Opinion ID: 1136122
Heading Depth: 2
Heading Rank: 3

Heading: The Complaint and Subsequent Actions Leading Up to the Hearing

Text: On November 13, 1992, Rosebud filed a Complaint with the IPUC seeking an order directing PacifiCorp to purchase capacity and energy pursuant to terms and conditions of Idaho law and at prices per kilowatt hour as calculated pursuant to the Idaho Public Utilities Commission from its proposed 40 MW electric generating facility to be located near Arco, Idaho. Rosebud represented in its Complaint and attached correspondence that it was ready, willing, and able to sign a contract for deliveries commencing in 1996. Rosebud also alleged that PacifiCorp was refusing to negotiate or provide any avoided cost rates. In its Answer, PacifiCorp noted that less than two months had elapsed between receipt of Rosebud's first communication regarding its proposed project and the filing of Rosebud's Complaint. PacifiCorp alleged Rosebud had not provided requested information. PacifiCorp included a copy of a letter to Rosebud in which PacifiCorp explained that in negotiating a purchase price it must consider the amount of transmission capacity available under its transmission service agreement with Idaho Power Company for moving power produced in the eastern part of the state to the western part of its system, because transmission capacity limitations would affect the avoidable costs associated with a large generation project such as Rosebud's. A prehearing conference was held on January 20, 1993. Rosebud stated that it was seeking an avoided cost rate consistent with the rates and methodology contained in Orders No. 23358 and 24383; that it was attempting to determine the viability of its proposed project; and, that it was too early for a contract. Subsequent to the initial prehearing conference, the IPUC issued a Notice of Scheduling. In its notice, the IPUC stated: It is anticipated that the parties will be able to agree to a set of reasonable assumptions (e.g., firmness and reliability of fuel supply) on which [PacifiCorp] can base and calculate an energy and capacity value for the proposed generated power. It is the understanding of the Commission that Rosebud is not seeking a contract or a lock-in of a firm rate at this time, merely a reasonable estimated rate which it can then use to ascertain project viability. On April 15, 1993, Rosebud notified the IPUC and PacifiCorp that it had changed the location of its project from Arco to Montpelier, Idaho. The location change was necessitated by the discovery in February of 1993 that the Lost River substation near Arco is not a point of interconnection with PacifiCorp's 230 kV transmission system. Thus, Rosebud would incur an additional expense in getting its power to the 230 kV transmission line if the project site remained in Arco. A second prehearing conference was convened on September 2, 1993, because of what Rosebud perceived to be an impasse in negotiations. PacifiCorp stated that it provided Rosebud with a set of avoided cost values based on certain assumptions for Rosebud to use to determine project feasibility, not as a firm offer. Rosebud responded that it needed a firm commitment from PacifiCorp as to the available rates in order to assess viability. The IPUC then directed PacifiCorp to identify in writing as precisely as possible the type of information that Rosebud must provide in order for negotiation to proceed further. On December 17, 1993, PacifiCorp filed an application with the IPUC in another case requesting a revision of its published avoided cost rates for qualifying facilities producing 10 megawatts or less. On January 14, 1994, the IPUC terminated the availability of PacifiCorp's avoided costs and declared that qualifying facilities that did not have contracts, or could not demonstrate entitlement to a contract as of that date, would be subject to the final avoided costs established in PacifiCorp's application. IPUC Order No. 25361. By May of 1994 the parties, with the IPUC's approval, agreed to continue contract and rate negotiations along the lines of the procedures set out by the IPUC in Rosebud Enterprises, Inc. v. Idaho Power Co., IPUC Order No. 25454, 1994 WL 232391 (Idaho 1994). On July 11, 1994, PacifiCorp filed its proposed pricing for the purchase of Rosebud generation. PacifiCorp qualified its proposal accordingly: [T]his proposal contains prices based upon PacifiCorp's superseded avoided cost rates. PacifiCorp does not agree that Rosebud Enterprises is entitled to these prices.... The pricing proposed by PacifiCorp is categorized into three distinct products: firm capacity, on-peak energy, and off-peak energy. PacifiCorp's proposed prices start with the SAR methodology-derived avoided costs but are adjusted to account for transmission constraints which limit the value of resources on the east side of its system. [5] PacifiCorp ships excess power produced in the eastern reaches of its territory during off-peak hours to re-pay power borrowed from Bonneville Power Administration (BPA) to meet on-peak demands for power in the western portion of its system. The fact that these eastwest transmission lines are already loaded to capacity during off-peak hours affects the value of Rosebud's power to PacifiCorp. Rosebud filed its proposed rates on July 14, 1994. Rosebud alleged that PacifiCorp's proposed on-peak/off-peak transmission adjustment to the SAR methodology avoided cost rates was not consistent with the established SAR methodology, amounted to an unapproved revision to PacifiCorp's previously published avoided cost rates, and violated the terms of an IPUC-approved merger agreement between Pacific Power and Light (PP & L) and Utah Power and Light (UP & L) pursuant to which the resulting entity, PacifiCorp, agreed to operate an integrated system comprised of PP & L's Oregon system and UP & L's Idaho system. Rosebud argued that it was entitled to the published avoided cost rates for cogenerators or small power producers of 10 megawatts or less without any adjustments. PacifiCorp filed a motion for an IPUC order compelling Rosebud to negotiate. Rosebud responded, characterizing PacifiCorp's proposal as a take it or leave it proposition and reiterating its position that PacifiCorp ignored the applicable methodology in its proposal. Rosebud requested clarification of the meaning of the terms existing avoided costs and existing methodology. The IPUC established a discovery and prefile schedule and set a public hearing.