Sunrise Energy Ventures (SEV)-Indiana Distributed Energy … · 2011-07-01 · Sunrise Energy...

Sunrise Energy Ventures (SEV)-Indiana Distributed Energy Advocates (IDEA)

Cause No. 44018; Exhibit DCL-001

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1

2

Exhibit No. DCL-001 3

4

5

6

INDIANAPOLIS POWER AND LIGHT (IPL) 7

IURC CAUSE NO. 44018 8

VERIFIED DIRECT TESTIMONY 9

OF 10

DEAN C. LEISCHOW 11

SUNRISE ENERGY VENTURES 12

ON BEHALF OF 13

INDIANA DISTRIBUTED ENERGY ADVOCATES, INC. (IDEA) 14

15

16

17

18

19

20

21



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I. INTRODUCTION 1

Q1. Please state your name, title, business and address? 2

A1. My name is Dean C. Leischow. I am the Managing Director of Sunrise Energy 3

Ventures LLC (SEV). My business address is 1200 Old Crystal Bay Road, Suite 4

100, Wayzata, MN 55391. 5

Q2. Please describe your educational and business experience. 6

A2. I have over 24 year of experience in the energy conservation and optimization 7

industry. I am a founder and principle of Sunrise Energy Ventures, LLC. Prior to 8

forming SEV, I served as Executive Vice President of Sales and Marketing of 9

Solar Energy Initiatives, Inc., which manages one of the largest solar dealer and 10

installer networks in the U.S. Solar Energy Initiatives is in the business of 11

constructing, owning, and operating large scale solar arrays throughout the 12

country. Prior to Solar Energy Initiatives, I served as the President of Leischow 13

Group Inc., a firm which provided targeted energy consulting solutions to several 14

markets. The most prominent markets served were multi-location restaurant and 15

retail, while other markets served included private colleges and universities. The 16

company advised its clients on how to best procure natural gas and electricity, as 17

well as how to minimize utility demand within their facilities. Over an 8-year 18

period, the company designed supply and demand management solutions for 19

clients and oversaw the implementation of these solutions to over 14,000 facilities 20

throughout the U.S. and Canada. The Leischow Group grew to annual sales of 21

$16 million and a managed utility supply base in excess of $150 million. The 22

executed programs resulted in a reduction in an estimated $300 million in annual 23



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energy consumption. Prior to starting the Leischow Group, I served as the 1

Director of Energy Performance Contracting for Siemens USA. I also held 2

several executive roles at Honeywell Inc. from 1986 to 1995. 3

Q3. Please describe your current duties and responsibilities with SEV. 4

A3. I am a founding principal member, and serve as a managing partner in the 5

business. 6

Q4. What is your role with Indiana Distributed Energy Advocates (“IDEA”)? 7

A4. I serve as a Voting Member of IDEA for Sunrise Energy Ventures. 8

Q5. When did SEV become a member of IDEA? 9

A5. We met with Ms. Laura Arnold, President of IDEA in mid-December 2010 to 10

discuss a variety of issues including potential membership. SEV became a 11

member in February 2011. 12

Q5. Have you previously testified before the Commission? 13

A5. No. I have not testified previously before the Indiana Utility Regulatory 14

Commission (IURC). 15

Q6. What is the purpose of your testimony? 16

A6. First, the purpose of my testimony as a member of IDEA is to explain how SEV 17

would be adversely affected by the proposed changes to IPL’s existing Rate REP 18

or Feed-in Tariff approved as a three (3) year pilot in Cause No. 43623. Second, I 19

plan to document the process and procedure SEV encountered with IPL trying to 20

develop projects under Rate REP. Third, I will offer some thoughts about IPL’s 21

proposed changes to Rate REP. Finally, I will offer some recommendations. 22

II. EXPERIENCE OF SEV WITH IPL AND RATE REP 23



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Q7. Haselden states in A21. “Seven developers submitted proposal for 25 1

proposed stand-alone projects”. Is SEV one of those seven developers? 2

A7. Yes. 3

Q8. In A29. (p. 11, lines 11-15) Haselden states: “…around December of 2010, 4

IPL began receiving significant interest from renewable energy project 5

developers desiring to construct large wind and solar photovoltaic facilities 6

on vacant or agricultural ground located in IPL’s service territory that 7

would be economically supported and financed by energy sales under Rate 8

REP.” Does this accurately depict when SEV expressed interest to IPL about 9

developing solar PV projects? 10

A8. No. SEV expressed significant interest to IPL substantially before December 11

