20160212Comments.pdf

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DAPHNE HUANG RECEIVED
DEPUTY ATTORNEY GENERAL
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[phone]
IDAHO BAR NO. 8370
Street Address for Express Mail:
472W. WASHINGTON
BOISE, IDAHO 83702.5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF PACIFICORP DBA )
ROCKY MOUNTATN POWER'S APPLICATION ) CASE NO. PAC-E-16-0I
TO APPROVE ELECTRIC SERVICE )
SCHEDULE NO.38, QUALIFYING FACILITY ) COVTMENTS OF THE
AVOIDED COST PROCEDURES. ) COwTMISSION STAFF
)
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
Attorney of record, Daphne Huang, Deputy Attorney General, and submits the following
comments.
BACKGROUND
In Case No. GNR-E-11-03, the Commission directed parties to participate in workshops
to "begin to form a structure for fair and reasonable . . . procedures and rules" for contracting
under the Public Utility Regulatory Policies Act (PURPA). Order No. 32697 at 48. In response,
Avista, Idaho Power, and PacifiCorp participated in such workshops and discussed contracting
procedures. However, the utilities did not agree upon or finalize a universal set of contracting
procedures. Therefore, each utility decided to file its own tariff with the Commission to speciff
its individual PURPA contracting procedures. Subsequently, Avista and Idaho Power filed
Schedule 62 and Schedule 73, respectively, which were both approved by the Commission.
STAFF COMMENTS FEBRUARY 12,20T6
In February 2015, PacifiCorp dba Rocky Mountain Power Company (Company or Rocky
Mountain) petitioned the Commission for approval to modify its "indicative" or "incremental"
pricing practice in its Integrated Resource Plan Avoided Cost methodology.l Application at 2;
Order No. 33357 at26. The Commission found it appropriate for Rocky Mountain to create "a
queue to track the order in which [qualifying facility (QF)] projects have entered negotiations
with a utility, so that incremental pricing can be calculated to reflect the actual impacts of each
project." Order No. 3357 at28. Accordingly, the Commission directed Rocky Mountain "to file
a tariff schedule . . . which outlines its PURPA negotiating process," similar to Avista's and
Idaho Power's respective Schedules 62 and73. Id. The Commission provided that Rocky
Mountain's schedule "should include specific criteria for management of the queue to eliminate
uncertainty and to facilitate negotiations between Rocky Mountain and [QFs]." /d
THE APPLICATION
Pursuant to the Commission's directive, Rocky Mountain filed its Application in this
case, for authority to implement Electric Service Schedule No. 38 - Qualified Facility Avoided
Cost Procedures. Rocky Mountain's proposed Schedule 38 in this case is closely based on the
Company's Utah Schedule 38 approved by the Utah Public Service Commission in 2015, which
addressed similar issues to those being addressed in this case in Idaho. If approved, Schedule
No. 38 will govern the Company's negotiating practices and queue management related to power
purchase agreements (PPAs) executed under PURPA. Rocky Mountain requested an effective
date by April 1, 2016. Application at l.
Rocky Mountain states that the purpose of proposed Schedule No. 38 is "to efftciently
provide the steps and schedule for both the Company and developers that will govern the
determination of indicative avoided cost pricing for a proposed QF project." Application at 2.
"schedule 38 lists the information required by the Company to prepare indicative prices for a
proposed QF project, includes a timeline and actions to be followed by [PURPA] developers to
receive a PPA as well as the consequences for failure to comply with the tariff." Id.
I Rocky Mountain also requested approval to modifu terms and conditions related to PURPA contracts. See
Application, Case No. PAC-E-l 5-03.
STAFF COMMENTS FEBRUARY 12,2016
STAFF ANALYSIS
Staff summarized the major milestones specified in Avista's and Idaho Power's tariff
Schedules 62 and 73 - which are almost identical to each other - in Table l, attached hereto. In
Table 2, also attached, Staff summarized the major milestones specified in Rocky Mountain's
Proposed Schedule 38. Staff has identified several areas in which Schedule 38 signifrcantly
differs from Avista's Schedule 62 and Idaho Power's Schedule 73.
