20180910Plaintiff Brief in Support of Motion.pdf

Case 1:18-cv-00236-REB Document 29-l- Filed 09/05/18 Page L of 20
Peter J. Richardson, ISB# 3195
515 N. 27th Street
Boise,Idaho 8.3702
Telephone [phone]
Facsimile: [phone]
1 lctct'(rr,ri cIra rtIsrlrtitrIa t r ls.qr)r tI
Attomeys for Plaintiffs
FRANKLIN ENERGY STORAGE ONE, LLC,
FRANKLIN ENERGY STORAGE TWO, LLC
FRANKLIN ENERGY STORAGE THREE,
LLC, FRANKLIN ENERGY STORAGE
FOUR, LLC
Robert C. Huntley ISB# 894
R. HUNTLEY LAW, PLLC
950 W. Bannock St., Ste. 600
Boise, tD 83701
Telephone (208) 388- I 230
Facsimile [phone]
rlrrrr rt lcy(tr lrttrtt lcvllrr,.com
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
F;ICEIVED
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Case No.: I : I 8-cv-00236-REB
PLAINTIFFS' BRIEF IN SUPPORT OF
MOTION FOR SUMMARY JUDGMENT
vs.
Plaintiffs,
PAUL KJELLANDER, KRISTTNE RAPER
ERIC ANDERSON, in theirofficial capacityas
Commissioners ofthe IDAHO PUBLIC
UTILITIES COMMISSION,
Defendants.
il
il
Franklin Energy Storage - Brief in Support of Motion for Summary Judgment.
i.
Case L:18-cv-00236-REB Document 29-1 Filed 09/05/18 Page 2 of 20
TABLE OF CONTENTS
TABLE OF AUTHORTIES....
TABLE OF ACRONYMS.......lv
PLAINTIFF'S BRIEF IN SUPPORT
OF MOTION FOR SUMMARY JUDGMENT. ... .. ..I
Part I: Overview PURPA andthe Idaho PUC's DutiesThereunder
Part II: Statement of Issue The ldaho PUC Oversteps its Authority
I
Part III: The IPUC's Implementation Only Contemplates Two Classes of
QF-(1)Wind/Solarand(2)AllOther. ............2
Part IV: Preemption: The IPUC's Classification of the Franklin Projects QF Status
is Preempted by PURPA, FERC's Regulations and Established Ninth Circuit
Court of Appeals Precedent.5
Part V: Not a o'Frivolous" Legal Machinate, Independent Energt Producers v. CPUC
is Controlling Precedent. .. . ..... . . . . .. ..9
Part VI: The PUC's Two Orders A.K.A. the ldaho PUC's Slight of Hand... ..........12
Part VII: Irreconcilable Conflict: Conflict Preemption t4
PaTtVIII: ConclusionandRelief Sought... ...........15
Franklin Energy Storage - Brief in Support of Motion for Summary Judgment.
ii.
............iii
Case 1:18-cv-00236-REB Document 29-1 Filed 09/05/18 Page 3 of 20
CASES AND AUTHORITIES
Cases
Brazos Electric Power Cooperative v. FERC,205 F.3d 235 (sth Cir. 2000)
FERC v. Mississippi, 456 U.S. 7 42, (l 982)
Indep. Energt Producers Ass'n v. Califurnia Pub. Ultil. Comm'n,
36 F.3d 848 (9th Cir. 1994)
Luz Development and Finance Corporation, 5l FERC fl 61,078 (1990),
Power Res. Group v. FERC 422F.3d231 (5th Cir.2005)
Re: California Public Utilities Commission, 133 FERC fl 61,059 (2010)
Sill*voodv. Ker-McGee Corp.,464 U.S. 238 (1984).
Statutes and Other Authorities
Public Uttlittes Regulatory Policies Act of 1978,
16 U.S.C. $$ 796 and824a-3 et. seq.
l6 U.S.C. $ 824a-3(a)
16 U.S.C. $ 82aa-3(0
18 C.F.R. $ 38s.207(aX2)
Idaho Public Utilities Commission Orders
Order No. 32697, Docket No. GNR-E-I l-03
Order No. 33357, Docket No. IPC-E-15-01
Order No. 33785, Docket No. IPC-E-17-01
Order No. 33858, Docket No. IPC-E-17-01
Franklin Energy Storage - Brief in Support of Motion for Summary Judgment.
iii.
Paee
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8,9, ll, 13, 14
8,7,12,10,
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2,3,6,ll, 12
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6
6
2,8
FERC
IPUC
kw
QF
Case 1:18-cv-00236-REB Document 29-1 Filed 09/05/l-8 Page 4 of 20
TABLE OF ACROIYYMS
Federal Energy Regulatory Commission
Kilowatt
Idaho Public Utilities Commission
Public Utilities Regulatory Policies Act of 1978
QualiSing Facility
Franklin Energy Storage - Brief in Support of Motion for Summary Judgment.
iv.
