HomeMy WebLinkAbout20020722-min.docMINUTES OF DECISION MEETING
JULY 22, 2002 – 1:30 P.M.
In attendance were Commissioners Paul Kjellander, Dennis Hansen, and Marsha Smith.
Commissioner Kjellander called the meeting to order. The first order of business was APPROVAL OF MINUTES FROM PREVIOUS MEETINGS on April 15, April 25, May 8, May 20, and May 28, 2002. Commissioner Kjellander moved for approval of the minutes. A vote was taken and the motion carried unanimously.
The second order of business was approval of items 2—12 on the CONSENT AGENDA. There were no comments or questions. Commissioner Kjellander moved for approval of the Consent Agenda items 2—12. A vote was taken and the motion carried.
The next order of business was MATTERS IN PROGRESS:
Joe Cusick’s July 19, 2002 Decision Memorandum re: Proposed Deposit Requirements by ILECs for Interexchange Carriers.
Mr. Cusick reviewed his Decision Memo. Commissioner Smith moved for approval of Staff’s recommendation to consider the matter under modified procedure using a generic case number. She also suggested changing the wording on some of the questions. A vote was taken and the motion carried unanimously.
Lisa Nordstrom’s July 11, 2002 Decision Memorandum re: Idaho Power’s Motion for Approval of Settlement and Settlement Stipulation on Risk Management and Hedging Issues. Status Report on Affiliate Transfer Pricing Issues. Case No. IPC-E-01-16. (Previously on the July 15, 2002 agenda.)
Ms. Nordstrom reviewed her Decision Memo. She said the settlement was reached through the input of Idaho Power, Commission Staff and the Customer Advisory Group. She said all the groups are recommending approval without major modification and are supporting adoption of the Stipulation with regard to risk management and hedging issues. She said the Company also filed a status report and an update to that status report regarding the operations of IdaCorp Energy, which are winding down and thus will have an effect on two contracts that were the subject of the hearings in the Idaho Power case last year. She said those contracts will not be a part of this settlement and will likely not have any relevance to the proceeding going forward since IdaCorp Energy is disbanding. She said the Customer Advisory Group will convene meetings in August and September to further discuss the risk management policy manual, which was presented at the Idaho Power board meeting last week, as well as additional compensation issues.
Commissioner Hansen said he thought the stipulated settlement assures we have the proper risk guidelines in place, which serves the public interest. He said he has no problem accepting the agreement, and he moved that the Commission accept the stipulated settlement. There was no further discussion. A vote was taken and the motion carried unanimously.
Scott Woodbury’s March 1, 2002 Decision Memorandum re: Case No. IPC-E-01-38 (Idaho Power), Amendment to Tariff Schedule 72, Interconnection to Non-Utility Generation. (Previously on the March 4, 2002 agenda.)
Mr. Woodbury reviewed his Decision Memo. He stated that the item had previously been before the Commission and had been brought forward because of item 17, which is the Company’s net metering amendment case. Commissioner Smith commented that when the Commission gets to item 17, she thought the Commission will define small as 100 kW, and she was wondering if there would be some benefit to having consistency among the tariffs as to what the definition of “small” is.
Mr. Sterling replied that initially when the new net metering tariff was proposed for Schedule 84, it was proposed for only Schedules 1 and 7, which are for residential and small commercial customers. He said that for those schedules, it was determined that a 25 kW limit was appropriate, but with the subsequent filing to include other customer classes, Idaho Power proposed a limit of 100 kW, and that is why there is a difference—because of the difference in customer classes. Commissioner Smith said she would withdraw her suggestion, and stated 25 kW would be small, and that would be analogous to the residential group that is in the first wave of net metering, with the second wave being larger, i.e. up to 100. There was no further discussion.
Commissioner Kjellander moved to approve the recommendations of Staff and Idaho Power that the inspections are to be every three years for the smaller projects and that we accept Staff’s recommendations. Commissioner Smith asked if we should clarify whether we are going to have a provision that if the interconnection requires more than the customer-furnished standard equipment, it’s the customer generator’s responsibility to bear those additional interconnection expenses. Commissioner Kjellander agreed that the clarification should be attached to the motion with a caution included that we continue to look at those interconnection costs to ensure they are not used as a method to thwart projects down the line. A vote was taken on the motion and it carried unanimously.
Commissioner Smith commented that the NARUC Electricity Committee staff is working with DOE and others on a standard set of recommended guidelines. She said the NARUC guidelines might have additional ideas that would be useful in our tariff, and she encouraged the Commission Staff and Company to look at those when they finally come out later this month to see if there are any helpful suggestions.
