20060322Reply comments.pdf

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Dean J. Miller (ISB #1968)
McDEVITT & MILLER LLP
420 West Bannock Street
O. Box 2564-83701
Boise, ID 83702
Tel. [phone]
Fax: [phone]
i oe(Q),mcdevi tt - mill er. com
Attorneys for Schwendiman Wind LLC
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OR\G\NAL
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF)
ACIFICORP FOR APPROVAL OF A POWER)
PURCHASE AGREEMENT FOR THE SALE
AND PURCHASE OF ELECTRIC ENERGYBETWEEN P ACIFICORP AND SCHWENDIMAN WIND LLC
CASE NO. P AC-O5-
REPLY COMMENTS OF
SCHWENDIMAN WIND LLC
COMES NOW Schwendiman Wind LLC ("Schwendiman ) and Replies to the
Letter Comments of Idaho Farm Energy Association ("IFEA") dated March 8, 2006, and
the Comments of Idaho Power Company dated March 7, 2006 as follows, to wit:
Idaho Farm Energy Association
Schwendiman appreciates the support and position of the Idaho Farm Energy
Association, but wishes to make clear that Schwendiman does not seek any modification
of the Amended Agreement's pricing or terms. During negotiations with PacifiCorp,
Schwendiman was well aware of the variable O&M issue discussed in the IFEA
comments, but recognized that it was not a negotiable item for PacifiCorp. While
Schwendiman agrees in theory with the IFEA analysis, Schwendiman has accepted the
REPLY COMMENTS OF SCHWENDIMAN WIND LLC - 1
Amended Agreement because the end result is reasonable in Schwendiman
circumstance.
Should this issue need further study with respect to other contracts in the future, it
should not be in the context of this contract approval proceeding.
Idaho Power
The Idaho Power Comments devote substantial spreadsheet space and graphics to
proving one simple point. If one assumes that 85% of the Mid-C price is lower than
PacifiCorp s non-conforming energy price then the ratepayer will receive a larger benefit.
Of course, the opposite is also true. Staff makes the key point that we do not know today
which price will be higher or lower. (See Staff Comments dated March 8, 2006, pg 7).
Idaho Power provided no information on the future relationship of these prices. No one
can. The ratepayer is equally likely to benefit from either PacifiCorp s or Idaho Power
banding mechanism.
Idaho Power repeatedly characterizes payments made for energy delivered outside
the 90-110 band as "liquidated damages.(See Comments of Idaho Power Company,
pgs 2, 3 , 4, 5.
This description is inaccurate and the Commission should not adopt it as a way to
characterize payments for energy delivered outside the 90-110 band.The phrase
liquidated damages" necessarily implies a breach of a contract:
Generally speaking, parties to a contract may agree upon liquidated damages in
anticipation of a breach, in any case where the circumstances are such that
accurate determination of the damages would be difficult or impossible, and
provided that the liquidated damages fixed by the contract bear a reasonable
relation to actual damages. Graves v. Cupic 75 Idaho 451 (1954).
REPLY COMMENTS OF SCHWENDIMAN WIND LLC - 2
Deliveries outside the 90-110 band are not a breach of the Idaho Power standard form
purchase power agreement, and the agreement itself does not use that phrase to describe
payments for deliveries outside the band. The reduced payments outside the band are not
damages for breach of the agreement; they are payments intended to reflect (in
imperfect way) a lesser value of the energy delivered.
Idaho Power s attempt to create by implication the perception that QF's who
make deliveries outside the 90-110 band are in breach of the purchase power agreement
is inaccurate. The Commission should not adopt the phrase "liquidated damages" as a
way to describe payment for deliveries outside the band.
Conclusion
For the reasons cited herein, Schwendiman respectfully requests that the
Amended Agreement be approved. Issues raised in the comments that are peripheral to
contract approval should be addressed separately in a manner the Commission thinks
appropriate without delay to contract approval.
DATED this 1-'-day of March, 2006.
Respectfully submitted
McDEVITT & MILLER LLP
ffi UPL
Dean J. Miller
McDevitt & Miller LLP
420 W. Bannock
Boise, ID 83702
Phone: [phone]Fax: [phone]
Attorneys for Schwendiman Wind LLC,
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CERTIFICATE OF SERVICE
I hereby certify that on the 2J!fllay of March, 2006, 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
ij ewellCiYpuc.state. id. us
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Usa Nordstrom, Esquire
Dean Brockbank, Esquire
PacuiCorp
825 N.E. Multnomah, Ste. 1800
Portland, OR 97232
lisa. nordstrom CiYpa cuic 0 rp. c om
Barton L. Kline, Esquire
Idaho Power Company
O. Box 70
Boise, ID 83707
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William M. Eddie II, Esquire
Advocates for the West
O. Box 1612
Boise, ID 83701
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REPLY COMMENTS OF SCHWENDIMAN WIND LLC - 4