PURPA
Case L:18-cv-00236-REB Document 29-l- Filed 09/05/18 Page 5 of 20
PLAINTIFF'S BRIEF IN SUPPORT
OF MOTION FOR SUMMARY JUDGMENT
PART I: OVERVIEW
PURPA AND THE IDAHO PUC's DUTIES THEREUNDER
This case concerns ldaho's implementation of a federal statute and regulations requiring
public utilities to purchase energy generated by a select class of generators. The facts of this case
are not in dispute. Congress enacted the Public Utilities Regulatory Policies Act of 1978
("PURPA")r to reduce the dependence of electric utilities on foreign oil and natural gas, in part by
encouraging the development of altemative energy sources such as cogeneration and small power
production facilities called "Qualifying Facilities" or "QFs". Brazos Electric Power Cooperative
v. FERC,205 F.3d 235,237 (5th Cir. 2000); see also FERC v. Mississippi,546U.S.742,745 -746
(1982) and, Power Res. Group v. FERC 422 F.3d 231,233 (5th Cir. 2005). PURPA directs the
Federal Energy Regulatory Commission (*FERC") to promulgate regulations promoting the
purchase by utilities of energy produced by QFs. l6 U.S.C. $ 824a-3(a). State regulatory agencies,
such as the Idaho Public Utilities Commission ("IPUC"), are directed to implement PURPA by
either adopting rules or by resolving disputes in a manner which complies with FERC's
regulations. l6 U.S.C. S 82aa-3(f).
PART II: STATEMENT OF ISSUE
THE IDAHO PUC OVERSTEPS ITS AUTHORITY
The issue before the Court is simply stated:
l Public Utilities Regulatory Policies Act of 1978. l6 U.S.C. $$ 796 and824a-3 et. seq
Franklin Energy Storage - Brief in Support of Motion for Summary Judgment.
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Case l":18-cv-00236-REB Document 29-l- Filed 09/05/18 Page 6 of 20
Since PURPA preempts the IPUC from determining QF status, may the IPUC properly
deny 20-year energy sales and purchase agreement rights of the four Plaintiff QFs which
rights are vested in them under PURPA?
Plaintiffs establish below that the IPUC has impermissibly intruded into an area
exclusively reserved by PURPA to the Federal Energy Regulatory Commission by its inquiry into
the energy source(s) proposed to be utilized by the Franklin Energy Storage QFs.
PART III:
THE IPUC's PURPA IMPLEMENTION ONLY CONTEMPLATES
TWO CLASSES OF QF - (l) WrND/SOLAR AND (2) ALL OTHER
This case concerns the IPUC's failure to properly implement PURPA. Pursuant to PURPA,
FERC promulgates regulations to effectuate the policy goals of the United States Congress by
encouraging the development of cogeneration and small power production facilities. FERC v.
Mississippi,456U.5.742,750,72 L.Ed. 2d532,102 S. Ct.2126 (1982). Inturn, Section 824a-
3(f1 of PURPA requires state regulatory agencies, like the Idaho PUC, to implement FERC's
regulations. Here the IPUC has violated PURPA, and FERC's PURPA regulations, in two orders2
implementing the same for a distinct class of Qualifying Facilities -- Energy Storage QFs. Prior
to issuing the two orders that are the subject of this proceeding, the IPUC had never specifically
addressed in any of its orders or rules, Energy Storage QFs.
The two IPUC orders at issue in this case are Order No. 33785 (Original Order) and Order
No. 33858. (Reconsideration Order). The Original Order (33785) was issued by the IPUC in
response to ldaho Power's Petition for Declaratory Order "determining the proper contract terms,
' IPUC Order No. 33785 and 33858, IPUC Docket No. IPC-E-I7-01, issued on July 13, 2017, and
August 29, 2018, respectively. See, Defendant's Exhibits 6 and 7, respectively, filed 6125118.
Document Nos. l:18-cv-00236-REB Document 4-6 ("Original Order") and Document 4-7
("Reconsideration Order").
Franklin Energy Storage - Brief in Support of Motion for Summary Judgment.
2.