2010. 12

Q9. When did SEV contact IPL about developing proposed projects using Rate 13

REP? 14

A9. SEV initiated contact with IPL about proposed projects using Rate REP during 15

late summer or early fall of 2010. 16

Q10. Please describe the nature and extent of the meetings, phone conversations 17

and correspondence between SEV and IPL regarding your proposed projects 18

using Rate REP? 19

A10. SEV held several in-person meetings and telephone calls with IPL. SEV even 20

arranged for a solar PV inverter manufacturer to make a presentation to IPL 21

employees to further their knowledge and understanding of solar PV technology. 22



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Q11. At any time prior to receiving a letter dated February 7, 2011, did IPL 1

express to SEV any concerns or doubts that IPL would not honor SEV’s 2

proposed stand alone solar PV projects? 3

A11. No, until we received the letter from IPL indicating they proposed to suspend 4

Rate REP, SEV only received encouragement from IPL. Specifically, in a 5

meeting on January 19, 2011 where Mr. Haselden mentioned to me, “IPL is 6

serious about making this program a success”. This letter is attached as Exhibit 7

DCL-002. 8

Q12. What is the status of your projects now under IPL’s current Rate REP? 9

A12. In IPL’s response to the questions posed by the IURC, SEV is identified as 10

Company A in the Petitioner’s Exhibit DE-2 entitled Summary of Interconnection 11

Applications Associated with Rate REP. This Exhibit shows that Company A has 12

five (5) Interconnection Applications which as listed as solar projects each with a 13

capacity of 10,000 kW or 10 MW’s. The Exhibit further lists these applications as 14

“stand-alone generation”. All five (5) applications are shown with a Date 15

Application Received as 12/29/10. This is attached as Exhibit DCL-003. 16

Q13. Do you believe the information contained in this Exhibit is accurate as it 17

applies to SEV? 18

A13. No. SEV believes that the date our applications were received should be 19

November 16, 2010. 20

Q14. Why do you believe the date should be earlier? 21

A14. SEV submitted five checks, each in the amount of $20,100, to IPL in late 22

November 2010 in payment for the Interconnection Application fees. 23



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Q15. How does IPL’s Rate REP Interconnection Application process compare to 1

the process SEV has encountered with other electric utilities in other states? 2

A15. It appears as though IPL has put very little effort into defining an application 3

process for Rate REP applications. On a regular basis, IPL was unable to make 4

timeline projections to help SEV better prepare itself for moving forward with the 5

applications. Furthermore, IPL made verbal commitments relating to the method 6

in which IPL and SEV would collaboratively make site selections, indicating that 7

SEV will send applications with site alternatives and IPL would help to narrow 8

down and optimize site selection. This was a process that was never brought to 9

light, and serves as one example of IPL’s lack of understanding in their own 10

processes and lack of willingness to uphold their commitments. 11

Q16. How many solar PV installations does SEV have in other jurisdictions? 12

A16. SEV has 35 installations spread between New Mexico and North Carolina. 13

Q17. What was your experience with the interconnection application process and 14

procedure in those two states? 15

A17. In New Mexico the utility has a very structured application process. The formal 16

process is published online and is broken up into eight specific steps. The 17

management and engineering team have been very responsive and willing to work 18

through any hurdles that have risen. In North Carolina we have experienced a 19

collaborative and engaging relationship with the engineering staff, again, with a 20

formal application and interconnection process. 21

Q18. Would you please compare and contrast the process used in other states with 22

what you have experienced in Indiana with IPL and Rate REP? 23



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A18. IPL seems to be lacking any sort of formally designed application process. 1

Furthermore, IPL’s actions have contradicted their verbal commitments on 2

numerous occasions. This has made applying difficult, and nearly impossible to 3

effectively plan around. 4

Q19. Are you familiar with the five (5) additional qualifications proposed for the 5

definition of a Renewable Facility contained in the current tariff? 6

A19. Yes. 7

Q20. What revisions to Rate REP is IPL seeking approval and do you approve 8

or oppose these changes? 9

A20. IPL is proposing five (5) changes as follows: 10

(1) Increase the maximum length of the term of a Rate REP contract from 11

ten (10) to fifteen (15) years. SEV supports this change. 12

(2) Eliminate language in Rate REP suggesting it contains a Commission-13

approved wholesale purchase power rate. SEV supports this change. 14

(3) Incorporate language requiring participants to have necessary authority 15

to make wholesale power sales. SEV does not oppose this change. 16

(4) redefine the term Qualifying Renewable Energy Power Production 17

Facility. SEV opposes this redefinition of “Renewable Facility”. 18

Q21. What are the additional qualifications IPL wants to add to the definition of 19

