20110406Reply Comments.pdf

WILLIAMS. BRADBURY
ATTORNEYS AT LAW RECEIVED
28H APR -5 PH~: 31
April 5, 2011
Idaho Public Utilties Commission
472 W. Washington Street
Boise,ID 83702
ATTN: JeanD. Jewell
Commission Secreta
Re: In the Matter of the Application of Pacificorp dba Rocky Mountain Power for a
Determination Regarding a Firm Energy Sales Agreement Between Rocky Mountain
Power and Cedar Creek Wind, LLC
Dear Jean:
Please find enclosed the original and seven (7) copies of Reply Comments of Cedar
Creek Wind LLC in each of the following actions:
Rattlesnake Canyon
Coyote Hil
Nort Point
Steep Ridge
Five Pine
PAC-E-11-01 if'-
PAC-E-11-02
PAC-E-11-03
PAC-E-11-04
PAC-E-11-05
,Sincerely, "f(~íJ~
Ronald L. Wiliams
RLW/jr
Enclosures
1015 W. Hays Street - Boise, ID 83702
Phone: [phone] - Fax: [phone] - ww.wiamsbradbur.com
RECEIVED
lOll APR -5 PM~: 31
Ronald L. Wiliams, ISB No. 3034
Wiliams Bradbur, P.C.
1015 W. Hays St.
Boise ID, 83702
Telephone: [phone]
Fax: [phone]
ron~willamsbradbur.com
Attorneys for Cedar Creek Wind LLC
BEFORE THE IDAHO PUBLIC UTILITES COMMISSION
IN THE MATTER OF THE APPLICATION OF) Case No. PAC-E-11-01
PACIFICORP DBA ROCKY MOUNTAIN )
POWER FOR A DETERMINATION )
REGARING A FIRM ENERGY SALES )
AGREEMENT BETWEEN ROCKY )
MOUNTAI POWER AND CEDAR CREEK )
WIND, LLC (RATTLESNAKE CANYON )PROJECT) )
)
IN THE MATTER OF THE APPLICATION OF) Case No. PAC-E-11-02
PACIFICORP DBA ROCKY MOUNTAIN )
POWER FOR A DETERMINATION )
REGARING A FIRM ENERGY SALES )
AGREEMENT BETWEEN ROCKY )
MOUNTAIN POWER AND CEDAR CREEK )
WIND, LLC (COYOTE HILL PROJECT) )
)IN THE MATTER OF THE APPLICATION OF) Case No. PAC-E-11-03
PACIFICORP DBA ROCKY MOUNTAIN )
POWER FOR A DETERMINATION )
REGARDING A FIRM ENERGY SALES )
AGREEMENT BETWEEN ROCKY )
MOUNTAIN POWER AND CEDAR CREEK )
WIND, LLC (NORTH POINT PROJECT) )
)
CEDAR CREEK WIND REPLY COMMENTS
v
Page 1
IN THE MATTER OF THE APPLICATION OF )
PACIFICORP DBA ROCKY MOUNTAIN )
POWER FOR A DETERMINATION )
REGARDING A FIRM ENERGY SALES )
AGREEMENT BETWEEN ROCKY )
MOUNTAIN POWER AND CEDAR CREEK )
WIND, LLC (STEEP RIDGE PROJECT) )
)
)
)
)
)
)
)
)
)
IN THE MATTER OF THE APPLICATION OF
PACIFICORP DBA ROCKY MOUNTAIN
POWER FOR A DETERMINATION
REGARDING A FIRM ENERGY SALES
AGREEMENT BETWEEN ROCKY
MOUNTAIN POWER AND CEDAR CREEK
WIND, LLC (FIVE PINE PROJECT)
Case No. PAC-E-11-04
Case No. PAC-E-I 1-05
REPLY COMMENTS OF
CEDAR CREEK WID LLC
Comes now Cedar Creek Wind, LLC ("Cedar Creek" or "CCW") and fies these Reply
Comments in response to Comments of the Commssion Staff and asks the Commission to
consider these Reply Comments, for the reasons set forth below.
Cedar Creek is counterpar to the five Firm Energy Sales Agreements with Rocky
Mountain Power in the above listed dockets. As the Commission noted in Order 32210 in Case
Numbers IPC-E-10-51through 55, a counterpary such as CCW is an "actual pary" in such a
case with a "direct interest" in the outcome of these proceedings. For this reason, these Reply
Comments are fied because an additional material fact impacting CCW's direct interest in this
case has arsen subsequent to the filing of initial comments by Cedar Creek and the March 24,
2010 date established by Commission Order 32192 for the filing of comments by interested
paries.
STATEMENT OF FACT
On March 25,2011 Rocky Mountain Power filed the Direct Testimony of Bruce W.
Griwold in IPUC Case No. GNR-E-11-01 In The Matter of the Commission's Investigation Into
CEDAR CREEK WIN REPLY COMMENTS Page 2
Disaggregation and An Appropriate Published Avoided Cost Rate Eligibilty Cap Structure for
PURPA Qualifing Facilties. In his direct testimony in this case Mr. Griswold, makes the
following statement:
Because the Company and Cedar Creek reached agreement on all terms of
their power purchase agreements including the avoided cost price prior to
December 14,2010, (the effective date of Commission Order No 32131)
Rocky Mountan Power executed final power purchase agreement and, on
Januar 10,2010, fied them with the Commission.
