20181206Plaintiff Response 48.pdf

Peter J. Richardson, ISB# 3195
515 N. 27th Street
Boise, Idaho 83702
Telephone [phone] I
Facsimile : (208) 938 -7 90 4
Attorney for Plaintiffs
Robert C. Huntley, ISB# 2188
R. HUNTLEY LAV/, PLLC
815 V/est Washington Street
Boise, ID 8701
Telephone [phone]
Facsimile: [phone]
Attorney for Plaintiffs
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
FRANKLIN ENERGY STORAGE ONE, LLC,
FRANKLIN ENERGY STORAGE TWO, LLC
FRANKLIN ENERGY STORAGE THREE,
LLC, FRANKLIN ENERGY STORAGE
FOUR, LLC
Case No.: I : I 8-cv-00236-REB
PLAINTIFFS' RESPONSE BRIEF TO
IDAHO POWER'S MOTTON TO DTSMISS
VS
and,
Plaintiffs,
PAUL KJELLANDER, KRISTINE RAPER
ERIC ANDERSON, in their off,rcial capacity as
Commissioners of the IDAHO PUBLIC
UTILITIES COMMISSION,
Defendants,
IDAHO POWER COMPANY,
Defendant-Intervenor
TABLE OF CONTENTS
I. Introduction
Franklins' Response Brief to Idaho Power's Motion to Dismrss
Case 1:18-cv-00236-REB Document 48 Filed 11/30/18 Page 1 of 9
II. The Idaho Commission Implements PURPA by Order and not by Promulgating
Regulations....
"Vy'ind or Solar" vs. "All Other QFs".A. The Original Implementation Plan....
B. The New Implementation Plan.
Conclusion
I
III.
ry.
.2
IJ
4
.6
TABLE OF AUTHORITIES
CASES
FERC v. Mississippi,456U.5.742,751,102 S. Ct. 2126,72L.F,d2d532 (1982). ......2
Indep. Energy Producers Assn'nv. Cal. P.U.C.,36 F.3d 848,856 (9th Cir. 1994).........6
Power Res. Group, Inc, v. Pub. Util. Comm'n of Tex.,422F.2d231,235 (5th Cir
2005).6
Franklins' Response Brief to Idaho Power's Motion to Dismiss
ll.
Case 1:18-cv-00236-REB Document 48 Filed 11/30/18 Page 2 of 9
I.
INTRODUCTION
Franklin Energy Storage Plaintiffs respectfully lodge this Response Brief to ldaho Power's
Motion to Dismiss for lack of subject matter jurisdiction. Idaho Power argues only two issues in
support of its Motion to Dismiss. It first argues that the Plaintiffs' Complaint should be dismissed
because it is an "as-applied" challenge beginning on page 10. It also argues that Plaintiffs' have
failed to exhaust their administrative remedies (based on their statute of limitations argument).
Plaintifß have addressed the second argument fully in their Response Brief to ldaho Power's
Motion for Summary Judgment and in their Reply Brief to Idaho Power's Response to Plaintiff s
Motion for Summary Judgment. Because those arguments are squarely before the court, they will
not be repeated here. The only argument yet to be fully addressed then, is the "as-applied"
argument, which like Idaho Power's statute of limitations argument is fatally flawed.
II.
THE IDAHO COMMISSION IMPLEMENTS PURPA BY ORDER AND NOT BY
PROMULGATING REGULATIONS
Idaho Power appears to place great legal significance in the fact that the Plaintiffs are
challenging implementation orders (as opposed to implementation rules) issued by the Idaho
Commission. It suggests that, because Plaintiffs are not challenging an implementation plan
adopted by a promulgated rule, that Plaintiffs' claims are therefore as-applied claims. For instance,
at p. I I Idaho Power asserts: "As-applied claims include questions on whether a specific state
agency's order, as opposed to a particular state rule, propedy implemented FERC's regulations
and whether a state agency properly interpreted its own rules.l" Also on page 12,ldaho Power
I Idaho Power Memorandum in Support of Motion to Dismiss at p. I l. Emphasis in original
Herein "Memorandum."
