20050920Reply comments.pdf

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Dean J. Miller ISB #1968
McDEVITI & MILLER LLP
420 West Bannock Street
O. Box 2564-83701
Boise, ill 83702
Tel: [phone]
Fax: [phone]
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Attorneys for Schwendiman Wind LLC ORIGINAL
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
In the Matter of the Application of Pacificorp
for the Approval of a Power Purchase Sale
Agreement for the Sale and Purchase of
Electric Energy Between PacifiCorp and
Schwendiman Wind LLC
Case No. P AC-O5-
REPL Y TO STAFF COMMENTS
COMES NOW Schwendiman Wind LLC ("Schwendiman ) by and through its attorney
of record and Replies to the Corrected Comments of the Commission Staff dated September 15
2005 as follows, to wit:
A. It is not necessary to perform the Order No. 29839 exemption analysis.
Schwendiman disagrees with Staffs belief that Order No. 29839 applies to this
application. (Staff Comments, pgs 3-5). That Order, in part, established a framework for
determining which potential projects would be eligible for a QF contract for capacity up to 20
megawatts (MW) despite the Commission s determination to prospectively reduce the eligibility
cap to 100 kilowatts (Kw). (The exemption analysis)
Order No. 29839 was issued on August 4, 2005. The Agreement between Schwendiman
and PacifiCorp was executed on July 19, 2005. Thus, the law/policy in effect at the time the
Agreement was signed was that PacifiCorp was entitled to execute contracts containing
REPLY TO STAFF COMMENTS - 1
published rates for projects with capacity of20 megawatts (MW) or less. The Agreement should
be evaluated based on the law/policy existing on the date it was executed, and, as noted, the
law/policy existing on that date did not require a showing of entitlement to an exemption from
the 100 K w eligibility cap.
As a practical matter the Order No. 29839 exemption analysis is unnecessary and serves
no meaningful purpose. The creation of criteria for determining which projects are sufficiently
mature as to be exempt from the new eligibility cap assumes the existence of numerous potential
proj ects and the resulting need to draw a line between those that should be allowed to proceed
under the old rules and those that should not, so that the utility is not required to acquire "too
much" QF wind generation. This arguably may have been the case with respect to Idaho Power
Company-there were numerous potential projects competing, in a sense, for eligibility under
the old cap. This, however, is not the case with respect to PacifiCorp. As the Commission noted
in Order No. 29839
, "
We find that neither PacifiCorp nor Avista are in the situation of having to
purchase an amount ofQF wind generation as has been offered and presented to Idaho Power.
In fact, to Schwendiman s knowledge, the Agreement in this case is the only QF wind contract
PacifiCorp has executed. There is little point in performing an exemption analysis designed to
draw lines between competing projects when there are no competing projects.
B. For the most part, Staff's Comments correctly apply the Order No. 29839
exemption analysis.
Assuming the exemption analysis is to be performed, Staff correctly interprets Order No.
29839 to require a showing that the project meets one of the threshold tests and at least one of
the described indicia of project development and maturity. (Staff Comments, pg. 5). Based on
this, Staff correctly concludes that Scwhendiman meets the threshold submission of
REPLY TO STAFF COMMENTS - 2
interconnection application test and a secondary wind study criteria. Staff thus correctly
concludes that the "Schwendiman Agreements meets the grandfathering provisions of Order No.
29839.
While Staffs ultimate conclusion is correct, Schwendiman believes there are deficiencies
in Staffs analysis of the other secondary criteria. For example, Staffs analysis of the project
financing criteria overlooks the commercial reality that no financier-where institutional or
private-will make a definite, binding commitment until there is a signed purchase power
agreement. The fact that Schwendiman signed an Agreement with PacifiCorp containing a
definite on-line date with liquidated damages in the event of breach is, in its self, evidence that
Schwindeman has arranged both financing and turbine availability. Because, however, Staff
correctly concludes that the project meets the eligibility criteria, Schwindeman will not discuss in
detail other analytical deficiencies.
The Agreement should be approved even in absence of a "90/110" clause.
Staffs Comments interpret Order No. 29632 (Case No. IPC-04-08) as establishing
performance criteria in the form of the so-called "90-110 Performance Band" that are applicable
to all utilities. Schwendiman respectfully suggests that Order No. 29632 should not be
interpreted so broadly.
In Order No. 29632, the Commission stated the issue it was considering as follows:
Should Idaho Power be allowed to include contractual provisions that impose
financial penalties or liquidate damages if a PURP A generator s energy deliveries
vary by more than plus or minus 10% from its forecasted performance. (Emphasis
added, Order No. 29632, pg 4).
The ordering language of the Order provides:
It is HEREBY ORDERED and Idaho Power Company is directed to conform its
QF contracting practice and Firm Energy Sales Agreement contract provision
REPLY TO STAFF COMMENTS - 3
requirements to accord and comply with the Commission s findings set forth
above. (Emphasis added, Order No. 29632, pg 23-24).
Thus, the specific language of Order No. 29632 is limited to the contracting practices of Idaho
Power Company. It would be unwise to construe the Order to apply to all utilities because to do
so would preclude other, perhaps more creative, approaches to the question of wind "firmness.
For all the reasons stated in its Reply Comments dated September 20 2005, PacifiCorp
MAG" criteria is a reasonable, and probably superior, approach compared to the "90-110"
approach.
CONCLUSION
Based on the reasons and authorities cited herein, the Agreement should be approved as
submitted.
DATED this day of September, 2005.
Respectfully submitted
(CDEVITT & MILLER LLP
\lX2 ~Dean J. Miller
McDevitt & Miller LLP
420 W. Bannock
Boise, ID 83702
Phone: [phone]Fax: [phone]
Attorneys for Schwendiman Wind LLC
REPLY TO STAFF COMMENTS - 4
CERTIFICATE OF SERVICE
I hereby certify that on the ay of September 2005 I caused to be served, via the
methodes) indicated below, true and correct copies of the foregoing document, upon:
Jean Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
O. Box 83720
Boise, ID 83720-0074
i i ewell~puc.state.id. us
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Lisa Nordstrom
Dean Brockbank
PacifiCorp
825 N.E. Multnomah, Ste. 1800
Portland, OR 97232
lisa.nordstrom~paci ficorp. com
Hand Delivered
S. Mail
Fax
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Email
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