16. Scott Woodbury’s March 1, 2002 Decision Memorandum re: Case No. IPC-E-01-40 (Idaho Power), Schedule 86—CSPP Non-Firm Energy—Amendment. (Previously on the March 4, 2002 agenda.)
Mr. Woodbury reviewed his Decision Memo. Mr. Woodbury noted that in a generic case dealing with contract size, the Commission increased the size for QF eligibility for published rates from 1 MW to 10 MW. He said there have been no proposed changes in this contract, and the generic case is scheduled for a hearing on reconsideration. Commissioner Kjellander noted that if the issue is 10 MW, it was resolved in the last order. Mr. Woodbury replied that is correct, but no parties have had the option to submit additional comments regarding the size limitation in this particular case. He said that was the reason for the Company’s proposal with respect to 1 MW--in order to link it to the QF eligibility--although he wasn’t sure whether the Company’s position would be different, given this is a non-firm tariff. He said neither the Staff nor the Company has had the option to address that particular issue.
Commissioner Smith made a motion to approve the recommended changes to Schedule 86, which involves removal of 86 Option B, Net Metering, and which has been replaced by a subsequent tariff limiting the 86 tariff eligibility to QFs with a capacity nameplate rating of less than 10 MW and setting the purchase price at an amount equal to 85% of the monthly weighted average Mid C index.
Commissioner Kjellander asked what is meant specifically by the capacity nameplate rating. Mr. Woodbury said it has to do with equipment. Mr. Sterling explained the nameplate capacity is what the equipment is rated to produce. He said that with certain types of generation, wind being a good example, the majority of the time it produces much less than its rated capacity, so the issue is whether you should rely on the nameplate capacity or the maximum amount it can produce or something less than the nameplate capacity with no real suggestion as to how that should be determined.
A vote was taken on the motion and it carried unanimously.
Scott Woodbury’s July 19, 2002 Decision Memorandum re: Case No. IPC-E-02-4 (Idaho Power), Schedule 84—Net Metering—Amendments.
Mr. Woodbury reviewed his Decision Memo. Commissioner Hansen stated that he thought it is reasonable to approve the Company’s application as it is. He said the Company addressed the issues well. He made a motion to accept the Company’s application “as is.”
Commissioner Smith commented about the Farm Bureau’s points regarding changing the cap to 1% or renewable energies. She said her position on the cap is to start with what the Company proposed. She said she didn’t know how long it will take to get there, but if we hit a point where we’ve reached the cap, and some customers are actually refused, then she wants the Company to come back and tell us the cap has been reached and that it’s in the position of having to refuse further applications. She said at that point, she wants the opportunity to look at the cap again and see if it is reasonable or if there’s a better measure of what’s appropriate or if we need one at all.
Commissioner Kjellander said he supports the motion but wanted to comment on interconnection costs. He said there was a request from the Idaho Rural Council that we open up a case to try to figure out what the interconnection costs would be. He said his main reluctance to do so is that the costs will be different on a case by case basis because each project will be a little different. He said it is something we need to be vigilant about, however, because he didn’t want to see the interconnection costs become something that a party might pile on to thwart these projects. He stated the Commission needs to be vigilant as we look at those down the road.
There was no further discussion on the motion. A vote was taken and it carried. unanimously.
A. Idaho Power Company’s July 22, 2002 Motion for Continuance and Expedited Consideration Regarding Garnet Accounting Order. Case No. IPC-E-01-42 (Idaho Power).
Mr. Woodbury stated that the matter was scheduled for public hearing on July 23rd, but the Company had filed a motion with the Commission that morning requesting that the scheduled hearing be vacated and continued for an indefinite period but not less than 120 days. He said the Company requested that the Commission consider its motion at the meeting today. He stated the principal reason for the requested continuance is that the Company has been advised by Garnet Energy and Garnet’s corporate parent, IdaCorp, that in today’s financial markets, based on the current power purchase agreement between the Company and Garnet, there is a substantial likelihood that Garnet and IdaCorp will be unable to obtain the necessary financing to construct the generating facility, and they are pursuing alternative financing arrangements that will require additional time. He said Idaho Power indicates that on or prior to October 21st, 2002 it will present a written report to the Commission that will either demonstrate the Garnet generating facility can be financed and that power can be provided in accordance with the power purchase agreement or it will request that the Commission issue an order closing the case and authorizing the Company to cancel the power purchase agreement. He said the Company states it has been advised by Garnet that should it go forward with the project and if the Commission can provide some assurance it could issue an order prior to March 1, 2003, the Garnet facility could still be constructed to meet the online date of June 1, 2005. He stated the Company has notified the parties individually of its motion. He said some of the parties were present, including Brad Purdy, who wished to address the Commission regarding the Company’s filing.