Renewable Facility and do you support these changes? 20

A21. 1. IPL wants to require that the expected annual output from any project shall not 21

exceed the annual consumption of the host facility. IPL does not propose this 22



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additional qualification for biomass facilities. SEV opposes this change and 1

believes that exempting biomass facilities is arbitrary and discriminatory. 2

2. IPL wishes to define a host facility to be defined as a building, production 3

equipment or collection of same in the same area such as a campus. The 4

surrounding land owned or leased by the host customer is part of the facility. SEV 5

is opposed to this change because it is not necessary if change #1 is not adopted. 6

3. IPL wants the maximum nameplate capacity of any Renewable Facility 7

associated with a Facility or any one IPL customer, its parent, subsidiaries or 8

affiliates, is 10 MW. SEV is not opposed to this as long as an entity is allowed to 9

propose more than one project under Rate REP. 10

4. IPL is requesting that the footprint of a Renewable Facility must be wholly 11

within the boundaries of the Facility and IPL’s service territory. SEV opposes the 12

requirement that the footprint be wholly within the boundaries of the Facility but 13

does not oppose that the footprint be wholly within IPL’s service territory. 14

5. IPL would like to allow Host customers to contract with third parties to own 15

and operate renewable energy projects at their facility. IPL wants these third 16

parties to be responsible for the interconnection agreement and require that the 17

host facility will additionally sign the interconnection agreement and be 18

responsible in the event of a default by the third party. SEV opposes the 19

requirement that the host facility signs the interconnection agreement and be 20

responsible in the event of a default by the third party. 21

22

23



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Q21. Haselden states in A35 (page 16, lines 11-15): “…there is no assurance that 1

all of the developers would move forward with all of their projects if IPL 2

offered them Rate REP agreements. Some of these projects are quite large 3

and IPL expects the interconnection costs to be significant. There is also no 4

assurance that IPL and the developers could reach a satisfactory agreement 5

that would be approved by the Commission”. Would you state your opinion 6

of these statements? 7

A21. SEV believes it could reach a satisfactory agreement with IPL if the company 8

were willing to engage its resources to move forward with the program which has 9

been offered to SEV and the general public. I believe this is a program that IPL 10

has offered, enthusiastically lead us to believe was realistic, and now is attempting 11

to renege on the program. 12

Q23. Will jobs or tax revenue be lost if IPL will not contract with the stand-alone 13

developers for purchases under Rate REP? 14

A23. Absolutely. IPL’s proposed changes to Rate REP will send a “chilling effect” to 15

all the developers with projects proposing to use Rate REP. If the IURC approves 16

IPL’s proposed changes, it will signal that the State of Indiana is not serious about 17

developing renewable energy resources. Furthermore, it will make all renewable 18

energy developers wary of any future programs offered by utilities under the 19

jurisdiction of the Commission. SEV is proposing five (5) projects under Rate 20

REP with an estimated value greater than $400,000,000 and estimated annual 21

operating expenses of greater than $20 million. 22



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Q24. Do you believe that IPL’s proposed changes to Rate REP are unfair to stand-1

alone developers? 2

A24. Yes, I do. 3

Q25. Do you believe that IPL has been transparent about its intentions with Rate 4

REP? 5

A25. Absolutely not! 6

Q26. After the IURC ruled against IPL’s motion to suspend Rate REP, did SEV 7

receive a letter outlining IPL’s new position regarding Rate REP? 8

A26. Yes, on April 21, 2011, SEV received a letter from IPL. This letter is attached as 9

Exhibit DCL-004. 10

Q27. Is the letter dated April 21, 2011, what you believe Haselden describes in A37 11

(page 17, lines 15-18) as: “…IPL also prepared a letter to accompany any 12

facilities study agreement for parties that appear interested in Rate REP 13

making clear that IPL does not intend to negotiate Rate REP agreements 14

with stand-alone developers.”? 15

A27. Yes. 16

Q28. What else does this letter state regarding a System Impact and Facilities 17

Study Agreement? 18

A28. The letter states: “IPL’s execution of the System Impact and Facilities Study 19

Agreement, however, is not intended to indicate that IPL will enter into a Rate 20