Franklins' Response Brief to Idaho Power's Motion to Dismiss. --l
Case 1:18-cv-00236-REB Document 48 Filed 11/30/18 Page 3 of 9
concludes, based on its 'rule vs. order' understanding, that, "it is beyond reproach that Plaintifß'
challenge is not an implementation challenge because they are not arguing that the IPUC
'promulgated regulations which are inconsistent with or contrary to [FERC's] regulations.2"'
Idaho Power neglects to inform the Court that the IPUC has never promulgated any rules or
regulations implementing PURPA. There are simply NO Idaho rules implementing PURPA.
Rather than implementing PURPA via rules, as it is allowed to do under PURPA, the Idaho
Commission implements PURPA on an ad hoc order-by-order and case-by-case basis. It is well
settled that a state commission can comply with PURPA "by resolving disputes on a case-by-case
basis, or taking any other action reasonably designed to give effect to FERC's rules." FERC v.
Mississippi,456U.5.742,751,102 S. Ct. 2126,72L.F,d2d532 (1982). Thus, it is of no moment
that Plaintiffs are alleging the IPUC's failure to implement PURPA is the result of its extra-
jurisdictional orders rather than its non-existent rules. A state commission can therefore fail to
implement PURPA by issuing flawed orders just as easily as it can fail to implement PURPA by
promulgating flawed regulations.
ilI.
"WIND OR SOLAR'VS. *ALL OTHER QFs"
The foundation of the Power Company's argument is that Franklin is asserting an "as-
applied" claim (that would not be jurisdictional to this Court) as opposed to an implementation
claim (that is jurisdictional to this Court). Idaho Power sums up this argument thusly:
Plaintiffs do not claim that the IPUC's two methods for calculating avoided costs are
unlawful, or that the IPUC's eligibility caps for solar and wind QFs, on the one hand, and
all "other" QFs, on the other hand, are unlawful. Instead, Plaintiffs claim that the IPUC,
in ruling upon Idaho Power's Petition, failed to adhere to its own implementation plan in
2 Id. atp. 12. Citing Policy Statement Regarding the Commission's Enforcement Role (Jnder
Section 210 of the Public Utilities Regulatory Policies Act of 1978,23 FERC T 61,304, 61,644
( r e83)
Franklins'Response Brief to Idaho Power's Motion to Dismiss. --2
Case 1:18-cv-00236-REB Document 48 Filed 11/30/18 Page 4 of 9
its dealings with Plaintifß by refusing to grant them the contract rate and terms applicable
to'oother" QFs.'
Idaho Power either fails to understand, or simply ignores, the essence of the Commission's
decision at issue in this proceeding. There are two distinct implementation plans in play - the
original plan and the new implementation plan. To clear up Idaho Power's misunderstanding each
is explained below.
A. The Orieinal Implementation Plan
As relevant here, the Idaho Commission originally implemented PURPA (via several
orders - not rules) by dividing all QFs into two categories. The first category the Idaho
Commission devised is applicable to all wind and solar QFs larger than 100 kW.4 This category
of QFs is limited to two-year contracts and negotiated ("IRP"-calculated) avoided cost rates.s The
other (second) category is a catch-all category that requires utilities to offer twenty-year contracts
at published rates for "all other" (other than wind or solar) QFs smaller than 10,000 kw.6
This is the extent of the Idaho Commission's original implementation plan (as relevant
here): wind and solar QFs are entitled to two-year contracts and negotiated rates while all other
QFs are entitled to twenty-year contracts at published rates. There are no embellishments or
subtle nuances to this plan. It is complete, and it is understandable. Plaintiffs do not, and have
not, challenged this original implementation plan. As Idaho Power notes, Plaintiffs do not assert
that this original implementation plan suffers from any legal flaws. Indeed, the Plaintiffs would
have been satisfied had the Idaho Commission merely applied this implementation plan in response
3 Id. ap. 13.
4 Plaintiffs' projects are all larger than this 100 kw threshold.
5 IPUC Order No. 32697. Dkt. no. 4-14.
6 Plaintiffls projects are all smaller than 10,000 kw - which is measured on a 10,000 average
monthly basis, the details of which are not relevant to this analysis.
