20050816_1286.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:SCOTT WOODBURY
DATE:AUGUST 12, 2005
SUBJECT:CASE NO. IPC-05-22 (Idaho Power)
INTERLOCUTORY ORDER NO. 29839 AND RELATED PETITIONS
WIND LAND IN CO RPO RA TED
On June 17, 2005, Idaho Power Company (Idaho Power; Company) filed a Petition
with the Idaho Public Utilities Commission (Commission) requesting a temporary suspension of
the Company s obligation under Sections 201 and 210 of the Public Utility Regulatory Policies
Act of 1978 (PURP A) and various Commission orders, to enter into new contracts to purchase
energy generated by qualifying wind-powered small power production facilities (QFs). A public
hearing and oral argument on the narrow issue of the requested temporary suspension of Idaho
Power PURP A obligation to enter into contracts to purchase energy generated by wind
powered small power production facilities (the need for and appropriateness of such relief and
related procedural and jurisdictional matters) and/or the Commission.:~,..power to suspend the
PURP A avoided cost rate for wind facilities was held on July 22, 2005 in Boise, Idaho.
August 4, 2005, the Commission issued Order No. 29839 in Case No. IPC-05-22. The
Commission s Order reduces the published rate eligibility cap for non-firm wind projects to 100
, requires individual negotiation for larger wind QFs, establishes criteria for assessing QF
contract entitlement and discusses further procedure. The Commission s Order, in part
contained the following findings:
Based on the record established in this case the Commission finds reason to
believe that wind generation presents operational integration costs to a utility
different from other PURP A qualified resources. We find that the unique
supply characteristics of wind generation and the related integration costs
provide a basis for adjustment to the published avoided cost rates, a
DECISION MEMORANDUM
calculated figure that may be different for each regulated utility. The
procedure to determine the appropriate amount of adjustment, we find, and
the identification of what studies, if any, need to be performed to provide
such a number is a matter appropriate for further proceedings. The record
reflects that a wind integration study if required may take six months to
develop. Idaho Power has requested a suspension period from six to nine
months.
The Commission is presented in this case with a Company proposal to
suspend its obligation to purchase and a Staff proposal to reduce the
published rate eligibility cap for qualified intermittent wind projects from
aMW to 100 k W and to require individual negotiation for larger wind
projects. Exempt from Staffs proposal are those wind projects that are
offered on a firmed basis. The Commission finds Staff s proposal to be a
reasonable approach. In doing so we find that under PURP A standard rates
for purchases need be published only for QFs 100 kW and smaller.
Reference 18 C.R. Section 292.304(c)(1). We find that the published
avoided cost rate for other generation types is not being challenged in this
case. We find no reason to cast the net any further than necessary and find it
reasonable to limit our Order to intermittent wind QFs only. Reference 18
R. Section 292.304(c)(3)(ii). We find our action in reducing the cap for
published rates for wind projects to be just and reasonable to the electric
consumers of Idaho Power and in the public interest. Reference 18 C.F .
Section 292.304(a)(1)(i). This Commission finds that it has continuing
authority to review PURP A rates in order to protect the public interest.
It was suggested in briefing and testimony that the 90/110 performance band
established in Order No. 29632 sufficiently dealt with the firm versus non-
firm characteristics of wind and that no further adjustment is needed. In
moving forward in this case we find that the average monthly generation
requirement that we established in Order No. 29632 may not capture the
integration requirements and operational demands placed on the utility by
intermittent generation and that the integration costs associated with same
may not be fully reflected in the published avoided cost rates. In moving
forward with this case we do so in recognition that no utility is required to
pay more than its avoided cost for QF purchases. PURP A 9 21 O(b).
Idaho Power has a federal requirement to purchase qualifying wind
generation pursuant to PURP A, and the implementing rules and regulations
of the Federal Energy Regulatory Commission (FERC) and this Commission.
The Commission recognizes that Idaho Power is also seeking to purchase
wind generation by way of a separate Request for Proposal (RFP) process.
The Company s RFP conforms with a resource acquisition strategy set forth
in its 2004 Integrated Resource Plan. We note of significance that an
Integrated Resource Plan is a living document and as such it is subject to
change as new information becomes available or as circumstances change.
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Bids in the Company s 2005 wind RFP were submitted in March 2005. The
Commission finds no persuasive evidence that the RFP bids were affected or
influenced by the published avoided cost rate. While the Commission is not
directing that the Company proceed in any particular manner with its RFP
we nevertheless encourage the Company to bring the RFP process to
conclusion.
