20160113Moore Direct.pdf

ldaho public Utilities Commission
Office_of the SecretaryRECEIVED
JAN I 3 20t6
Boise,ldaho
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE
APPLICATION OF ROCKY
MOUNTAIN POWER FOR APPROVAL
OF ELECTRIC SERVICE SCHEDULE
NO. 38 - QUALIFYING FACILITY
AVOIDED COST PROCEDURES
CASE NO. PAC-8.16.01
DIRECT TESTIMOI{Y OF
KYLE T. MOORE
ROCKY MOUNTAIN POWER
CASE NO. PAC.E.16.O1
January 2016
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Please state your name, business address and present position with
PacifiCorp, dba Rocky Mountain Power (the "Company").
My name is Kyle T. Moore. My business address is 1407 W. North Temple, Salt
Lake City, Utah 84116. My present position is Originator/Power Marketer for
Rocky Mountain Power, a division of the Company.
How long have you been in your present position?
I have been in my present position since July 2015.
Please describe your education and business experience.
I have a B.A. in Business Finance and an MBA from the University of Utah. I
have been employed with the Company since 2007, six years in the planning and
financial analysis group, two years in the structure and pricing area for the
commercial and trading group, and most recently as an originator/power marketer
responsible for negotiating qualifying facility contracts, negotiating intemrptible
retail special contracts, and managing wholesale or market-based energy and
capacity contracts with other utilities and power marketers. I worked in the
regulation and rates department for Kern River Gas Transmission Company for
three years from 2004 through 2007 assisting in rate case and other
regulatory/pricing proceedings and studies. I also worked for Energy Strategies as
an associate consultant for five years from 1999 through 2004 consulting in
various subjects including cogeneration feasibility studies, decision and risk
analysis, utility negotiations, and other regulatory work.
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Rocky Mountain Power
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PURPOSE AND SUMMARY OF TESTIMONY
What is the purpose of your testimony?
I propose a new Electric Service Schedule No. 38, Qualifying Facility - Avoided
Cost Procedures ("Schedule 38"), to govern the Company's negotiating practices
and queue management for powff purchase agreements ("PPA") executed
pursuant to the Public Utility Regulatory Policies Act of 1978 ("PURPA") in
Idaho and explain the provisions of this new tariff.
Please summarize your testimony.
On February 27,2015, the Company petitioned the Commission to modifr terms
and conditions of PURPA purchase agreements and approve modifications to the
IRP avoided cost methodology. Commission Order No. 33357 directed the
Company to "file a schedule setting out its PURPA negotiating practices and
queue management."l The PURPA negotiating practices and queue management
procedures contained in the proposed Schedule 38 will provide fair pricing,
contracting processes, and queue management for projects that don't qualiff for
published rates in Idaho and will more accurately reflect the Company's avoided
costs.
PROPOSED SCHEDULE 38
QUALIFYING FACILITY _ AVOIDED COST PROCEDURES
Please explain why the Company is proposing Schedule 38.
In Case No. PAC-E-15-03 the Company's requested reconsideration of Order
No. 32697 that generally directed that incremental pricing be updated after the
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Rocky Mountain Power
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' Order No. 33357, lines 26-27.
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Qualified Facility ("QF") developer and utility had entered into a signed contract.
The Company petitioned to change this indicative pricing practice in the IRP
methodology so that it could provide more accurate avoided cost rates to proposed
QF projects. Mr. Brian S. Dickman testified: "The IRP Method does not
recognize the impact of proposed QF projects that do not yet have a signed
contract but are at some stage in the process of receiving indicative avoided cost
prices and pursuing a power purchase agteement with the Company."2 He also
testified that if the queued QFs that have not currently signed a contract with the
Company are not taken into consideration, the IRP Method will result in
payments to QFs that exceed avoided costs. The Commission found that the
"signed contract" language in Order No. 32697 did not achieve its intended result
and that creation of a queue to track the order in which QF projects have entered
negotiations with a utility was reasonable and appropriate. In Order No. 33357 the
Commission directed the Company to file a tariff schedule, like those of Idaho
Power and Avista, which outlines its PURPA negotiating process. In compliance
with Order No. 33357 the Company is filing Electric Service Schedule 38, a new
tariff for QF projects that don't qualifr for published rates, which provides the
steps and schedule for both the Company and QF to determine indicative or
estimated avoided cost prices for a proposed QF project. The tariff will: (1)
facilitate communication between the Company and potential QFs as they work
through the negotiation process, (2) identify the information required from the
QF, and (3) specify the timeline in which the QF will receive indicative pricing.
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Rocky Mountain Power
2 Case No. PAC-E-15-03, Dickman testimony page 3 lines l0-13.
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The tariff codifies the process to be followed. Through extensive experience with
a similar process in other states, the Company believes the formal process
proposed in Schedule 38 is an efficient and productive process for both the
Company and potential QFs.
Does the Company have a formal QF negotiation procedure in other
jurisdictions?
Yes. The Company's Schedule 38 for non-published rate QF contract negotiation
process is in place in Utah,3 Oregon and Wyoming.