REP agreement to buy power your proposed Facilities.” 21

Q29. What does else does the letter say? 22



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A29. “While Rate REP is a filed tariff, the purpose of the tariff as approved by the 1

Indiana Utility Regulatory Commission is to allow IPL to recover purchased 2

power costs incurred under Rate REP agreement; it does not require IPL to enter 3

into Rate REP agreements.” 4

Q30. What did the footnote to this letter say? 5

A30. Footnote 1 states: “Energy purchased pursuant to Rate REP is a wholesale sale of 6

energy well in excess of IPL’s avoided cost and is subject to the jurisdiction of the 7

Federal Energy Regulatory Commission. The Federal Power Act does not prohibit 8

IPL from exercising discretion in choosing who it will purchase energy from 9

unless the energy is being sold by a Qualifying Facility or Small Power 10

Production Facility at IPL’s avoided cost.” 11

Q31. What is the conclusion stated in this letter? 12

A31. On page two, the letter from Haselden states: “IPL does not believe your proposed 13

projects satisfy this criteria and no Rate REP agreement will be negotiated with 14

Sunrise for the proposed projects. IPL is willing, at this time, to discuss 15

purchasing power from the proposed projects pursuant to its Rate CGS. 16

Q32. Can you tell us what rate is available for SEV under IPL’s Rate CGS? 17

A32. The most recently approved prices under IPL’s Rate CGS would be less than 18

$0.03 per kWh. Please find attached Exhibit DCL-005 which shows IPL’s rates 19

under Rate CGS. 20

Q29. In Q&A 38 (page 17, lines 19-22) Mr. Haselden indicates in his testimony 21

that none of the stand-alone developers have signed System Impact Studies 22

with IPL and therefore, he now indicates that none of the stand-alone 23



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developers have entered the interconnection queue process as of the date of 1

the submission of his testimony on May 1, 2011. Has SEV signed a System 2

Impact Study with IPL? Why or why not? 3

A29. No, SEV does not have a signed System Impact Study with IPL. 4

Q29. What is your opinion of Mr. Haselden’s statement in A39 (page 18, lines 3-5): 5

“IPL will not agree to enter into an agreement for Rate REP purchases with 6

any stand-alone developer unless they are working with an IPL customer in 7

the manner set forth in the revised Rate REP language.”? 8

A29. In my opinion, this statement by Mr. Haselden indicates that IPL’s proposed 9

changes to Rate REP are a fait accompli. It appears from his testimony and the 10

letter SEV received that IPL believes that Rate REP is a ceiling for Rate REP and 11

not a standard contract offer available to any and all parties on a non-12

discriminatory basis. SEV is somewhat surprised with IPL’s position given that as 13

I understand it Indiana is not deregulated with respect to electric utilities and this 14

program was approved by the Commission in an order in Cause No. 43623. It 15

appears that IPL is saying that it is under no obligation to offer Rate REP to 16

anyone regardless of whether it is a so-called developer proposing a stand-alone 17

system or a more traditional IPL customer. 18

Q18. How do the rates under IPL’s proposed feed-in tariff (Rate REP) compare 19

with similar rates or programs conducted by other electric utilities? 20

A18. As a member of IDEA, I am aware that the only other electric utility in Indiana 21

which has proposed a Feed-in tariff is NIPSCO in Cause No. 43922. I am not 22



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familiar with the details of that proposed program and SEV is not currently 1

proposing any projects under the NIPSCO program. 2

Q21. What is your opinion of IPL’s proposed changes to Rate REP? 3

A21. SEV supports IPL’s proposal to change the contract length for Rate REP from 10 4

years to 15 years 5

Q26. How does SEV view IPL’s goal (in years) for the length of the “simple 6

payback” for an average system under Rate REP? 7

A26. SEV understands that in response to IDEA’s Data Request 1-6 asking this 8

question, the company’s response was: “IPL has no such goal.” SEV thinks it is 9

unrealistic for IPL to believe that either developers proposing stand alone projects 10

or IPL customers would develop projects under Rate REP if they cannot achieve a 11

simple payback plus a reasonable rate of return using Rate REP. 12

Q27. Is IPL experiencing any problems or difficulties implementing Rate REP? 13

A27. In IPL’s Motion to Withdraw Proposed Revisions to Rate REP and Temporarily 14

Suspend Rate REP filed 2/07/2011, it alleges a need to revise Rate REP’s terms 15

“Based on the experience IPL has gained with Rate REP and developments that 16

have impacted the price of certain renewable energy resources.” 17

Q28. What recommendations do you have to resolve IPL’s alleged problems 18

implementing Rate REP? 19

A28. From my personal knowledge with SEV trying to develop solar PV projects using 20

