Mr. Wilby s testimony takes no position on dispatch priorities or priority designations. Shell believes that such testimony is proper and does not

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1 evidence of maximum renewable capacity in the CREZ, and thus the Commission s CREZ designation order would relate precisely to those parties. Mr. Wilby s testimony takes no position on dispatch priorities or priority designations for transmission capacity, it merely describes Shell s view of how section (e) of the Commission s rule operates. Shell believes that such testimony is proper and does not contravene Order No. 20. Ironically, if its own testimony is any indication, FPLE agrees that the subject of section (e) s operation is properly before the Commission because, in contrast to Shell s discrete and innocuous reference, FPLE devoted pages to the topic. In his description of whether a developer should be allowed to augment its financial commitment, FPLE witness Robert Bergstrom testified regarding FPLE s compehg interpretation of section (e) of the rule. FPLE believes that developers who do not participate in and substantiate a CREZ nomination, can nonetheless obtain the benefits of the CREZ designation, i.e., participate in the dispatch priority proceeding that follows designation, if they can demonstrate some level of financial commitment in that subsequent proceeding. He stated that in some cases, a developer may present financial commitment in areas that the Commission does not designate as a CREZ. With regard to these developers, he claims: [a]t least regarding this initial CREZ designation case, a developer should have some opportunity in a timely and meaningful manner to meet financial commitment requirements and thereby participate in the benefits of a CREZ that the Commission does de~ignate.~ In other words, the ability to augment financial commitment for which FPLE argues in its testimony would allow a developer not otherwise entitled to do so to qualib for the dispatch priority scheme the Commission sets... to comply with section (e) of the rule. 4 Direct Testimony of Robert Bergstrom, pg. 26/ Id. at 27/19. HOUSTON: : vl 3

2 In addressing issue No. 6 in the Commission s Preliminary Order: Shell testified that there is a maximum number of proposed generators that can post financial commitments and in turn receive the benefits of nominating the designated CREZ. FPLE has testified that a developer should be able to receive the benefits of a CREZ by supplying financial commitment relative to a CREZ that it did not nominate. This is nothing more than two opposing points of view regarding the interpretation of section (e) of the rule. It is not dispatch priority simply because FPLE disagrees with Shell s (and others ) interpretation of the rule. Shell s testimony does nothing more than offer its view that qualification for the dispatch priority proceeding is limited to those developers who nominated and substantiated the Commission s ultimate CREZ designation. Dispatch priority among those developers, which wiu not be decided and cannot be addressed in this docket, is then established in a separate proceeding, subject to the Commission s interpretation of its rule and the ongoing Renewable Transmission Task Force protocol revision process at ERCOT. In addition to apparently agreeing with Shell that the operation of section (e) is a proper subject for testimony, FPLE also seems to agree with the precise concerns underlying Shell s belief that the section (e) proceeding is intended to prevent the piling on scenario that has been a concern for so many developers. Mr. Bergstrom testified that [ilf first movers are not protected from free-riders who pile on to CREZ-related transmission facilities, the benefits of participation in the CREZ designation process would be outweighed by its costs (including early and public financial ~ornmitment). ~ This is precisely Shell s stance with regard to CREZ nomination, substantiation, and qualification for the dispatch priority proceeding in (e). It is difficult to understand how FPLE can reconcile its stance against piling on to transmission Issue No. 6, in part, asked whether any CREZ designated by the Commission should be limited to a minimum or maximum amount of generating capacity. Id. at 25/47. HOUSTON: : ~1

3 facilities backed by the financial commitment of others with its support for piling on the financial commitment of others when it comes to the section (e) proceeding. 11. CONDITIONAL COUNTER-MOTION TO STRIKE Shell and FPLE have done nothing more than present two sides ofprecisely the same issue. Mr. Wilby did so in circumspect fashion, devoting only a single sentence to it. FPLE, as described above, has devoted literally pages to it. Ultimately, if referring to the basis upon which a party in this proceeding may participate in the section (e) proceeding contravenes Order No. 20, then the following portions of Mr. Bergstrom s testimony would also have to be stricken: Page 26 / lines 20-26, sentence beginning I can imagine... Page 27 / lines 18-22, sentence beginning Allowing a reasonable... The testimony offered in this debate bears directly on the parties responses to bsue Nos. 4 and 6 posed by the Commissioners in their Preliminary Order, yet does not violate the mandate of Order No. 20. Shell believes the Commission is best served by obtaining competing views on the subject of the operation of section (e) and then using its policy judgment and experience to weigh the evidence and render a decision relative to the Issues it posed. If only one side of this debate is stricken from the record, the Commissioners will be denied the benefit of a comprehensive perspective and a complete evidentiary record on this important issue. Thus, if, and only if, the AW determines that testimony regarding the operation of section (e) of the CREZ Rule contravenes Order No. 20, would Shell request the relief described above PRAYER WHEREFORE, Shell respectfully requests that Joint Movants Motion to Strike Direct Testimony be denied, and, should Mr. Wilby s Direct Testimony be stricken for violating Order No. 20, that the corresponding portions of Mr. Bergstrom s Direct Testimony, identified above, HOUSTON: : Ov

