG.
15 10. In part in reliance on the rate structure contained in that draft PPA, XRG has
16 made substantial investments in development of the project, including finalizing site control, and
17 indentifying potential equity and debt financing opportunities.
18 11. Nevertheless, before the service date of Order No. 31025 and the new rates
19 contained therein, XRG provided Rocky Mountain Power with the essential elements regarding
20 the four projects to complete the PPAs with the rates contained in Order No. 30744. XRG
21 obligated itself to enter into four draft PPAs for the projects.
22 12. On March 9, 2010, Rocky Mountain Power received a letter from the
23 Commission's Staff, stating that the published avoided cost rates would be recalculated. The
Page 4— First Amended Formal Complaint of XRG
I letter included Staff's recalculation of the avoided cost rates, which were substantially lower than
2 those in Order No. 30744 and included in the draft PPA Rocky Mountain Power sent to XRG.
3 13. Rocky Mountain Power concurred in Staff's recalculation on March 12, 2010,
4 without providing XRG with notice of Staff's recalculated rates or Rocky Mountain Power's
5 concurrence.
6 14. Because Rocky Mountain Power continued to refuse to negotiate PPAs for all
7 four projects, XRG filed its initial Complaint in this docket on July 29, 2010.
8 15. Rocky Mountain Power admitted in its Answer that it informed XRG in writing
9 on March 23, 2009, May 11, 2009, and October 2, 2009, that available transmission capacity
10 from the proposed delivery point - Brady substation — was insufficient for accepting more than
11 23 megawatts of net output from XRG's proposed qualifying facilities.
12 16. XRG filed initial discovery requests, inquiring, in part, into Rocky Mountain
13 Power's determination that it lacked transmission capacity to accept the output from all four
14 projects.
15 17. On September 21, 2010, Rocky Mountain Power sent XRG a letter admitting that
16 transmission was now available for all 4 QFs.
17 18. Rocky Mountain Power's September 21, 2010 letter contained, for the first time
18 since XRG contacted Rocky Mountain Power on January 21, 2009, a standard matrix of
19 additional project information for each of the 4 QFs that Rocky Mountain Power believed XRG
20 needed to provide in order for Rocky Mountain Power to prepare standard contracts and
21 complete due diligence.
22 19. XRG entered into settlement negotiations in good faith in hopes of foregoing
23 further litigation and simply securing PPAs for its projects.
Page 5 - First Amended Formal Complaint of XRG
1 20. XRG accepted Rocky Mountain Power's request to stay discovery, and settlement
2 negotiations commenced in October 2010.
3 21. On November 5, 2010, Rocky Mountain Power, along with Idaho Power
4 Company and Avista Corporation, filed a Joint Motion to Adjust Published Avoided Cost Rate
5 Eligibility Capin GNR-E-10-04, requesting reduction in the eligibility cap from 10 average
6 monthly megawatts to 100 kilowatts of nameplate capacity.
7 22. On December 3, 2010, the Commission issued Order No. 32131, wherein it
8 declined to immediately reduce the eligibility cap, but stated that its final decision on the
9 eligibility cap issue would be retroactively effective on December 14, 2010.
10 23. By e-mail dated December 16, 2010, Rocky Mountain Power unilaterally lifted
11 the stay on discovery pending settlement of XRG's Complaint and re-commenced litigation.
12 24. On February 7, 2011, the Commission issued Order No. 32176, in Case No.
13 GNR-E-10-04, reducing the published avoided cost rate eligibility cap to 100 kw for wind QFs
14 effective December 14, 2010. This order made unavailable to the XRG projects the published
15 rates that were otherwise available in Order No. 31025 at the time XRG initially filed its
16 Complaint on July 29, 2010.
17 25. Rocky Mountain Power has asserted that XRG is not even entitled to four PPAs
18 with the rates that were in effect at the time XRG filed its Complaint on July 29, 2010.
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Page 6— First Amended Formal Complaint of XRG
I LEGAL CLAIMS
2 Complainant's First Claim for Relief
3 Rocky Mountain Power is in violation of PURPA, FERC's regulations and orders, and the
4 Commission's orders by failing to provide XRG with a power purchase agreement with
5 published avoided cost rates in effect prior to March 12, 2010.
6 26. XRG re-alleges and incorporates all preceding paragraphs.
7 27. XRG has attempted in good faith to engage in negotiations to obtain fully
8 executed power purchase agreements to deliver energy and capacity to Rocky Mountain Power
9 from its four wind projects and has provided Rocky Mountain Power with the essential, project-
10 specific elements for such agreements prior to March 12, 2010.
11 28. XRG committed itself to sell energy and capacity from its QF to Rocky Mountain
12 Power prior March 12, 2010, and, consequently, XRG committed Rocky Mountain Power to buy
13 from XRG's QF at the rates on file prior to March 12.