Rate REP, IPL has a very disjointed, confusing and at times contradictory process 21

and procedure for handling those wishing to sell electricity from renewable 22

energy resources under Rate REP. Most if not all of the proposed projects involve 23



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solar photovoltaic systems. This has resulted in a clouded and less than totally 1

transparent pilot program. We recommend that the Commission order IPL to 2

follow through with the proposed projects for Rate REP as the tariff is currently 3

written and to honor the order of the proposed projects based on a first come, first 4

serve basis. If IPL feels it is necessary, it could propose to limit each developer to 5

one or two projects for a maximum of 20-25 MW’s to ensure that capacity under 6

the 1% cap of IPL’s retail sales would be available for IPL’s traditional customers 7

under Rate REP. IPL could also implement a request for formal documentation of 8

site control for proposed projects which might reduce the number of proposed 9

projects currently under consideration. 10

Q29. Does this conclude your direct testimony? 11

A29. Yes. 12

13

VERIFICATION 14

I, Dean C. Leischow, swear and affirm that the foregoing representations are true 15

and accurate to the best of my knowledge and belief. 16

17

18

Dean C. Leischow 19

20

June 30, 2011 21

Date 22

Petitioner's Exhibit DE-2

Summary of Interconnection Applications Associated with Rate REPDate

DateRenewable

InterconnectionCapacityApplicationAgreementCompany

TypeLevel(kW)ReceivedApproved Comments

GSA

Solar32,01012/08/102/4/2011 Rooftop Installation - Existing CustomerCompanyA

Solar310,00012/29/10Pending Stand-alone Generator

CompanyA


CompanyA


Company A


Company A


Company B

Solar34,06312/16/10Pending Stand-alone GeneratorCompany C


Company C


Company C


Company D

Wind39,00012/17/10Pending Stand-alone Generator

Company D

Wind37,20012/17/10Pending Stand-alone Generator

Company E


Company E


Company E

Solar310,0001/27/2011Pending Stand-alone GeneratorCompany E


Company F

Solar310,0001/27/2011Withdrawn 2/23/2011Stand-alone Generator

Company F


Company F


Company F


Company F


Company F


Company G


CompanyG


Total

170,773

Petitioner's Exhibit DE-2

Summary of Interconnection Applications Associated with Rate REP(Corrected)DateDate

RenewableInterconnectionCapacityApplication Agreement

CompanyTypeLevel(kW)ReceivedApproved Comments

GSA

Solar32,01012/08/102/4/2011 Rooftop Installation - Existing CustomerCompanyA

Solar310,00012/29/10Pending Stand-alone GeneratorCompanyA




Solar310,00012/29/10Pending Stand-alone GeneratorCompany B

Solar34,06312/16/1 0Pending Stand-alone GeneratorCompany C



Solar32,00012/17/10Pending Stand-alone GeneratorCompanyC


Solar32,00001/18/11Pending Stand-alone GeneratorCompany D

Wind39,00012/17110Pending Stand-alone GeneratorCompany D

Wind37,20012/17/10Pending Stand-alone GeneratorCompany E




Solar310,0001/27/2011Pending Stand-alone GeneratorCompany F

Solar310,0001/27/2011Withdrawn 2/23/2011Stand-alone GeneratorCompany F




Solar310,0001/27/2011Pending Stand-alone GeneratorCompany F

Solar33,0001/27/2011Pending Stand-alone GeneratorCompany G

Solar32,0001/31/2011Pending Stand-alone GeneratorCompany G


Total

174,773

Via Electronic Filing

February 25, 2011

Secretary of the Commission and Director of Electricity Division Indiana Utility Regulatory Commission 101 W. Washington St., Suite 1500E Indianapolis, IN 46204 RE: Annual IPL Cogeneration Filing Under 170 IAC 1-6, the Thirty-Day Administrative Filing Procedures and Guidelines Rule, Indianapolis Power & Light Company (IPL) submits herewith for filing a revision to our Tariff No. E-16 entitled:

Rate CGS - Cogeneration and Small Power Production 16th Revised Sheet No. 122

IPL is filing this tariff revision pursuant to 170 IAC 4-4.1, the Cogeneration and Alternate Energy Production Facilities Rule. Specifically, Section 10 requires that on or before February 28 of each year a generating electric utility shall file with the Commission a standard offer for purchase of energy and capacity at rates derived from the appropriate sections of this rule.