How was Schedule 38 developed?
Schedule 38 - Qualifying Facility Avoided Cost Procedures, is based on Utah's
Schedule 38 approved by the Utah Public Service Commission in 2015. Utah's
version of Schedule 38 - Qualiffing Facility - Avoided Cost Procedures,
originated from the output of a work group established in 2002 in Utah Docket
02-035-T1l to address issues similar to those being addressed in this case in
Idaho. The work group included many parties with similar interests to those in
this case. Additional modifications were made to Utah's Schedule 38 through a
collaborative process and settlement in 2015 through Utah Docket
No. 14-035-140. These modifications were put in place to provide additional
timelines for both the QF and the Company in order to more efficiently manage
the pricing queue.
' As an example the Utah tariff can be found at the following internet address:
http://www.rockymountainpower.net/contenVdam/rocky_mountain_power/doc/About_Us/Rates_and_Regu
lationfutah/Approved_Tariffs/Rate_Schedules/Avoided_Cost_Purchases_from_Qualiffing_Facilities.pdf.
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Please explain the proposed Schedule 38 and its purpose.
The purpose of Schedule 38 is to efficiently provide the steps and schedule that
both the Company and a developer work through to determine indicative avoided
cost pricing for a proposed QF project. The tariff clearly lays out the information
required by the Company to prepare indicative prices for a proposed QF project.
Even a developer of a QF project in the conceptual stage should have most
of the information collected and available to provide to the Company because it is
necessary for the design, development, financing, and construction of the QF
project. As outlined by the procedure, QF developers that provide the required
details regarding their projects upfront have a much lower probability of
experiencing a delay in the development of indicative prices. The Company works
closely with the QF in this initial step by completing due diligence and feedback
on the information. Once the information is agreed to by both parties, the
Company completes its pricing step. As outlined by the tariff, the parties then
follow the timelines and process for completing negotiation of a PPA. The
timeline for the various steps in the process is as follows:
a) Company must provide Developer illustrative, pro forma contract within
seven days of request [Section I.8.1];
b) Developer may request indicative pricing at any time by submitting
required information [Section I.B.2] ;
c) Company must notify Developer whether request for indicative pricing is
complete within seven days of submission [Section I.B.3];
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I d) Company must provide indicative pricing within 30 days of notice of
2 completeness [Section I.B.4];
3 e) Developer must request proposed PPA and submit required information
4 within 60 days of receipt of indicative pricing [Section I.B.5];
5 0 Company must notifu Developer whether request for PPA and required
6 information is complete within seven days of submission to the Company
7 lSection I.8.6l;
8 g) Company must provide Developer with proposed PPA within 30 days of
9 notice of completeness [Section I.8.6];
10 h) Developer must provide Company with initial comments on and proposed
I I edits to PPA within 30 days of receipt [Section I.B.7];
12 i) Company must respond to Developer's initial comments and edits within
13 30 days of receipt, and commence negotiations over areas of disagreement
14 [Section I.B.8];
15 j) Indicative prices must be updated unless a PPA is executed within six
16 months after indicative pricing was provided by the Company [Section
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18 k) Company must complete all intemal reviews and approvals within 2l days
19 after agreement is reached on a proposed final version of a PPA[Section
20 r.B.8l;
2l l) PPA must be executed within five months after Developer's receipt of
22 proposed PPA [Section I.B.l0];
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m) Company must submit PPA to Commission for approval within seven days
of execution [Section I.B.8]; and
n) Company must submit Transmission Service Request within seven days
after execution of PPA [Section I.B.8].
What contract terms and conditions that will be included by the Company in
a PPA that is provided as part of the Schedule 38 process?
The terms and conditions of the QF PPA shall be similar to those terms and
conditions obtained from recent similarly-sized QFs and third party PPAs in
Idaho.
Has Schedule 38 worked as it was intended in the other states where it has
been implemented?
Yes. Schedule 38 has provided a framework under which the QF developer knows
what is required in order to obtain indicative pricing. Even in other states where
there is no formal Schedule 38, the Company uses this schedule as a general road
map with the developer who is requesting indicative pricing. It provides the QF
developer a clear understanding on what is needed to secure indicative prices
from the Company. If they wish to proceed with the project or renew their
contract, the tariff establishes a procedure that both parties follow throughout the
contract negotiations. To work effectively, Schedule 38 requires specific and
detailed information from the QF regarding their proposed project. A QF
developer that comes to the Company with vague requests or insufficient details
will go through a series of due diligence meetings until all data is agreed to by
both parties, as the Company is not in a position to provide indicative pricing
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without suffrcient and clear project details. Once the prices are prepared and
accepted by the QF, there is a set timeframe for the Company to provide an initial
draft PPA for contract negotiations and the steps and timeframe to complete a
PPA.
Have you provided as an exhibit a proposed Schedule 38 for ldaho?
Yes. Exhibit No. I is the Company's proposed Schedule 38 for Idaho which
provides the process, procedures, and information required by the Company for a
QF developer to obtain indicative pricing from the Company and an executed
PPA.
Does this conclude your direct testimony?
Yes.
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