14 29. These commitments result in non-contractual, but binding, legally enforceable
15 obligations. 18 C.F.R. § 292.304(d)(2)(ii); JD Wind 1, LLC, 129 FERC ¶ 61,148, at pp. 10-11.
16 30. By failing to provide publicly available standard PPA terms and conditions, and
17 delaying its responses to XRG's binding offers to enter into four PURPA PPAs for its wind QFs
18 near Malta, Idaho, Rocky Mountain Power is in violation of PURPA, FERC's implementing
19 regulations, and the Commission's orders. See 16 U.S.C. § 824a-3(a)(2); 18 C.F.R. §
20 292.304(d)(2)(ii); Blind Canyon Aquaranch v. PacCorp Company, Case No. IPC-E-94-
21 1, Order No. 25802 (November 1994).
22
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Page 7— First Amended Formal Complaint of XRG
I Complainant's Second Claim for Relief in the Alternative
2 Rocky Mountain Power is in violation of PURPA, FERC's regulations and orders, and the
3 Commission's orders and XRG is entitled to the rates from Order No. 31025 that were in
4 effect at the time XRG filed its original Complaint.
5 31. XRG re-alleges and incorporates all preceding paragraphs.
6 32. XRG filed a Complaint on July 29, 2010, alleging that Rocky Mountain Power
7 failed to properly process XRG's requests for four PPAs by relying upon an erroneous
8 transmission investigation.
9 33. XRG's claim that Rocky Mountain Power's transmission investigation was
10 incorrect subsequently proved to be correct when Rocky Mountain Power confirmed that it could
11 accept the output of all four XRG projects at XRG's proposed point of delivery.
12 34. XRG had a meritorious Complaint on file with the Commission alleging that it
13 committed to sell its output pursuant to PPAs with standard terms and conditions approved by
14 the Commission on July 29, 2010, but Rocky Mountain Power refused to negotiate four PPAs
15 based upon an erroneous transmission investigation.
16 35. XRG created a legally enforceable obligation to sell to Rocky Mountain Power at
17 the rates in Order No. 31025 in effect at that time of filing its Complaint, and no later than
18 December 13, 2010, under the Commission's pre-filed complaint rule. See A. W. Brown Co., Inc.
19 v. Idaho Power Co., 121 Idaho 812, 816, 828 P.2d 841 (1992).
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Page 8 - First Amended Formal Complaint of XRG
I PRAYER FOR RELIEF
2 WHEREFORE, XRG respectfully requests that the Commission issue an Order:
3 1. Declaring that Rocky Mountain Power is in violation of PURPA, FERC's
4 implementing regulations, and the Commission's orders.
5 2. Requiring Rocky Mountain Power to execute standard PURPA power purchase
6 agreements for XRG's four QF projects at Rocky Mountain Power's avoided cost rates on file
7 for QFs under 10 aMW prior to March 12, 2010.
8 3. Alternatively, if the Commission determines XRG is not entitled to the rates in
9 existence on March 12, 2010, requiring Rocky Mountain Power to execute standard PURPA
10 power purchase agreements for XRG's four QF projects at Rocky Mountain Power's avoided
11 cost rates on file for QFs under 10 aMW when XRG filed its Complaint prior to December 14,
12 2010.
13 4. Granting any other relief that the Commission deems necessary.
Respectfully submitted this 27th day of July 2012,
RICHARDSON AND O'LEARY, PLLC
Petichardson (ISB No: 3195)
Gregory M. Adams (ISB No. 7454)
Attorneys for the XRG LLCs
Page 9— First Amended Formal Complaint of XRG
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 27th day of July, 2012, a true and correct copy of
the within and foregoing XRG LLCs' FIRST AMEND FORMAL COMPLAINT was served
in the manner shown to:
Jean Jewell
Commission Secretary
Idaho Public Utilities Commission
472 W. Washington
Boise, ID 83702
[e-mail]
Mark C. Moench
Rocky Mountain Power
201 South Main Street, Suite 2300
Salt Lake City, UT 84111
[e-mail]
Daniel E. Solander
Rocky Mountain Power
201 South Main Street, Suite 2300
Salt Lake City, UT 84111
[e-mail]
Jeffrey S. Lovinger
Kenneth E. Kaufmann
Lovinger Kaufmann LLP
825 NE Multnomah, Suite 925
Portland, OR 97232
lovinger(LKLaw.com
[e-mail]
X Hand Delivery
- U.S. Mail, postage pre-paid
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RICkDSON & O'LEARY PLLC
Attorneys for Complainant
Page 10— First Amended Formal Complaint of XRG