Case No. GNR E-11-0 1, Griswold, Di - 8. (emphasis added) A copy of this page of Mr.
Griswold's direct testimony is attched.
Ths statement of Mr. Griswold is in accord with the facts sworn to by Dana Zentz in his
affidavit previously filed by CCW in these cases, where Mr. Zentz said:
16. On November 29, 2009 I received an email from Ken
Kaufman, legal counsel to PacifiCorp, transmitting a "proposed final redline"
PP A for the Coyote Hil wind project, with the additional notation that when
the Coyote Hil PP A is finalized, PacifiCorp will commence preparg the
other four PP As using the same contract prototype. My response the next day
made a couple of anotations in the body of ths PP A and otherwse noted that
"we have nothing fuher" to add or request. See Attachment No. 8 (to
Affidavit) (emphasis original)
24. All material outstading contract issues between CCW and
PacifiCorp were resolved by November 29, 2010 and the paries had, on or
before this date, arived at a meeting of the minds. CCW was simply forced to
wait for three weeks for PacifiCorp credit, legal and management reviews of
the contracts, before contract execution by PacifiCorp.
See Affidavit of Dana Zentz, p. 10, 12-13.
In spite of both paries to the power purchase agreements (PP As) confirming in sworn
testimony before the Commission that a binding, legally enforceable obligation arose before
December 14,2011, Staff recommends that the Commission reject the five Cedar Creek PPAs
because Rocky Mountain Power executed the agreements afer December 14,2010. As Stated by
Staff: "Staf views the December 14,2010 effective date of Order No. 32176 as absolute."
CEDAR CREEK WI REPLY COMMENTS Page 3
STATEMENT OF LAW
The standard ariculated by Staff - that December 14,2010 is an "absolute" cut-off date-
is both a misreading of the Commission Order 32176 in Case No. GNR-E-10-4 and is contrar to
established law regarding PURP A rates and contract requirements.
In its Notice of Joint Petition in Case No. GNR-E-10-4 the Commission stated its intent
to "reduce the published avoided cost eligibilty cap" effective on December 14,2010. See Order
32131. After deliberation the Commission in Order No. 32176 held: "Based on the forgoing, the
Commission temporarily reduces the eligibilty cap for published avoided cost rates from 10
aMW to 100 kW for wind and solar resources only, effective December 14,2010." Id. Both
Orders establish December 14 as the date of "eligibilty" for 10 aMW cap and the standard rates
that accompany such a 10 aMW contract. Neither Order requires, or even speaks to, December
14 as the date by which both counterparies must have signed. Both counterparies - Rocky
Mountain Power and Cedar Creek - agree that the five CCW contracts were eligible for the 10
aMW rates prior to December 14,2010. Both also agree that all PPA terms and conditions,
including price, had been agreed to before this date. Respectfully, CCW believes Staff is
misreading Commssion Order No. 32176.
As previously noted in CCW's initial comments, two recent Qualifying Facilty (QF)
contract approvals by the Commission continue a long line of decisions wherein the Commission
reviews the relevant facts and circumstaces to determine whether a QF is entitled to vintage
rates or contract terms. Those factors are discussed in CCW's initial comments in these cases
and will not be repeated here, except with respect to the final point: a "meeting of the minds"
between counterparies to a PP A.
CEDAR CREEK WI REPLY COMMENTS Page 4
In Grand View Solar the Commission approved a PP A executed by both paries
substantially after a change of avoided cost rates, but containing higher vintage PURP A rates. i
In Grand View Solar Idaho Power represented to the Commission that "an agreement (between
Idaho Power and Grand View Solar) was materially complete prior to March 16,2010, and
except for routine Idaho Power final processing, an agreement would have been executed by
both paries prior to March 16,2010." Order No. 32068 at p. 2. Staff also recommended
approval of the Grand View Solar Contract: "Staff concludes that the Company has
demonstrated that Grandview (sic) is eligible for grandfathered rates." Id. at p. 3. The
Commission approved the Grand View Solar PPA, noting: "We accept the representations of
Idaho Power as to the contract negotiations of the paries." Id. at p. 5. The Commission then
stated: "We fuher find the Company's approach in this case regarding contract rates to be
consistent with the spirit of those prior grandfathering cases. See A. W Brown Co., Inc., v. Idaho
Power Company, 121 Idaho 812,817; 828 P.2d 841 (1992), Order No. 29872, Case No IPC-E-
05-22." Id. See also Yellowstone Power Inc. 2 where the Commission also found that
Yellowstone was entitled to grandfathered contract terms and rates, as "(t)here is no reason to
question the representations of Idao Power and Yellowstone" as to a meeting of the minds on
contract rates and terms. Order No. 32104. at p. 11. In this case Idaho Power and Yellowstone
Power Inc. also both executed the PPA after March 16. 2010.
