20130201Grouse Creek Motion for SC to Expedite.pdf

Ronald L. Williams, ISB No. 3034
Williams Bradbury. P.C.
1015 V. Hays St,
Boise, ID 83702
Telephone: [phone]
Fax: [phone]
Email: [e-mail]
Atj.jel:..s for Petitioners-Appellants Grouse Creek Wind Park, LLC and Grouse Creek
Wind Park H, LLC.
I $I I 411*1Vilifflay -115137MMU77Me
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GROUSE CREEK WIND PARK, LLC and )
GROUSE CREEK WIND PARK II, LLC, )
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Petitioners-Appellants, )
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V& )
)
IDAHO PUBLIC UTILITIES COMMISSION, )
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and )
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IDAHO POWER COMPANY, )
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Respondents-Respondents on Appeal. )
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)
SUPREME COURT
DOCKET NO 39151-2011
IDAHO PUBLIC UTILITIES
COMMISSION NO. IPC-E-10-61
AND IPC-E-10-62
(a U (ØXI ai *ii ai OW U
COMES NOW Grouse Creek Wind Park, LLC and Grouse Creek Wind Park II,
LLC ("Grouse Creek"), and pursuant to Appellate Rule 32(c) moves the court to set oral
argument in the above matter for the August 2013 Term of the Court, for the reasons set
1. In December, 2010, Grouse Creek and Idaho Power executed contracts for
the sale and purchase of power from the two Grouse Creek wind projects. In June of 2011
the Commission rejected approving those agreements. Grouse Creek petitioned for
Motion to Expedite - 1
reconsideration of that rejection, which rejection was affirmed by the Commission in July
of 2011. Grouse Creek subsequently appealed, but the appeal was remanded to the
Commission for further consideration. Following Reconsideration on Remand the
Commission in September, 2012 again rejected the Grouse Creek contracts.
2.A significant portion of the economic benefit Grouse Creek has relied on
in pursuing development of the two Grouse Creek wind projects relates to federal
production tax credits (PTCs) available to the developers of renewable energy projects.
Those credits were extended by the American Taxpayer ReliefAct of 2012 ("ATRA"),
but are set to expire on December 31, 2013.
3.The first year (2013) "all hours" energy production rate Grouse Creek
would be paid by Idaho Power under the rejected contracts is 6.193 cents per kilowatt
hour (kWH).2 The PTCs available to Grouse Creek are 2.2 cents per kWH. In the first
year of what was supposed to be Grouse Creek's operation (2013), PTCs would have
accounted for approximately 25% of the projects' revenues. PTCs are available under the
ATRA for the first ten years of operation of a renewable energy project.3
4.Without the benefits of PTCs Grouse Creek will suffer severe and
irreversible economic harm.4 In order to qualify for PTCs under ARTA, Grouse Creek
must "start construction" before January 1, 2014.' While the Internal Revenue Service is
yet to publish guidance on what is considered "start of construction" under ARIA,
The American Taxpayer ReliefAct of2012, H.R. 8, Sec 407 (January 2, 2013),
htm://www.gDo.aov/fdsys/DkIBlLLS- II 2hr8eas/pdfIBILLS- I 12hr8eas.pdf'
2 Firm Energy Sales Agreement between Idaho Power and Grouse Creek, R. Vol. 1, p. 30.
See Affidavit of Christine Mikell, attached.
Id.
Id.
Motion to Expedite -2
applying past guidance would indicate that five percent of the cost of a project must be
incurred in order to have "started construction." 6
5.If Grouse Creek prevails in this appeal, but the Court's decision occurs in
late 2013, Grouse Creek is fearful that the benefit of a favorable Court decision could not
be implemented in time for it to qualify for the PTCs. With a Court ruling favorable to
Grouse Creek, the Commission must then conform its order to that decision, while at the
same time allowing the Parties time to adjust key contract terms and conditions, in order
to reinstate the economic viability of the contracts.7 Those revised contracts would then
be approved by the Commission. Only with approved contracts would Grouse Creek be
able to finance the projects and start construction.
6.If this matter was set for argument before the Court in the normal course,
there is risk that Grouse Creek and the other parties in this case would not be able to
accomplish the tasks described in paragraph 5 in time for Grouse Creek to qualify for
PTCs. If this matter were argued before the Court in August and Grouse Creek prevails,
the risk of Grouse Creek failing to qualify for the PTCs is substantially reduced.
For the reasons stated above, Grouse Creek respectfully requests that oral
argument in the above matter be set for the Court's August, 2013 Term.
DATED this I S4 day of February, 2013.
Ronald L. Williams, ISB 3034
Williams Bradbury, P.C.
Attorneys for Grouse Greek
6 See, Section 45 of the Internal Revenue Code of 1986, 26 U.S.C. § 45( and Section 1603 of the American
Recovery and Reinvestment Act of2009. H.R. I ,Pub. L. No. 111-5, 123 Stat. 115 (February 17, 2009)
hun://www.no.gov/fdsvs/nkg/B1LLS-I I lhrlenr/pdf/BILLS-I I lhrlenr.pdf. wherein the U.S. Treasury adopted a 5%
safe harbor provision for "commencement of construction."
See Mikell Affidavit. For example, the First Energy Date contained in the contracts is June I,
2013, an impossibility at this point in time.