Case L:18-cv-00236-REB Document 29-L Filed 09/05/18 Page 7 of 20
conditions, and avoided cost pricing to be included in ...contracts for battery storage facilities
requesting contracts under the Public Utilities Regulatory Policies Act of 1978."3 In its Original
Order No. 33785,4 the IPUC summarized the implementation scheme it had previously established
for determining a QF's avoided cost rates and contract terms:
This Commission UPUCI has established two methods of calculating avoided cost,
depending on the size of the QF project: (l) the surrogate avoided resource (SAR)
methodology, and (2) the integrated resource plan (IRP) methodology.s lcitation omittedl
The Commission uses the SAR methodology to establish standard or "published" avoided
cost rates. [citation omitted] Currently, the eligibility cap for wind and solar QFs to access
published avoided cost rates is set at 100 kilowatts (kW). OF projects other than wind and
solar are subject to a published rate eligibilitlr cap of l0 average megawatts (aMW).6
[Citation omitted].
In 2015, this Commission reduced the term for individually-negotiated PURPA contracts
(those not subject to published rates) in Idaho from 20 years to 2 years. [citation omitted]
The contract term for published rate contracts remains at 20 years.T
Simply stated, if a wind or solar QF is 100 kW or smaller it is entitled to published rates and a
twenty-year contract. [f a wind or solar QF is larger than 100 kW its rates are set using the IRP
methodology and that QF is only entitled to a two-year contract. QF projects "other than wind or
solar" that are 10,000 average kW or smaller are entitled to published rates and a twenty-year
3 See Defendant-Intervenor ldaho Power Company's Memorandum in Support of its Motion to
Intervene at Declaration of Donovan E. Walker at Exhibit 10, p. l. Case l:18-cv-00236-REB
Document 7-5 at p. 54.
a Document No. 1:18-cv-00236-REB Document 4-6
5 The details associated with the two methodologies noted are not at issue in this case.
6 Each of the Franklin QFs' estimated output falls below the l0 aMW capacity cap, which is
measured on a monthly average basis. While each of the Franklin Energy Storage QFs has a
nameplate (theoretical) capacity of greater than l0 megawatts, each has an actual average monthly
output of less than l0 megawatts. The size estimation of the projects was not at issue before the
IPUC.
7 Document Nos. l: l8-cv-00236-REB Document 4-6 Order No. 33785 at pages 2 - 3, underscoring
provided.
Franklin Energy Storage - Brief in Support of Motion for Summary Judgment.
3.
Case 1-:18-cv-00236-REB Document 29-1 Filed 09/05/18 Page 8 of 20
contract. If a QF "other than wind or solar" is larger than 10,000 average kW, its rates are set
using the IPR methodology and it is only entitled to a two-year contract. Each of the Franklin
Energy Storage Projects is smaller than 10,000 average kW.
In establishing its policy for determining entitlement to either twenty-year contracts or two-
year contracts, the Commission established a simple dichotomy between solar/wind QFs and all
QFs other than wind/solar. However, in creating this dichotomy, the Commission did not
contemplate the possibility of energy storage QFs. Indeed, the Idaho Commission has never
mentioned energy storage QFs in any of its prior orders implementing PURPA. The ldaho
Commission made this point clear in its protest before FERC in this matter. According to the
IPUC's protest filed at FERC:
Until Idaho Power petitioned the Idaho PUC for declaratory relief regarding Franklin's
requested PURPA contracts, the ldaho PUC had not yet considered the eligibility cap for a
battery storage QF to receive standard avoided cost rates and associated terms and
conditions in a PURPA contract.
In deciding which QF resource types should have a lower eligibility cap, the Idaho PUC
specifically considered biomass, small hydro, cogeneration, geothermal, and waste-to-
energy . .. Tlre ldaho Commission did not address battery storage.8
The ldaho Commission had implemented its policies for setting avoided cost rates and
determining contract terms based on a dichotomy that did not explicitly contemplate energy
storage QFs. Thus, when faced with the question of how such QFs fit into its rigid dichotomy, it
had just three choices. First, it could have initiated a process through which it could implement an
8 Notice of Intervention and Protest of the ldaho Public Utilities Commission, FERC Docket No.
ELlS-50, Jan. 16, 2018 at pp 8 - 9. Richardson Decl. at Exhibit l. (Emphasis provided.)
Franklin Energy Storage - Brief in Support of Motion for Summary Judgment.
4.
And:
Case 1:18-cv-00236-REB Document 29-l- Filed 09/05/18 Page 9 of 20
avoided cost methodology and contract terms explicitly for energy storage QFse. Second, it could
have simply ruled that "other than wind and solar" means exactly what is says - e.g. all QFs other
than wind or solar are entitled to published rates and twenty-year contracts, which would implicitly
and naturally include energy storage QFs. The ldaho Commission chose a third, and decidedly
unsustainable, route by including the Franklin energy storage QFs in its classification of solar QFs.