At the beginning of hearing on July 22, the Commission adjourned to allow
the parties to explore whether any consensus could be reached regarding
those PURP A projects that were in various stages of negotiation with Idaho
Power. The parties were unable to reach consensus. Accordingly, this
Commission finds it reasonable to establish the following criteria to
determine the eligibility of PURP A qualifying wind generating facilities for
contracts at the published avoided cost rates. For purposes of determining
eligibility we find it reasonable to use the date of the Commission s Notice in
this case, i.e., July 1 , 2005. For those QF projects in the negotiation queue on
that date, the criteria that we will look at to determine project eligibility are:
(1) submittal of a signed power purchase agreement to the utility, or (2)
submittal to the utility of a completed Application for Interconnection Study
and payment of fee. In addition to a finding of existence of one or both of the
preceding threshold criteria, the QF must also be able to demonstrate other
indicia of substantial progress and project maturity, e., (1) a wind study
demonstrating a viable site for the project, (2) a signed contract for wind
turbines, (3) arranged financing for the project, and/or (4) related progress on
the facility permitting and licensing path.
On August 5 , 2005, Windland Incorporated (Windland) filed Petition for
Reconsideration of Commission Order No. 29839. Reference Idaho Code 9 61-626;
Commission Rule of Procedure 331.01. Windland's Petition for Reconsideration should be read
in conjunction with Windland' s August 10 Petition requesting that the Commission treat as final
that part of Order No. 29839 establishing criteria to determine the eligibility of PURP A
qualifying wind generating facilities for contracts at the published avoided cost rates. Reference
Commission Rule of Procedure 323.03. Windland requests that the Commission reconsider its
decision regarding "grandfathering.After such reconsideration, Windland requests that the
Commission amend its Order to prohibit the "grandfathering" of any wind QF projects to the
published avoided cost rate established by Order No. 29646, a rate that Windland contends the
Commission found to be "too high for wind QFs" (see italicized language above), and that
therefore Windland alleges is unjust and unreasonable.
On August 9, 2005, Windland filed a Petition for Stay of the Commission s Order
No. 29839 until such time as Windland'Petition for Reconsideration regarding
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grandfathering" is resolved and/or until such time as the Commission issues an Order regarding
the law governing grandfathering and the parties relationships concerning wind powered QF
contracts. Reference Commission Rule of Procedure 324.
COMMISSION DECISION
The Commission s Order No. 29839 was not designated as a final Order and by
Commission Rules is therefore an Interlocutory Order.Reference Commission Rule of
Procedure 321.01 (Interlocutory Orders) and 323.01 (Final Orders). Pursuant to Rule 323.
whenever a party believes that an Order not designated as a final Order according to the terms of
the Commission s Rules should be a final Order, the party may petition the Commission to
designate the Order as final. If an Order is designated as final after its release, its effective date
for purposes of reconsideration or appeal is the date of the Order of designation. Once
designated as final, the statutory timelines for petitions for reconsideration and cross-petitions
are triggered. Reference Idaho Code 9 61-626; RP 331.01 Petition for Reconsideration (21 days)
and .02 Cross-Petition for Reconsideration (7 days). Statutory timelines cannot be adjusted.
Any person may petition the Commission to stay any Order, whether interlocutory or
final. Reference Commission Rule of Procedure 324. Windland's Petition for Stay was filed
August 9, 2005. Answers to petitions are timely under Commission Rule of Procedure 57.02 if
filed within 21 days, unless the Commission modifies the time.
Windland has filed three Petitions regarding Interlocutory Order No. 29839. Does
the Commission find it reasonable to designate that portion of the Commission s Interlocutory
Order that established criteria for determining contract entitlement and eligibility of certain wind
QFs to the published rates established in Order No. 29646 as a Final Order? Does the
Commission find any reason to modify the 21-day Answer deadline for Windland' s Motion to
Stay? Pursuant to Idaho Code 9 61-624 (see also RP 322 Interlocutory Orders; RP 326.02 Final
Orders) the Commission may at any time, upon notice to the public utility affected, and after
opportunity to be heard (by evidentiary hearing or written submission) rescind, alter or amend
any Order or decision made by it. AnYthing further?
Scott D. Woodbury
blslM:IPCEO522 sw2
DECISION MEMORANDUM