1, Timeline of milestones
Although the major milestones adopted by Rocky Mountain Power are similar to those
used by Avista and Idaho Power, the time allowed in each step is different to varying degrees.
For example, Avista and Idaho Power allow a QF to prepare initial comments on and proposed
edits to a draft power purchase agreement within 90 calendar days of receipt of a draft
agreement, whereas Rocky Mountain Power only allows 30 days for QF review of a draft
agreement. Table 2 lists the main steps in the proposed Schedule 38. Overall, Staff believes the
timeline in the proposed Schedule 38 is reasonable and feasible, but Staff suggests Rocky
Mountain Power clarify whether "days" in the proposed tariff refers to calendar days or business
days.
2, Addition of details regarding queue management
Unlike the other two approved schedules, the proposed Schedule 38 has added detailed
descriptions about how Rocky Mountain Power manages its pricing queue in terms of queue
entry, price recalculation, and removal from queue. Staff believes the added language about
queue management is useful and necessary to mitigate further confusion and reduce potential
conflict that may arise in the queue management process.
3. Addition of other PPA terms
Rocky Mountain Power further added three other terms to its proposed Schedule 38 that
are not addressed in either Idaho Power's or Avista's contracting process.
a. The scheduled commercial operation date must not be greater than thirty (30)
months after the execution date of the power purchase agreement. This requirement is intended
to prevent indicative prices from becoming outdated before the project comes online. Staff
STAFF COMMENTS FEBRUARY T2,2016
believes 30 months is a reasonable period, because 95o/o of the existing QF contracts in Idaho
have agreed to online dates within thirty months of contract execution.
b. The OF developer must sien a System Impact Study Agreement with PacifiCorp
Transmission within 120 days of the date of a final. non-appealable Commission order approving
the agreement. The intent of this requirement is to ensure the transmission process is
coordinated with the QF contracting process so that any necessary transmission upgrades can be
completed before the project's proposed online date. Staff believes this language is important to
minimize the possibility that transmission delays will lead to contract default.
c. The QF developer must provide 1007o of the project development security within
30 days of the date a Commission order approving the PPA has become final and non-
appealable. Project development security normally consists of delay security in an amount equal
to $45 multiplied by the maximum generation capacity of the facility (for example, $45 x 10,000
kW: $450,000 for a l0 MW project). Staff believes the purpose of this requirement is to
provide assurance that the project is seriously and diligently pursued, and to provide funds to
cover damages to the utility and its ratepayers in the event of default or unreasonable delays.
Staff acknowledges that this requirement could prove challenging for some projects who have
yet to obtain project financing, but nevertheless believes it will be effective in eliminating
speculative contracts, ensuring progress towards construction, and protecting ratepayers.
As discussed above, Rocky Mountain Power's proposed Schedule 38 clearly differs in
several material ways from comparable tariffs of Idaho Power and Avista. However, Staff does
not believe that those differences are necessarily any indication that the contracting procedures
of any one utility are any better or worse than those of the other utilities. In fact, as mentioned
earlier, an attempt was initially made in Case No. GNR-E-I1-03 to develop a single set of QF
contracting procedures that could be adopted by all three utilities. That attempt was not fruitful.
Consequently, it should come as no surprise that each utility's contracting-procedures tariff is
different. In the time since workshops were held to try to develop a single tariff for all three
utilities, Rocky Mountain Power has experienced far more PURPA development activity in its
Utah jurisdiction than either Idaho Power or Avista. Despite being the last of the three utilities to
f,rle a QF contracting-procedures tariff in Idaho, Rocky Mountain has applied its Schedule 38 in
Utah for some time. Therefore, it has had more experience in testing the effectiveness of the
contracting procedure. Nonetheless, if the Commission agrees to approve Schedule 38, Staff
STAFF COMMENTS FEBRUARY 12,2016
intends to monitor whether the tariff is successful in improving the QF contracting process and
will seek changes if problems are encountered or if improvements can be made.
RECOMMENDATION
Staff believes that Rocky Mountain Power's Application to implement Schedule 38 is
reasonable and necessary to ensure a clear, standard QF contracting procedure. Staff
recommends approval, but suggests the Company clarify whether "days" in the proposed tariff
refers to calendar days or business days.