It did so based entirely upon the Franklin projects' primary energy input - solar energy. This it
may not do. While, the first two options open to the Commission may have been legally defensible,
the third option is beyond the jurisdiction of the IPUC. Only FERC may adjudicate QF status.
The Idaho PUC's inexplicable reclassification of the Franklin QFs based on their primary energy
input infringes on FERC's exclusive jurisdiction as to QF status. Such action is preempted by
PURPA and FERC's implementing regulations.
PART IV: PREEMPTION:
THE IPUC'S CLASSIFICATION OF THE FRANKLIN PROJECTS QF STATUS IS
PREEMPTED BY PURPA, FERC,S REGULATIONS AND ESTABLISHED NINTH
CIRCUIT COURT OF APPEALS PRECEDENT
Plaintiffs are each a self-certified QF pursuant to FERC regulations as an "energy storage
system Qualifying Facility'' QF."to The IPUC's PURPA implementation orders provide that all
QFs "other than wind and solar" QFs (up to ten average monthly megawatts in size) are entitled to
e Indeed, this is what Idaho Power asked the Commission to do in its Petition for Declaratory order,
quoted above. See footnote 3, supra.
r0 Franklin Energy Storage One, LLC, FERC Docket No. QFIT-581; Franklin Energy Storage
Two, LLC, FERC Docket No. QFIT-582; Franklin Energy Storage Three, LLC, FERC Docket
No. QFIT-583; and Franklin Energy Storage Four, LLC, FERC Docket No. QFIT-584. See
Defendant's Exhibits 8, 9, l0 and I l, respectively, filed 6125118. Document Nos. l:18-cv-00236-
REB Document 4-8, 4-9, 4-lO and 4- 1 l.
Franklin Energy Storage - Brief in Support of Motion for Summary Judgment.
5
case 1:18-cv-00236-REB Document 29-l- Filed 09/05/18 page L0 ol20
'standard offer' twenty-year contracts.rr On the other hand, solar and wind QFs that are larger
than 100 kW are only entitled to two-year 'standard offer' contracts under the ldaho PUC's
PURPA implementation scheme.l2 Each Plaintiff, (as an "other than solar or wind QF")
separately sought a twenty-year PURPA standard offer contract from Idaho Power Company.
(Walker Decl. at Exhibits 1,2,3 and 4).r3
Idaho Power did not respond directly to the Franklin Projects requests for standard offer
twenty-year QF contracts. Instead, Idaho Power sought a declaratory ruling from the IPUC that:
Tlhe Commission UPUCI issue a declaratory order, without prejudice to Idaho Power's
position on the validity of the underlying self-certifications, finding that, under the facts
presented, the Proposed Battery Storage Facilities are subject to the same 100 kW
published avoided cost rate eligibility cap applicable to wind and solar facilities." r4
Importantly, in its original order (Order No. 33785) the ldaho Commission did not make a finding
on Idaho Power's specific request that it subject battery storage "Facilities" to the same eligibility
cap "applicable to wind and solar facilities." Instead the tdaho Commission reclassified the
"Battery Storage Facilities" based on their "primary energy source." The Idaho Commission stated
that:
We find it appropriate to base Franklin's ... eligibility under PRPA on its primary energy
source - solar. Solar resources larger than 100 kW are entitled to negotiate two-year
PURPA contracts through the use of Idaho's IRP methodology.rs
rr IPUC Order No. 32697 issued in Docket No. GNR-E-l l-03. Document Nos. l:18-cv-00236-
REB Document 4-14.
t2 IPUC No. Order 33357 issued in Docket No. IPC-E-15-01 on8l20ll5. Document No. l:1S-cv-
00236-REB Document 4-4.
13 Document No. l:18-cv-00236-REB Document Nos. 7-3, 7-4 and 7-5. (Document 7-3 contains
Walker Decl. Exhibits 2 and 3. Documents 7-4 and 7-5 each only contain a single Walker Decl.
Exhibit, No. 3 and 4 respectively.)
ta See Defendant-lntervenor tdaho Power Company's Memorandum in Support of its Motion to
Intervene at Declaration of Donovan E. Walker at Exhibit 10, p. l. Case l:18-cv-00236-REB
Document 7-5 atp. 66.
r5 IPUC Order No. 33785 atp.l},Original Order. Seefn j supra.
Franklin Energy Storage - Brief in Support of Motion for Summary Judgment.
6.
Case 1:18-cv-00236-REB Document 29-l- Filed 09/05/1-8 Page 1,L of 20
ln reaching this conclusion, the Idaho Commission simply disregarded that energy storage QFs
have been established by FERC as distinct QFs and instead looked beyond the face value of the
QF certification to deqide that the Franklin Energy Storage QFs are only entitled to treatment as
solar QFs under the Idaho implementation scheme.