8 Id.
Motion to Expedite -3
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this I it day of February, 2013, I caused to be served a true
and correct copy of the foregoing document upon the following individuals in the manner indicated
below:
Donald L. Howell, II
Lead Deputy Attorney General
Kristine Sasser, Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington (83702)
P0 Box 83720
Boise, ID 83720-0074
E-Mail: Don.HowelI(puc.idaho.gov
E-Mail: Kris.Sasserpuc.idaho.gov
Donovan E. Walker
Idaho Power Company
P0 Box 70
Boise, ID 83720-0074
E-Mail: dwalkerlidahopower.com
O Hand Delivery
O US Mail (postage prepaid)
0 Facsimile Transmission
O Federal Express
Electronic Transmission
0 Hand Delivery o US Mail (postage prepaid)
0 Facsimile Transmission
O Federal Express
EJ Electronic Transmission
Ronald L. Williams
Ronald L Williams, ISB Nc. 3034
Williams Bradbury, P.C.
1015 W. Hays St.
Boise, ID 83702
Telephone: [phone]
Fax: [phone]
Email: ron@wi 1liamsbradbtry.com
Attorneys for Petitioners-Appellants Grouse Creek Wind Park, LLC and Grouse Creek
Wind Park II, LLC.
IN THE SUPREME COURT OF THE STATE OF IDAHO
)
) SUPREME COURT
GROUSE CREEK WIND PARK, LLC, and ) DOCKET NO. 39151-2011
GROUSE CREEK WIND PA 1K II, LLC, )
)
Petitioners-Appellants.
)
)
VS.
)
)
IDAHO PUBLIC UTILITIES COMMISSION, )
)
and )
)
IDAHO POWER COMPANY, )
)
Respondents-Respondcnts on Appeal. )
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Idaho Public Utilities Commission
Case Nos.
LPC-E-10-61 and IPC-E-10-62
AFFIDAVIT OF CHRISTINE
MIKELL IN SUPPORT OF
MOTION TO EXPEDITE
1, Christine Mikeil, b.thig first duly sworn on oath, deposes and says:
1.I am over the age of 18, and I am the President of Wasatch Wind
Intermountain, LLC, which s the owner of Grouse Creek Wind Park, LLC, and Grouse
Creek Wind Park II, LLC (collectively, "Grouse Creek").
2.In December :f 2010 Grouse Creek signed two contracts for the delivery
of power to Idaho Power. In June and July of 2011, and again in September of 2012 (on
Affidavit of Christine MikeLi in Support of Motion to Expedite -
remand from the Idaho Supume Court) the Idaho PUC declined to approve these two
contracts between Grouse Creek and Idaho Power.
3.The contracts between Idaho Power and Grouse Creek contain power rates
to be paid by Idaho Power v hich are calculated on an energy delivery basis. The first
year "average" rate for ener.y delivered is 6.193 cents per kilowatt hour (kWJ-fl. That
rate escalates over the 20 ye..r life of the contract between Idaho Power and Grouse
Creek.
4.Provided certain conditions are met, Grouse Creek is also entitled to a
federal tax production tax cri:dit ("PTC") for power delivered to Idaho Power, which is
currently set at 2.2 cents per kWH. That rate, which also escalates, is available for the
first ten years of a renewabh project's commercial operation. In effect, approximately
25% of the expected Grouse Creek project revenues for the first 10 years of operation are
tied to PTCs. Grouse Creek istimates that PTCs are worth approximately $90 million in
income tax credits over thesc. 10 years of operation.
5.Federal PTCs expire on December 31, 2013. In order to qualify for PTCs a
renewable energy project must have "started construction" before January 1, 2014. While
the IRS has yet to issue guidance as to what "started construction" means, it is my
opinion, and those of others in my industry, that the same or similar 5% "safe harbor"
rules Will apply as were appi ed to the "commencement of construction" requirements
under the prior stimulus package.
6.If Grouse Crick is successful in is appeal in this matter, it then must
renegotiate with Idaho Powei certain key terms of the contracts that are now impossible
to meet, see those contracts ii pproved by the Idaho PUC, close construction financing and
then spend the funds and "start construction" sufficient to qualify under the expected safe
Affidavit of Christine Mike]] in Support of Motion to Expedite - 2
harbor rules. Grouse Creek e;timates these activities would take, at a minimum, 60 to 90
days.
7. If Grouse Crc k is successful on appeal, yet unable to start construction of
its project before the end of 2013 sufficient to qualify for the PTCs, Grouse Creek would
suffer severe and irreversibk economic harm of approximately $36 million related to the
ten year loss of PTCs. In addition, loss of PTCs would seriously jeopardize the financial
ability of moving forward with development of the two wind projects.
I declare under perju.: y and under the laws of the United States and under the laws
of the State of Utah that the lorgoing is true and correct, to the best of my knowledge and
belief.
DATED this / clay of February. 2013.
QMAi LLf ristine Mikell
SUBSCRIBED AND SWOBN to before me this 'day of February, 2013.
Public for
Residing at 3~1,nd- Ulall
My Commission Expires:
NOTARY PUBLIC I
e,eICeR E. RICKARDS
saw
cOMMSON EXPIRES pRUAW( 21. 2OiS
STA1EOFUTAH
Affidavit of Christine Mikel I in Support of Motion to Expedite - 3