Mr. Purdy stated he was representing IRC/CFRLU, or IRC for short. He said IRC did not object to deferral of the hearing and to that extent supported Idaho Power’s motion. However, he said that given the Company’s statement that it cannot obtain financing for Garnet in the foreseeable future and that the Company cannot in good conscience recommend that Idaho Power proceed with this case, and in light of the significant possibility that Garnet cannot perform within the terms of the contract, it is unclear how the Commission could possibly approve the Company’s request. He said he had a motion to make on behalf of IRC opposing the proposal to leave the docket open indefinitely for several reasons, and he moved that the Commission dismiss the Application without prejudice. He said IRC has taken the position all along that Garnet was not economically viable, was too speculative, that the market was in a state of tremendous uncertainty, and that the plant was not in the best interests of ratepayers and should not be constructed at this time. He said Idaho Power, or at least the marketplace, now agrees with IRC.
He stated that IRC had moved to vacate the hearing in April but Idaho Power countered that because it had backed its unregulated sister company’s subsidiary in its turbine contract, deferral would cost the company millions of dollars in late payment penalties. He said the company stressed back in April that time was of the essence and even a 90-day deferral of the hearing would be financially disastrous, but now in its motion, Idaho Power seeks an indefinite deferral, which is exactly what IRC sought in its motion back in April. He said Idaho Power even states it can wait until March 1, 2003 to receive approval from the Commission in order for Garnet to come on line as scheduled, and to say this is inconsistent with its position in April would be an understatement. Mr. Purdy said he was pointing this out to underscore that this project has been flawed from the start, that IRC’s contentions have proven out, and that Garnet, as currently proposed and for the foreseeable future, is not viable. He said perhaps most importantly, it would not disadvantage Idaho Power in any way to dismiss this docket without prejudice, but it would disadvantage his clients to leave it open. He stated his clients are a consortium of public interest groups including people with full-time jobs who have contributed incredible amounts of time and energy to opposing an ill-conceived project detrimental to the company’s ratepayers. He said huge amounts of time have been devoted to ramping up for this tremendously important case and it would be patently unfair to leave the proceeding open until Idaho Power deems itself ready to proceed. He said the people who have taken the time to provide input to the Commission have a right to have this matter put behind them and to have some closure. He also noted that without a decision by the Commission, as opposed to a withdrawal of the application by the company, it is questionable whether the intervenors would be entitled to funding according to the Commission’s Rules of Procedure.
Mr. Purdy said Idaho Power stated that it first learned of IdaCorp’s decision not to proceed with Garnet late last week, but that he felt that was hard to believe because there is considerable overlap between the officers and directors of IdaCorp and Idaho Power. He said Idaho Power financially backed the Garnet turbine contract, and surely those two companies are in constant communication. He said it is specious to suggest that IdaCorp knew of its decision not to proceed with Garnet much before Idaho Power did because they are one in the same. He said market conditions did not just deteriorate last week, and the changes taking place have been occurring since even before Idaho Power filed the Garnet application. He stated the uncertainties that exist today existed when IRC filed its motion to vacate the hearing indefinitely back in April. He reiterated that IRC did not oppose Idaho Power’s motion to defer the hearing, but strenuously objected to leaving the docket open indefinitely. He said Idaho Power should not be allowed to move the Commission and the intervenors around like pieces on a chess board at the Company’s convenience. He said the Company has been long aware of market conditions and to inform all concerned in less than 24 hours prior to the hearing that it intends to defer its application, but expects the case to remain open, is unfair. He stated that because of the rapid changes taking place within the markets, the Garnet testimony and data will be outdated. He said the Company can always come back with a new project and proposal that is more viable. He made a motion that the Commission dismiss the application based upon the Company’s own concessions and sworn testimony of Mr. Darrel Anderson.