The Idaho Commission could have initiated a proceeding to establish avoided cost rates
and terms and conditions of contracts for energy storage facilities. Indeed, a recent FERC decision,
affords states the flexibility necessary to set resource-specific avoided cost rates through PURPA.I6
But the Idaho Commission did not set resource-specific avoided cost rates for energy storage QFs,
and Franklin does not assert that the Idaho Commission may not do so. However, to do so would
require the Idaho Commission to go through the trouble of initiating a proceeding to determine the
appropriate avoided cost rates for storage projects. That would have required prior notice and
other indicia of due process such that the Franklin projects' contract requests would have preceded
the adoption of any new implementation scheme specific to energy storage QFs. Hence, they
would be entitled to grandfather status under the existing ldaho Implementation plan which
includes all QFs other than solar and wind in the category of QFs eligible for twenty-year contracts.
The Franklin Projects duly Petitioned the ldaho Commission to reconsider its decision.
(Richardson Decl., Exhibit No. 2.) The Projects asserted on reconsideration that they are neither wind
nor solar QFs and are hence entitled to contract terms and conditions reserved for "all other
projects" pursuant to the IPUC's 'standard offer' published avoided cost regime. The Franklin
Projects also directed the IPUC's attention on reconsideration to established FERC precedent,
t6 Re: Caltfornia Public Utilities Commission, 133 FERC tT61,059 (2010).
Franklin Energy Storage - Brief in Support of Motion for Summary Judgment.
7.
Case l":18-cv-00236-REB Document 29-l- Filed 09/05/18 Page L2 ot 20
citing to Luz Development and Finance Corporation 5l FERC fl 61,078 (1990), to the effect that;
(l) energy storage systems are distinct QFs in their own right; and (2) controlling Ninth Circuit
Court of Appeals precedent, Indep. Energt Producers Ass'n v. Califurnia Pub. Ultil. Comm'n,36
F.3d 848 19th Cir. l9g4), to the effect that state PUC commissions are preempted by federal law
from questioning (or even inquiring) into the validity of a QF's status - a role that the Ninth Circuit
Court declared in Indep. Energt Producers is reserved exclusively to FERC under PURPA.
The ldaho Commission's reconsideration orderlT noted the existence of the FERC and
Ninth Circuit decisions in passing but completely disregarded their import. The IPUC
characteized Franklin's reliance on the Ninth Circuit's precedent in Independent Energt
Producers v. CPUC as a "frivolous effort to contrive alegal basis for reconsideration".ls It
likewise acknowledged the fundamental finding in FERC's Luz decision (that energy storage
systems are distinct QFs) but completely disregarded that basic precept by asserting that it may
actually look to the underlying energy source of the storage system to determine the nature of the
QF itself. According to the ldaho Commission in its order on reconsideration:
In the Final Order, we explicitly recognized that "battery storage facilities' QF status is a
matter with FERC's jurisdiction" and we acknowledge the self-certifications of Franklin's
QFs. . . . Consistent with FERC's analysis in Luz, we looked to the primary energy source
of Franklin's battery storage QFs to determine the projects' eligibilityto particular avoided
cost rates and contract terms.le
The Idaho Commission frankly admited that it looked to the QF's energy source to determine its
eligibility for PURPA benefits ("avoided cost rates and contract terms.") This it may not do. The
Idaho Commission is prohibited from questioning the validity of the QF's assertion that it is, in
r7 IPUC Order No. 33858. Reconsideration Order, Supra atfn2.
ta lbid. at p. 3.
te Id.
Franklin Energy Storage - Brief in Support of Motion for Summary Judgment.
8.
Case 1:18-cv-00236-REB Document 29-1 Filed 09/05/18 Page 13 of 20
fact, a QF. As explained in detail below, the Ninth Circuit Court of Appeals has determined that
the only entity with the legal authority to make an inquiry as to the energy inputs necessary to
qualify a facility as a QF is FERC. States are preempted from making such determinations.
PART V: NOT A (FRMLOUS" LEGAL MACHINATE
INDEPENDENT ENERGY PRODUCERS Y. CPUC
IS CONTROLLING PRECEDENT
The similarity as to issues and facts in the Ninth Circuit case, Independent Energt
Producers, make it persuasive precedent. As is the case with the ldaho PUC, in Independent
Energt Producers, the California PUC had established a system by which QFs would be entitled
to 'standard offer' contracts20 that contain standardized contract terms and established standard
offer prices to be paid to QFs for electric energy. Also like the Idaho PUC, the California PUC
made these standard contracts available to certain classes of QFs. If the Califomia QF frt into a
pre-defined class of QF it was entitled to the standard offer contract at standard offer prices for
that class of QF. Similarly, under the Idaho PUC's implementation of PURPA, if a QF fits into
one of two pre-defined classes of QF (either "wind/solar" or "all other") it also is entitled to a
standard offer contract and standard offer prices based on which of the two classes it falls into.