4 be stricken as well. Shell further requests such other and further relief to which it shows itself to be entitled. Respectllly submitted, LOEKE LIDDELL & SAG? LLF Houston, Texas (713) Telephone (7 13) Facsimile JERALD W. EPPS State Bar No Congress Avenue, Suite 300 Austin, Texas (512) Telephone (512) Facsimile ATTORNEYS FOR SHELL WINDENERGY, INC. CERTIFICATE OF SERVICE I hereby certify that on May 9,2007 a true and correct copy of the foregoing instrument was sent to all padies of record in this proceeding in accordance with the manna of service specified for this proceeding. John K(9.n.ld HOUSTON: 013l29.00ll7: l17444ovl 6 G

5 DOCKET NO COMMISSION STAFF'S PETITION Q PUBLIC UTILITY comn4bsm u"o f:4 FOR DESIGNATION OF 8 OF "=rm 2c z- COMPETITIVE RENEWABLE Q TEXAS Tz --c '7: ENERGY ZONES 8 COMMISSION STAFF'S RESPONSE TO JOINT MOTION TO c DIRECT TESTIMONY ZPT I a- 03 m n* - zc 13 < -$ a: m NOW COMES Staff of the Public Utility Commission of Texas (Commission Staff or Staff), representing the public interest, in the above titled and numbered cause, to submit this Response to Joint Motion to Strike Direct Testimony. On May 2, 2007, FPL Energy, LLC, AES Seawest, Inc., and Invenergy Wind North America (Joint Movants) filed a Joint Motion to Strike portions of several Witnesses' direct testimony (Joint Motion) on the basis that it contravenes Order No Order No. 20 ruled that evidence relatbg to dispatch priority is inadmissible in this docket. However, some of the testimony that Joint Movants seek to have striken instead relates to specifying the amount of wind generation that each developer who nominated a CREZ can build within the CREZ. P.U.C. SVSST. R (a)(S)(D) provides that for each new CREZ that the Commission orders, the Commission shall specifj. any other requirement considered appropriate by the Commission as provided by PURA. Further, P.U.C. SUBST. R (~)(6) indicates that it is appropriate for the Commission in this CREZ docket to specify the amount of wind generation that each developer who nominated a CREZ can build within the CREZ. This provision requires, within 45 days of an application for a CCN for transmission improvements filed pursuant to the order designating a CREZ, "each developer for that CREZ" to post collateral for its pro share of transmission costs. In addition, this provision states that if a developer hits to post the collateral, the Commission may seek "another developer to step into the shoes of a defaulting developer". This provision Joint Motion to Strike Direct Testimony at 1 (May 2,2007). 5+ EXHIBIT DG-6 5b7

6 assumes that certain developers have been designated for a particular CREZ and that those developers will be allocated a pro rata share of transmission costs. A logid basis for such a pro rata allocation is for the Commission to have specified the amount of wind generation that each developer who nominated a CREZ, in a CREZ determination docket such as the current one, can build witbin the CREZ. P.U.C. SUBST. R (~)(4) requires that a CCN application for CREZ transmission facilities be filed within a year of the order designating the CREZ. Given the fact that the rule does not provide for a separate process to designate developers for a particular CREZ, such designations should be made in the currenf docket. The Joint Movants request that the following testimony of Horizon Wind Energy, LLC (Horizon) witness Wayne Walker be stricken: However, in this case, the Commission should also designate the number of MW of CREZ generation allocated to each developer who nominated that CREZ... and number of MW per developer is the best way to designate CREZ. 2 Shilarly, the Joint Motion requests that the phrase and by MW per project[.i be stricken from Mr. Walker s testimony.3 For the reasons stated above, this testimony should not be stricken. Direct Testimony of Wayne Walker on Behalf of Horizon Wind Energy, LLC, at 8, lines 6-9. Direct Testimony of Wayne Walker on Behalf of Horizon Wind Energy, LLC, at 24, lme 10. 2

7 May 7,2007 Respectfully Submitted Thomas Hunter, Division Director, Legal Division Keith Rogas Deputy Division Director, Legal Division Annette Lo& Mass Attorney, State Bar No Public Utility Commission of Texas 1701 North Congress Avenue P.O. Box Austin, Texas, Tel Facs CERTIFICATE OF SERVICE I, Annette Lown Mass, staff attorney, certify that a copy of this document was served on all parties of record in this proceeding on May 7,2007, in accordance with Order No. 3. Annette Lown Mass 3