This tariff revision supersedes the 15th Revised Sheet included with IPL's annual cogeneration filing made February 26, 2010 and approved April 7, 2010. The Company's standard offer and form contract for the purchase of energy and capacity from cogeneration and alternate energy production facilities operating within IPL's service territory has not been revised since the last filing.

Only the affected tariff sheet is submitted for approval in this filing. All other tariff sheets of Rate CGS and the riders for maintenance, back-up and supplementary power remain unchanged from those previously approved.

This filing also includes a mark-up of the existing tariff sheet, and supporting documentation and assumptions consistent with prior Annual IPL Cogeneration Filings. In addition, this filing contains the Determination of Average System Losses for the Twelve Months Ended December 31, 2010, a Verified Statement by IPL concerning notification of customers regarding the proposed revision of Rate CGS, a copy of such notification, and proof of publication.

DATE RECEIVED: FEBRUARY 25, 2011

IURC 30-DAY FILING NO: 2827

Indiana Uti l i ty Regulatory Commission

If you have any questions, please feel free to contact me at 317-261-5341, at the address on the letterhead, or at [email protected].

Respectfully submitted,

James L. Cutshaw Revenue Requirements Manager

Enclosures xc: Office of the Utility Consumer Counselor 115 W. Washington St., Suite 1500 South Indianapolis, IN 46204




mailto:[email protected]

Indianapolis Power & Light Company I.U.R.C. No. E-16 16th Revised No. 122 One Monument Circle Superseding Indianapolis, Indiana 15th Revised No. 122 RATE CGS (Continued) INTERCONNECTION CONDITIONS AND COSTS: (Continued) (f) (Continued)

(1) Where purchases are intended to be less than 1000 kilowatthours per month, and the Company and Qualifying Facility mutually agree, a single bidirectional meter may be placed between, at one side, the Company system and, on the other side, the Qualifying Facility and any load associated with it.

(2) Where such measurement is appropriate for measurement of energy, the circuit shall include at

minimum two monodirectional meters in a series arrangement between, at one side, the Company system and, on the other side, the Qualifying Facility and any load associated with it:

Load

Utility

(3) Where such is appropriate for measurement of energy, the circuit shall include a monodirectional meter between the on-site load and the Company and, in a series arrangement, two monodirectional meters between the Qualifying Facility and the Company system:

Qualifying Facility

Load

Qualifying Facility

Company System

(4) The meter measuring purchases by the Company shall be of a design to record time periods, and shall be capable of electronically transmitting instantaneous readings.

(5) Other metering arrangements shall be the subject of negotiations between the Company and the

Qualifying Facility. RATE FOR PURCHASE: The rate the Company will pay each Qualifying Facility for energy and capacity purchased will be established in advance by written contract with the Company as filed and approved by the Commission and will be based on the RATE FOR PURCHASE on file from time to time with the Commission, adjusted as outlined in the remaining parts of this section. Unless otherwise agreed the RATES FOR PURCHASE shall be: (1) Capacity $7.19 per KW per month (2) Energy - Peak Period 2.78¢ per KWH - Off Peak Period 2.20¢ per KWH Second step of two step increase. Effective:




Indianapolis Power & Light Company I.U.R.C. No. E-16 16th Revised No. 122 One Monument Circle Superseding Indianapolis, Indiana 15th Revised No. 122 RATE CGS (Continued) INTERCONNECTION CONDITIONS AND COSTS: (Continued) (f) (Continued)

(1) Where purchases are intended to be less than 1000 kilowatthours per month, and the Company and Qualifying Facility mutually agree, a single bidirectional meter may be placed between, at one side, the Company system and, on the other side, the Qualifying Facility and any load associated with it.

(2) Where such measurement is appropriate for measurement of energy, the circuit shall include at

minimum two monodirectional meters in a series arrangement between, at one side, the Company system and, on the other side, the Qualifying Facility and any load associated with it:

(3) Where such is appropriate for measurement of energy, the circuit shall include a monodirectional meter between the on-site load and the Company and, in a series arrangement, two monodirectional meters between the Qualifying Facility and the Company system:

(4) The meter measuring purchases by the Company shall be of a design to record time periods, and shall be capable of electronically transmitting instantaneous readings.