The two classes of QFs entitled to distinct ldaho approved avoided cost and contracting treatment
are (l) wind/solar QFs and (2) all other QFs.
The California PUC subsequently had a case of buyer's remorse and, upon deciding the
avoided cost rates it had set were too high, authorized the utilities it regulated to determine if QFs
were complying with PURPA in maintaining their QF status. In other words, the California PUC
was, by authorizing its regulated utilities to do so, actually making QF status determinations.
20 Independent Energt Producers, supra, at 85 l.
Franklin Energy Storage - Brief in Support of Motion for Summary Judgment.
9.
Case 1:18-cv-00236-REB Document 29-l- Filed 09/05/1-8 Page L4 of 20
The district court in California ruled in favor of the CPUC, finding that "the states may play a role
in monitoring and enforcing compliance with QF requirements." However, the Ninth Circuit
overturned the district court. The Ninth Circuit explained:
ln 1991, the CPUC adopted the monitoring program that gave rise to this action. Under
this program, the CPUC authorized the Utilities to monitorthe compliance ofthe QFs from
which they purchase electric energy to ensure that they are in compliance with federal
operating and effrciency standards.2 l
The Ninth Circuit specifically overturned the district court 22 arrd established that FERC
"exercise[s] exclusive authority over QF status determinations." 23 Hence, to the extent the ldaho
Commission makes any QF status determination, such a determination is preempted by federal
law. According to the Ninth Circuit:
[B]ecause the CPUC pro$am authorizes the Utilities to make QF status determinations,
and thus to intrude into an area of exclusively federal regulation, it is preempted by federal
law . . . The structure of PURPA and the Commission's [FERC] regulations, reflect
Congress's express intent that the Commission [FERC] exercise exclusive authority over
QF status determinations. 2a
Likewise, the [daho Commission is prohibited from 'looking under the hood' to question the status
of a FERC certified QF. If the Idaho Commission believes that a QF's status, orlilsengfgli.Spurls,
are questionable or doubtful its only recourse is to complain to FERC. It may not take it upon
itself to make any determination as to the nature of a QF - including whether the QF's underlying
energy source complies with PURPA or not. Of course, the very foundation of the ldaho
Commission's declaratory order is its examination (beyond the face value of the QF's certification
2t lbid. at852.
22 ldid.. at 853.
23 Id.
z4 Id.
Franklin Energy Storage - Brief in Support of Motion for Summary Judgment.
10.
Case 1:18-cv-00236-REB Document 29-1 Filed 09/05/18 Page 15 of 20
as energy storage facilities) into the underlying energy input to the storage systems. The Idaho
Commission freely admits that it made exactly the type of inquiry that is expressly prohibited to it
under federal law. According to the Idaho Commission:
FERC confirmed that energy storage facilities are not renewable resourceVsmall power
production facilities per se. Electric input is required to produce electric output from a
storage facility. [citation omitted]. For this reason. in order to qualifv as a PURPA
resource. the primarv energy source behind the battery storage must be considered. We
must, then, look to Franklin's . . . primary energy sources in order to determine their
eligibility under PURPA.2S
The tdatro Commission is preempted from making any determination as to a QF's ability to
"qualify as a PURPA resource." Indeed, were states able to make independent determinations as
to a facility's ability to qualify under PURPA it would undermine one of the comerstones of that
important federal statute. The Ninth Circuit was clear on the need to have a single arbitrator
(FERC) as to QF status:
It is the Commission's [FERC] role, not the state's or utilities' role, to determine that QFs
that have received certification from the Commission no longer meet federal operating and
efficiency standards. A utility may not change the conhactual obligations between the QF
and the utility based on such a determination. The Commission has explicitly provided
comprehensive procedural mechanisms under which QFs may be officially certified and
decertified by the Commission; to permit states or utilities to challenge the compliance of
QF outside of the procedure established by the Commission could result in determinations
that are inconsistent with the federal scheme and would, in eff[ect afford certification by the
Commission liule or no deference.26
Here the ldaho Commission gave no deference to the QF status of the Franklin projects and instead
actually questioned their Energy Storage status based on its independent inquiry into the source of
energy that charges the storage system. This it may not do.
25 Original Order No. 33785 at p. I l. Emphasis provided.
26 Independent Energt Producers, Supra at p. 855.
Franklin Energy Storage - Brief in Support of Motion for Summary Judgment.