Commission Kjellander asked Mr. Purdy how his clients would be financially disadvantaged if the Commission were to allow Idaho Power to defer the case for 90 days. Mr. Purdy replied that in paragraph 3 of the motion, it states, “As a result, Idaho Power hereby requests that the Commission issue its order continuing the hearings for an indefinite period but not less than 120 days.” Mr. Purdy said he was confused as to where Commissioner Kjellander came up with the “by 90 days.” Commissioner Kjellander stated that in the last page, under item 2, of the motion, it states that Idaho Power would “provide a written report to the Commission on or before October 21st, 2002, in which report Idaho Power will either demonstrate (1) That the Garnet facility can be financed and constructed to allow Garnet to satisfactorily perform under the PPA or (2) That it would be in the public interest for the Commission to issue its order concluding this proceeding and authorizing Idaho Power to cancel the PPA. Mr. Purdy replied that he found that inconsistent with paragraph 3 and confusing. He said based on the reading of the motion, he didn’t know if Idaho Power was proposing a hearing in 120 days or if they were proposing to leave the docket open indefinitely. Mr. Purdy said that IRC has spent a lot of time preparing for the case and has an expert witness who has already purchased an airline ticket and invested time and resources into filing testimony and preparing for the hearing. He said Idaho Power seems to be leaving them hanging without a definite time frame and without a sound basis for dragging this out. He said at some point it has to come to an end, and the manner in which Idaho Power proposes to end it is to simply withdraw its application, thereby potentially depriving the IRC of any funding.
Bart Kline of Idaho Power thanked the Commission for the opportunity to get the matter on the agenda under such short notice. He said the Company apologized for doing that and it was not the Company’s intention to have the case unfold the way it has. Mr. Kline said in Mr. Purdy’s discussion, he mentioned that Idaho Power or the Company was not able to finance this project, and he thought we needed to be careful to make sure we are clear about who is doing the financing, and he didn’t want to leave the impression with anyone that IdaCorp or Idaho Power is in any kind of financial situation where they can’t finance fundamental resources that are necessary to serve customer loads. He said reliability is always something that will be of a high priority to the Company. He stated there is absolutely no question that we are in a period where the energy-related financial markets are very difficult, but what was being discussed is merchant power plant financing. He explained that Garnet and IdaCorp are going to develop a merchant power plant, which means Idaho Power is only obligated to purchase power from that project for a relatively small portion of time that the power plant would be generating. He said what is causing the uncertainty is the fact that the plant still needs another customer, and the financing community is punishing all merchant power developers right now if there is any market risk. He said what IdaCorp and Garnet are going to have to do if they are going to be able to preserve this kind of a contract and move forward with the merchant power plant is to find a partner to own a portion of the equity in the power plant. He said that will not be easy to do since there is probably not one credit worthy utility in the western United States right now. He said there may be a possibility of preserving what is a pretty good contract for Idaho Power’s customers, but the Company doesn’t want to sugar coat it and it is going to be difficult. He said what the Company is hoping to do is to take a 90-day period and see if it can find that kind of financing arrangement. He stated that is why the Company proposed a continuance of the hearing rather than withdrawing the application. He said Mr. Purdy is correct that a huge amount of effort has gone into this case and this project, and what the Company is hoping to do is to preserve some of that work by simply delaying the hearing or ultimately delaying a decision, rather than having to start all over again if the Company is able to put together a financing package. He said Idaho Power is willing to reimburse IRC for the plane tickets Mr. Purdy mentioned.
Mr. Kline explained that as far as the confusion over the 90 days versus 120 days, the Company will come to the Commission as soon as it possibly can with the information in a written report no later than the end of October. He said from his standpoint, that is the date that would drive this matter. He said the 120 days is of no importance, and the key is how fast the Company can come to the Commission with a written report regarding the future of this contract. He said in presenting the report, if the Company is going to argue to the Commission that this power purchase agreement and arrangement should be preserved, then the Company will have the burden to demonstrate that it can be done. If the Company can’t do that, then it will at that time be asking the Commission to allow them to withdraw the application and cancel the contract. He said he wanted to make sure the record is clear that this is an IdaCorp-Garnet financing arrangement, not an Idaho Power financing arrangement, and there is a difference between them.
Commissioner Kjellander asked about the issue of possible penalties and if those will come into play in light of the fact Idaho Power is now requesting a continuance. Mr. Kline replied that the Company had previously been trying to expedite the process due to the turbine generator contract with Seamons, and in order to maintain the contract and not pay a cancellation charge, the Company had wanted to get an Order from the Commission by August 23, 2002. He said if the Company had the Order, it wouldn’t have to cancel the turbine generator contract and wouldn’t incur additional costs associated with it. He said if the Commission grants the Company’s motion, IdaWest will go back to Seamon’s Westinghouse, and will make one more effort to see if they will extend the time period in which they can supply the turbine generator without a cancellation charge. He said the world for turbine generators has changed a lot because merchant power plants are canceling their orders with turbine manufacturers in droves, so there is a possibility they will extend the contract. He said if they aren’t willing to cancel the contract, the cancellation costs will not show up in the rates charged to customers under that agreement.