Alternatively, if December 14 is in fact considered the "absolute" date by which a
contract must be entered into, the counterparies to the Cedar Creek PP As are in accord that such
1 Case No. IPC-E-1 0-19; In the Matter of the Application of Idaho Power Company for Approval of a Firm Energy
Sales Agreement with Grand View Solar PV 1. Idaho Power and Grand View Solar executed their contract on June
8,2010, not quite thee months after the change in rates.2 Case No. IPC-E-10-22; In the Matter of the Application of Idaho Power Company for Approval of a Firm Energy
Sales Agreement with Yellowstone Power Inc. The contract between Yellowstone Power Inc. and Idaho Power was
dated July 28, 1020, more than four months after the change in rates.
CEDAR CREEK WIN REPLY COMMENTS Page 5
a binding commitment or obligation was agreed to between them before December 14,2010.
The actul date inserted on the face of the PP As by Rocky Mountain Power was merely a
fuction of "routine final processing" 3 of the PP As by Rocky Mountain Power.
CONCLUSION
Staffs recommendation to now, and for the first time, establish an "absolute" or "bright
line" grandfathering test, as a substitute for the longstanding "facts and circumstaces" test
(previously employed by the Commission and ratified by the Idaho Supreme Cour) is wrong and
misguided. Such a new, arbitrar test for determining grandfathered rights to pre-existing rates,
terms or conditions is bad public policy because it would simply allow a utilty the unilateral
ability to "ru out the clock" with routine, non-substative approval matters when the "absolute"
date is approaching. A hard-and-fast rule is also contrar to PURPA's federal mandate that
utilities execute power purchase agreements with QF projects that are matue and are ready,
wiling and able to deliver qualifying power to the utilty at the avoided cost applicable at that
time.
The Commission has a long history of siftng through and determining which projects
and contracts are suffciently mature to deserve grandfathered PURP A rates, terms or conditions.
That well reasoned body oflaw should not be abandoned here for an arbitrar, "absolute" hard-
date test that fails to consider both the facts and the equities of the parties involved. Or, as in this
case, sworn testimony by both counterparies to the Cedar Creek PP As that "(T)he Company and
Cedar Creek reached agreement on all terms of their power purchase agreements including the
avoided cost price prior to December 14,2010." Id. Grswold Direct Testimony, p. 8.
3 IPUC Order No. 32068, Grand View Solar, p.2.
CEDAR CREEK WI REPLY COMMENTS Page 6
~h
Dated this ~ day of April, 20 i i.
CEDAR CREEK WI
Respectfuly submitted,
Rpt Lw~
Ronald L. Wiliams
Wiliams Bradbur, P.C.
of Attorneys for Cedar Creek Wind
REPLY COMMENTS Page 7
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..;-:. ~
REceIVED
mii MAR 25. AM 10= 00
lDAH. o. nUt:.., I,"'t . rOlil;..f
UTltJTIES COMMISSION
BEFORE TH IDAHO PUBLIC UTIT COMMSION
IN TH MATI OF THE )COMMISSION'S ) CASE NO. GNR-E-11-OlINTIGATION INO )
DISAGGREATION AN AN ) Di Tesny ofBnice W. Griold
APPROPRITE PUBLISHE )
AVOIDED COST RATE ELIGIBIL )CAPSTRUCIFORPURA )
QUALIFG FACil
ROCKY MOUNAIN POWE .
CASE NO. GNR-E-11-Ol
Ma 2011
Pror to applyig fora QF contr with published prce, Ced Crek
submitt a bid into the Company's 2009 reewable RF as a single 151 MW
project but thei bid was not selec by the Company. beus thei propose
price was too high and not competitive with the alteatives. in. Marh 2010, the
developer reueste QF pricing for two 78 MWprojects. . The projec' avoide.
cost prices were determed using the Commssion-ordere IR methodology for
Idao QFs over 10 aM. The Company prepared and delivere a term ~eet
contag a twenty-yea str of avoide cost prices. On a twenty-yea nomial
1evelized paymnt basis the resutat avoide cost price was $56.06 pe MW .
assug a sta date in 2012. The avoide cost prices were rejec by the
developer due to the price beg too low.
In May.2010, the developer resubmitt five distict projects totag 133
. MW. and reueste the publihed avoide cost prices. Ce Crek is a 1arge-
scale, sophisticate developer with legal and tehncal assets who disaggate a
single lare projet that was not selec thugh the Compary's.competitive bid
procs into multiple projects in order to met the 10 aM thshold and qua
for much higher published avoide cost contrts.
Because the Company and Ce Crk rehed agment on al te of
thei power purhase agnts includig the avoide cost price prior to
Dember 14, 2010, (the effecve date of Commssion Orr No. 32131) Rocky
Mounta Power execte fial power purhase agrmentS and. on Janua 10,
2010, fied them with the Commsion. These contrct ar cutly before the
Commsion. for review and deision. . On a compartive basis, the 20-yea
Griswold. Di - 8
Rocky Mouta Power