I l.
Case 1:18-cv-00236-REB Document 29-1 Filed 09/05/18 Page 16 of 20
FERC, as the sole and final arbitrator as to QF status, has ruled that energy storage systems
are distinct QFs in their own right.2? The Franklin Energy Storage projects are self-certified at
FERC as energy storage QFr.'* Pursuant to the Ninth Circuit in Independent Energt Producers,
(discussed above) the Idaho Commission may not challenge or question QF status (except at
FERC2) and it must therefore accept at face value the QF status of the Franklin projects.
Furthermore, it may not change the established contractual obligations30 accorded to the QF based
on any "such determination" as to the QF status of the projects. FERC has also established strict
standards as to the type of energy (renewable only) that may be used to charge the storage system
in order for it to qualify as a QF. However, if those strict standards are met (as determined by
FERC alone) the energy storage system is, according to FERC, a renewable resource "for purposes
of QF certification."3l
PART VI: THE PUC's TWO ORDERS
A.K.A.THE IDAHO PUC's SLIGHT OF HAND
As noted above, and as readily conceded by the IPUC, all QF tlpes fall into only one of
two sides of the IPUC's dichotomy for determination of entitlement to published rates. On one
side of the dichotomy are wind/solar QFs. The other side of the dichotomy is the catch-all class
that includes "all othef'QFs. Energy storage QFs were not contemplated by the IPUC when it
27 Luz Development and Finance Corporation, supra atp.6.
28 Seefn 10, supra.
2e The ldaho Commission is free to petition FERC for a declaratory order regarding a particular
project's QF status. See l8 C.F.R. 385.207(a)(2).
30 Here, contract obligations for "other QFs" had been previously established under the ldaho
Commission's implernentation of PURPA - which are twenty-year contracts at published rates.
IPUC Original Order No. 33785 atpp 2 - 3.
3t Luz Development and Finance Corporation, Supra, atp.6.
Franklin Energy Storage - Brief in Support of Motion for Summary Judgment.
t2.
Case l-:18-cv-00236-REB Document 29-1 Filed 09/05/18 Page 17 of 20
created this dichotomy. When faced with the question of which side of the ledger to put the
Franklin QFs it chose the wind/solar side because, according to the Commission, it:
[c]onsidered the Franklin QFs' primary energy source in evaluating the types of benefits
the QFs would qualify for under PURPA - that is, the QFs' applicable avoided cost rates
and contract terms. Given the record32 before it, the Idaho PUC found the Franklin QFs
are primarily energized by the sun, with energy generating output profiles that directly
reflect the solar generation operating as their primary energy source. The ldaho PUC thus
determined the 100 kW eligibility cap (used for solar QFs) should apply to Franklin.3l
Each of the Franklin QFs are certified at FERC as "an energy storage system QF'and no
party has challenged or questioned their status as such.3a Ignoring the undisputed fact that the
Franklin QFs are certified at FERC as "energy storage" QFs, the ldaho Commission freely admits
that it applied the "eligibility cap (used for solar OFs)" in implementing, for the first time, an
avoided cost contract/term policy for energy storage QFs. That new implementation policy
disregards the energy storage QF status of the Franklin projects and instead looks to the underlying
energy source that charges the storage system. Such an implementation scheme violates FERC's
unequivocal rulings that energy storage QFs are stand alone distinct QFs entitled to all the
privileges and benefits federal law affords them.
PURPA grants FERC exclusive authority over QF status determinations. In Indep. Energt
Producers Ass'n, Inc. v. Cal Pub. Utilittes Comm'n,36F.3d848 (9th Cir. 1994) the Ninth Curcuit
32 The Commission's use of the phrase "record before it" should not be confused to be understood
that there is an evidentiary record upon which the Commission based its decision. There is none.
There is no testimony, affiants or affidavits, discovery requests or responses or any other iota of a
record remotely resembling an evidentiary record. Rather, the "record" the Commission refers to
are the legal pleadings and arguments engendered by ldaho Power's petition for a declaratory
order. There is no factual record upon which the Commission based its decision.
33 Richardson Decl. Exhibit l. Notice of Intervention and Protest of the ldaho PUC, FERC Docket
No. ELl8-50 at p. I l. Citations omitted. Parenthetical in original.
3a Defendants so admit in their answer to Paragraph 53 of the Complaint.
Franklin Energy Storage - Brief in Support of Motion for Summary Judgment.
13.
Case l-:18-cv-00236-REB Document 29-L Filed 09/05/18 Page 18 of 20
Court of Appeals ruled that "The structure of PURPA and the Commission's regulations, reflect
Congress's express intent that the Commission [FERC] exercise exclusive authority over QF status
determinations." Id. at 853-854.