Commissioner Smith commented that it is frustrating and very confusing because it seems that in half of Mr. Kline’s comments, he is trying to distinguish, which is appropriate, between IdaCorp, Garnet, IdaWest and Idaho Power Company, the utility. She said in the course of his comments, however, he used the “we” statement, and she isn’t sure who “we” is. She said if “we” means Garnet, IdaCorp, and IdaWest, then he shouldn’t be in front of the Commission representing Idaho Power and saying “we.” She asked that those who come to the Commission representing Idaho Power Company make sure that they are representing Idaho Power and not the other affiliates of IdaCorp, because she doesn’t care about the financial problems of those other companies, and she is going to make it her job to be sure that none of the costs or their financial problems are inflicted upon Idaho Power and its rate payers. She asked that he be more precise to be sure the interests he is talking about are Idaho Power’s and not some other affiliate’s interests.
Commissioner Hansen asked if the report Idaho Power will be filing on or before October 21st will address how it intends to meet the demand for power without the Garnet plant. Mr. Kline replied that Idaho Power still needs to acquire approximately 350 megawatts of peaking capacity to be available in June of 2005. He said during the 90-day period, not only will be Garnet and IdaCorp be doing their thing, but also Idaho Power will be moving expeditiously to identify alternatives to the Garnet contract that hopefully will be at least as reliable and economical. He said they will definitely be advising the Commission as to what Idaho Power Company is going to do to meet that future resource need.
Mr. Kjellander asked Mr. Purdy if Idaho Power’s offer to reimburse his group for the airfare is acceptable. Mr. Purdy reminded the Commission that there will be other expenses as well, such as those incurred by Mr. Eckland, who was cutting his family vacation short to fly back for the hearing. Commissioner Kjellander asked Mr. Kline if it would be Idaho Power’s position that any of the intervenor’s witnesses will be reimbursed for airfare. Mr. Kline said “absolutely” and apologized for any inconvenience.
Commissioner Kjellander stated the Commission would take a brief recess to caucus before rendering its decision.
Commissioner Kjellander recalled the meeting to order. He made a motion that the hearing be vacated and that oral arguments be scheduled to further discuss the motion presented by Mr. Purdy at 10:00 a.m. on Wednesday, July 24th. A vote was taken on the motion and it carried unanimously.
The next order of business was RULEMAKING:
Don Howell’s July 17, 2002 Decision Memorandum re: Updating the Monetary Threshold for Reporting Railroad Accidents/Incidents, IDAPA 31-7102-0201.
Mr. Howell reviewed his Decision Memo. He said he also wanted to point out that the citation correction in Rule 4 would be necessary but he wanted to change the Staff’s recommendation to leave the word “are” in the third line of that rule instead of making the change to “may be.”
Commissioner Smith commented that in April, Mr. Howell had given the Commissioners a memo noting the FRA’s new locomotive sanitation standards and the fact that our railroad sanitation Rule 102 was preempted; however, we weren’t under any legal requirement to remove it, but she was wondering if we ought to include it with this rulemaking so our rules reflect rules that we actually have. Mr. Howell replied that the Railroad Accident Reporting Rules are in a different set than the Railroad Safety and Sanitation Rules.
Commissioner Smith made a motion to approve the changes proposed with the correction noted. A vote was taken and it carried unanimously.
19. Weldon Stutzman’s July 18, 2002 Decision Memorandum re: Updating Commission Safety and Accident Reporting Rules to Adopt by Reference Latest Safety Codes and Regulations—IDAPA 31-1101-0201.
Mr. Stutzman reviewed his Decision Memo. Commissioner Smith made a motion that the Commission adopt by reference the current edition of the National Electric Safety Code and the parts of Title 49 CFR that have changed since October 1 of 2000. A vote was taken on the motion and it carried unanimously.
Commissioner Kjellander stated the only other item on the agenda was item 20 under the category FULLY SUBMITTED MATTERS. He said the Commission would deliberate on that item privately. He then adjourned the meeting.
DATED this _____ day of July, 2002.
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COMMISSION SECRETARY
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