(5) Other metering arrangements shall be the subject of negotiations between the Company and the

Qualifying Facility. RATE FOR PURCHASE: The rate the Company will pay each Qualifying Facility for energy and capacity purchased will be established in advance by written contract with the Company as filed and approved by the Commission and will be based on the RATE FOR PURCHASE on file from time to time with the Commission, adjusted as outlined in the remaining parts of this section. Unless otherwise agreed the RATES FOR PURCHASE shall be: (1) Capacity $7.19 per KW per month (2) Energy - Peak Period 2.78¢ per KWH - Off Peak Period 2.20¢ per KWH Second step of two step increase. Effective:

Utility

Load

Qualifying Facility

Load

Qualifying Facility

Company System

Deleted: 15th

Deleted: 14

Deleted: 6.05

Deleted: 2.45

Deleted: 1.93




C unadjusted monthly capacity payment per kW 7.19$

Ca adjusted monthly capacity payment 7.19$ D present value carrying charges $1 investment 1.41$ V investment avoidable unit $ per kW 740$ n expected life avoidable unit (years) 30ip annual escalation rate for avoidable unit 2.5%io annual escalation rate O & M expense 2.5%r cost of capital 8.89%O annual O&M expense per kW avoidable unit 11.48$ L line losses 5.27%t year of the contract 1f carrying charge rate 13.59%tu in-service year avoidable unit 2011tq in-service year QF 2011Y year of capacity payment 2011

INDIANAPOLIS POWER & LIGHT COMPANY

RATES FOR PURCHASE OF CAPACITY




r rate of return 8.89%A Ad Valorum tax rate 1.10%P insurance rate 0.15%d sinking fund depreciation rate 0.75%

d = r

(1 + r)n - 1

T federal and state composite income tax rate 40.525%D book depreciation rate 3.33%b marginal interest rate on debt capital 6.37%L debt ratio 52.11%n service life of the deferrable unit 30

carrying charge rate = r + A + P + d + (T / (1-T) ) * (r + d - D) * ( (r-bL) / r) = 13.59%


CARRYING CHARGE RATE CALCULATION




Type of Amount Percentage of Marginal Cost Weighted Capital (000) Capital Structure of Capital Cost

Long Term Debt 890,480$ 52.11% 6.37% 3.32%

Preferred Equity 59,135$ 3.46% 5.47% 0.19%

Common Equity 759,281$ 44.43% 12.10% 5.38%

1,708,896$ 100.00% 8.89%


RATE OF RETURN CALCULATIONDecember 31, 2010

IPL’s last general rate case was concluded with the Commission’s approval of a Settlement Agreement. The Settlement Agreement was silent on the issue of rate of return. The Commission’s Order approving the Settlement Agreement made no specific finding regarding the cost of common equity or its application in a book weighted or market weighted capital structure. Consequently, IPL and the OUCC have for many years utilized the rate of 12.1% for purposes of IPL's calculation of its AFUDC rate and its CGS rate.




Estimated Investment Cost per kW for Avoidable Unit

Plant Capital Cost 160 MW CT

Total Capital Requirement (includes AFUDC) 740$ per kW

Annual O&M Expenses per kW for Avoidable Unit

Fixed 8.40$ per kW/yr

Variable 3.08$ per kW/yr

Total $/kW/yr 11.48$


ESTIMATED INVESTMENT AND O&M EXPENSES




On Peak Off PeakPeriod Period

Avoided Cost per Midas Per kWh 0.0271$ 0.0214$

Average System Losses for Year Ended December 31, 2010 5.273% 5.273%Line losses factor 1 / (1-(losses/2)) 1.02708 1.02708

Avoided Cost adjusted for line losses Per kWh 0.0278$ 0.0220$


AVOIDED ENERGY COST CALCULATIONBASED ON MIDAS GOLD PRODUCTION RUN




Verified Statement of Indianapolis Power & Light Company (IPL)

Concerning Notification of Customers Affected by the Revision of Rate CGS

In the Annual IPL Cogeneration Filing

Indianapolis Power & Light Company complied with the Notice Requirements under 170

IAC 1-6-6 in the following manner:

- beginning on February 18, 2011 and continuing through the filing date, the attached

notice was posted in the Customer Service Office at 2102 N. Illinois Street

- beginning on February 18, 2011 and continuing through the filing date, the same notice

was posted on IPL’s website under the Pending section of the Rates, Rules and

Regulations area

- a legal notice placed in the Indianapolis Star on February 18, 2011 as evidenced by the

attached Publishers Affidavit; and

- beginning on the filing date, a copy of the Annual IPL Cogeneration filing will be

included on IPL’s website under the Pending section of the Rates, Rules and Regulations

area

I affirm under penalties for perjury that the foregoing representations are true to the best

of my knowledge, information, and belief.