PART VII: IRRECONCILABLE CONFLICT:
CONFLICT PREEMPTION
Conflict preemption has been explained as follows: "lf Congress has not entirely displaced
state regulation over the matter in question, state law is still preempted to the extent it actually
conflicts with federal law, that is, when it is impossible to comply with both state and federal law,
or where state law stands as an obstacle to the accomplishment of the full purposes and objectives
of Congress." Silkwood v. Ker-McGee Corp 464 U.S. 238,248 (1984). The impossibility of
complying with the State of Idaho's policy that the primary energy source determines QF status is
easily illustrated. The Franklin QFs are not required to use solar energy to charge their batteries.
They can use any renewable energy source and they have specifically reserved that right in their
form 556's. As discussed above, the preemption of the State of ldaho's attempt to classify a QF
is absolute and unequivocal. However, the Franklin Energy Storage projects highlight the practical
impossibility of a QF having to comply with both FERC's standard and the state's imposed
standard for QF qualification.
The Franklin Projects, as energy storage projects, may utilize any renewable resource (in
any amount) to energize their battery arrays.3s However, according to the Idaho Commission, an
energy storage QF is classified pursuant to the "primary energy source" that is used to energize
the battery arrays.36 Although the primary energy source proposed for the Franklin projects is
15 Luz, supra, at p. 5.
36 Order No. 33785 at p. 12.
Franklin Energy Storage - Brief in Support of Motion for Summary Judgment
t4.
Case 1:18-cv-00236-REB Document 29-1 Filed 09/05/18 Page 19 of 20
currently solar, it may, at any time in the future, add or even substitute different energy sources.
According to the FERC Form 556 that was filed by each of the Franklin Projects:
The energy storage system that comprises the energy storage Qualifying Facility is
designed to, and will, receive 100% of its energy input from a combination of renewable
energy sources such as wind, solar, biogas, biomas, etc. The current initial design utilities
solar...
Thus, should one of the Franklin Projects choose to augment half of the energy input to the battery
array using energy generated with, for example, a biogas generator, the Idaho Commission's ruling
would be impossible to comply with as there would be no "primary energy source." Further
compounding the impossibility of complying with the ldaho Commission's decision would be the
situation where the solar and biomass input varies each year (or month or day or even hour) such
that at sometimes the solar input would be primary and at other times the biogas input would be
primary. Of course, the FERC designation of an energy storage QF only requires that the energy
input be sourced from a (a.k.a. any) renewable source regardless of the magnitude of the mixture
of renewable energy sources.
This conflict between compliance with the ldaho Commission's order and FERC's
standard for energy storage QF status is impossible to reconcile. There simply is no room in the
regulatory arena for both the ldaho Commission and the Federal Energy Regulatory Commission
to make independent, and in this case, conflicting determinations of QF status.
PART VIII: CONCLUSION AND RELIEF SOUGHT
PlaintifPs respectfully request entry of Summary Judgment in favor of Plaintiff s declaring
and requiring the Defendants honor Plaintiffs "qF" status and require ldaho Power to tender
twenty (20) year contracts at published rates consistent with their status as "other QF" pursuant to
Franklin Energy Storage - Brief in Support of Motion for Summary Judgment.
15.
Case 1:18-cv-00236-REB Document 29-1 Filed 09/05/18 Page 20 of 20
established IPUC requirements together with an award to Plaintiff s of their attomey fees and
costs, and such other relief as may be appropriate and equitable in the premises.
Respectfully submitted this 5th day of Septebmer 2018.
/s/ Rolrcrt L'. tluntlev. lisu
Robert C. Huntley, Esq.
/s/ Peter J. Richardson, Esa.
Peter R. Richardson, Esq.
Attorneys for Plaintiffs
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 5th day of September, 2018, I filed the foregoing electronically
through the CM/ECF system, which caused the following parties and counsel to be served by
electronic means, as more fully reflected on the Notice of Electronic Filing:
Brandon Karpen
I I t'irt tclor r. kit r Jtc r r{r rzlr r rc. i claho. gov
Edith Pacillo
Iitlit Ir.1xu'iIIo(rt;1trrt:. ithrIto. so v
ScotZar:.aig
Scrrtl.zitttziA({iitg ttlll to.gov
Attorneys for Defendants
Steven B. Anderson
1!t:t(rt. it.srt, lr l:tu crrttt
Wade L. Woodard
[e-mail]
Attorneys for Defendant-Intervenor Idaho Power Company
/s/ Peter J. Ric'hardson. Esq.
Peter R. Richardson, Esq.
Franklin Energy Storage - Brief in Support of Motion for Summary Judgment.
16.