'r1'\
Respectfully submitted this l7'' day of February 2016.
Technical Staff: Rick Sterling
Yao Yin
i : umisc:comments/pace I 6. I djhrps)? comments
STAFF COMMENTS FEBRUARY 12,2016
OF Avista & Idaho Power
The QF shall provide the utility with a
completed application.
The utility shall within l0 business days notifz the
OF in writins of anv deficiencies.
Following satisfactory receipt of all information, the
utility shall within 20 business days provide an
indicative pricins proposal.
The QF requests in writing that utility prepare
a draft ESA to serve as the basis for
negotiations between the parties. The QF
provides the utility with any additional
information that the utility reasonably
determines necessary for the preparation of a
draft ESA.
If the utility determines that the QF has not provided
sufficient information, the utility shall within 10
business days notifo the QF in writing of any
deficiency.
Following satisfactory receipt of all information, the
utility shall within l5 business days provide the QF
with a draft ESA.
Within 90 calendar days, the QF shall ( 1)
notify the utility in writing that it accepts the
terms and conditions of the draft ESA, or (2)
prepare initial comments and proposals based
on the draft.
The QF shall contact the utility to schedule
ESA negotiations at such times and places as
are mutuallv asreeable to the parties.
The utility shall update pricing at appropriate
intervals to accommodate any changes to the utility's
avoided cost calculations, the proposed qualiffing
faciliw or orosed terms of the draft ESA.
When both parties are in full agreement, the utility
shall prepare and forward to the QF within l0
business days a final executable version of the ESA.
The QF shall within l0 business days execute
and return the final ESA.
The utility will within l0 days execute the ESA and
submit it to the Commission for review.
Table 1. Major Milestones in Avista's Schedule 62 and Idaho Power's Schedule 73
STAFF COMMENTS FEBRUARY 12,2016
Table 2. Major Milestones in Rocky Mountain Power's Proposed Schedule 38
OF Rocky Mountain Power
The OF reouests the Pro Forma contract.
The utility shall provide a pro forma purchase
asreement within 7 davs.
The OF mav request indicative pricins at any time.
The utility must notiff the QF whether request for
indicative pricing is complete within 7 days of
submission.
The utility must provide indicative pricing within 30
davs of notice of comoleteness.
The QF must request draft power purchase agreement
and submit required information within 60 days of
receiot of indicative oricins.
The utility must notifr the QF whether request for
power purchase agreement and required information
is complete within 7 days.
The utility must provide the QF with draft power
purchase agreement within 30 days of notice of
comoleteness.
The QF must provide the utility with initial
comments on and proposed edits to draft power
purchase agreement within 30 days of receipt.
The utility must respond to the QF's initial comments
and edits within 30 days of receipt and commence
nesotiations over areas of disagreement.
The utility must complete all intemal reviews and
approvals within 2l days after agreement is reached
on a proposed final version ofa power purchase
asreement.
PPA must be executed within 5 months by both parties within 5 months after the draft PPA was provided by
the utilitv to the QF, except to the extent delays are caused by utiliw's actions or inactions.
The utility must submit power purchase agreement to
the Commission for approvalwithin 7 days of
execution.
The utility must submit Transmission Service
Request within 7 days after execution of purchase
Dower asreement.
STAFF COMMENTS FEBRUARY 12,2016
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 12TH DAY OF FEBRUARY 2016,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. PAC-E-16-OI, BY MAILING A COPY THEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:
TED WESTON YVONNE HOGLE
ID REG AFFAIRS MANAGER ASSISTANT GENERAL COUNSEL
ROCKY MOUNTAIN POWER ROCKY MOUNTAIN POWER
1407 WEST NORTH TEMPLE STE 330 I4O7 WEST NORTH TEMPLE STE 320
SALT LAKE CITY UT 84 1 I 6 SALT LAKE CITY UT 841 1 6
E-MAIL: [e-mail] E-MAIL: [e-mail]
DATA REQUEST RESPONSE CENTER
E.MAIL ONLY:
datarequest@pacifi com.com
SECRETARY
CERTIFICATE OF SERVICE