Dated this 25th day of February, 2011.

James L. Cutshaw Revenue Requirements Manager




I N D I A N A P O L I S P O W E R & L I G H T C O M P A N Y

Determination of Average System LossesBased on Twelve Months Ended December 31, 2010

Line LineNo. Description KWH No.

Sources of Energy

Generation (Excludes Station Use)

1 Steam 16,301,019,000 1

2 Nuclear - 2

3 Hydro - 3

4 Other 47,256,000 4

5 Total Net Generation 16,348,275,000 5

6 Purchases (Net) - Wind 289,515,000 6

7 Interchanges (Net) (1,196,607,000) 7

8 Transmission for/by Others - Wheeling (Net) 0 8

9 Total KWH Available 15,441,183,000 9

Disposition of Energy

10 Billed & Unbilled Sales to Retail Customer 14,609,152,566 10

11 Sales for Resale (Wholesale) 0 11

12 Company Use (Office, Maintenance Bldgs., etc.) 17,780,650 12

13 Total KWH Accounted for 14,626,933,216 13

14 Total Energy Losses (9 less 13) 814,249,784 14

15 Average System Losses (14 Divided by 9 in %) 5.273% 15




LEGAL NOTICE

Notice is hereby given that on or about February 25, 2011, Indianapolis Power & Light Company expects to submit a revision to its Tariff No. E-16 entitled Rate CGS - Cogeneration and Small Power Production, 16th Revised Sheet No. 122 ("Rate CGS"). The revision to Rate CGS will affect any customer taking electric service under the Company's standard offer and form contract for the purchase of energy and capacity from cogeneration and alternate energy production facilities operating within IPL's service territory. IPL expects approval of the filing on or about April 6, 2011. This notice is provided to the public pursuant to 170 IAC 1-6-6. The contact information, to which an objection should be made, is as follows: Secretary Indiana Utility Regulatory Commission 101 W. Washington Street, Suite 1500 East Indianapolis, Indiana 46204 Telephone:(317) 232-2700

Office of Utility Consumer Counselor 115 W. Washington Street, Suite 1500 South Indianapolis, Indiana 46204 Telephone:(317) 232-2484 Toll Free: 1-888-441-2494

Fax: (317) 232-6758 Fax: (317) 232-5923 Email: [email protected] Email: [email protected]

Dated February 18, 2011.




83633-5776167

LEGAL NOTICE Notice is hereby given that on or about Febru· ary 25, 2011, Indianapo- , lis Power & light Company expects to submit a revision to its Tariff NO. E-16 entitled Rate eGS - Cogeneration and Small Power Production, 16th Revised Sheet No. 122 ("Rate CGS"). The revision to Rate

fo~e~illt:~~~t a~fegt~f~ service under the Company's standard offer and form contract for the purchase of energy and capacity from cogeneration and alternate energy production facilities operating w ithin IPL's service territory. IPL expects approval of the filing on or about April 6, 2011. This notice is provided to the public pursuant to 170 lAC 1-6-6. The contact information, to which an objection shou ld be made, is as follows: Secretary Ind iana Utility Regulatory Commission 101 W. Washington Street, Suite 1500 East Indianapolis, Indiana 46204 Telephone:(317) 232-2700 Fax: (317) 232-6758

.· I;mail:. [email protected] Office of Utility Consumer Counselor ll5 W. Washington Street, Suite 1500 South Indianapolis, Indiana 46204 Telephone:(317) 232-2484 Toll Free: 1-888-441-2494 Fax: (317) 232-5923 Email: [email protected] Dated February 18, 20ll (S - 2/18/11 - 5776167)

PUBLISHER'S AFFIDAVIT

State of Indiana MARlON County

SS:

Personally appeared before me, a notary public in and for said county and state,

the undersigned Kerry Dodson who, being duly sworn, says that SHE is clerk

of the INDIANAPOLIS NEWSPAPERS a DAILY STAR newspaper of general circulation

printed and published in the English language in the city of INDIANAPOLIS in state

and county aforesaid, and that the printed matter attached hereto is a true copy,

which was duly published in said paper for 1 time(s), between the dates of:

02/18/2011 and 0211812011

Clerk

My commission expires:

-=~.Gtr Public LOUISE M. POWEll . NOTARY PUBLIC ,

STATE OF INDIANA MY COMMISSION EXPIRES February 28. 2016




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