Franklins' Response Brief to ldaho Power's Motion to Dismiss. --3
Case 1:18-cv-00236-REB Document 48 Filed 11/30/18 Page 5 of 9
to Idaho Power's Petition for Declaratory Order. However, the Idaho Commission did NOT apply
its original implementation plan to the Franklin QFs. Rather than simply living with the natural
consequences of their original plan, the Defendants chose to adopt a new and fundamentally
different implementation plan.
B. The New Implementation Plan
Idaho Power upset the Commission's apple cart by asking it to change the original
implementation plan to address how battery storage QFs should be treated for purposes of
determining the appropriate methodology for calculating avoided cost rates, determining contract
term (length), and determining the other essential contact terms because the original plan clearly
and unequivocally provided that "all other" (that is other, than wind or solar) QFs are entitled to
twenty-year contacts at published rates.
Initially, in its Petition for Declaratory Order, Idaho Power explicitly acknowledged the
Commission's original implementation plan and summarized its operative provisions as follows:
After separate lengthy and contested proceedings, the Commission determined as part of
its implementation of PURPA for the state of Idaho: (1) the published, or standard, avoided
cost rate eligibility cap for wind and solar QFs is set at 100 kW, consistent with 18 C.F.R.
292.304(c), Order no.32262; and (2) the maximum contract term for proposed QF projects
that are larger than the published rate eligibility cap is two years. The published rate
eligibility cap for all other generation types remains at the previously established l0
average megawatts ("aMW") on a monthly basis and all proposed projects that are eligible
for published rates have the previously established maximum contract term of 20 years
available to them.7
Thus, Idaho Power conceded the fact that the Idaho Commission, as "part of its implementation of
PURPA," had created the wind/solar vs "all other" QF dichotomy. This implementation plan was
the status quo at the time Idaho Power hled its Petition for a Declaratory ruling at the IPUC.
7 Idaho Power Petition for Declaratory Order atp.2. Emphasis provided. Dkt. No. 7-5 atp. 55
Franklins' Response Brief to ldaho Power's Motion to Dismiss. --4
Case 1:18-cv-00236-REB Document 48 Filed 11/30/18 Page 6 of 9
Not satisfied with the results of Franklins' requested application of the Commission's
original implementation pløn,Idaho Power proposed an entirely new implementation plan for
energy storage QFs. According to ldaho Power's Petition for Declaratory ruling:
Idaho Power seeks a declaratory ruling from the Commission that proposed battery storage
facilities over 100 kW are eligible for negotiated avoided cost rates determined by the
incremental cost Integrated Resource Plan ("lRP") methodology and a maximum, contract
term of two years - and that battery storage facilities up to a maximum nameplate capacity
of 100 kW are entitled to published avoided cost rates and a 2}-year maximum contract
term.
This is not a request to apply the simple wind/solar vs. "all other" dichotomy which would have
been an "as-applied" activity. It is, rather, a request for the Commission to create a new plan for
implementing PURPA for a class of QFs (energy storage) that is not contemplated or even
mentioned in the original implementation plan. The determination of what avoided cost
"methodology" is applicable to an entire class of QFs and the determination of essential
contracting provisions applicable to an entire class of QFs are quintessential implementation
questions.
That is, Idaho Power sought not to apply the Idaho Commission's original implementation
plan rather but to fundamentally change that plan for the purpose of preventing Franklin from
securing twenty-year contracts at published avoided cost rates as would have occurred under the
original implementation plan. Thus, Idaho Power mistakenly asserts that Franklin complains, "the
IPUC, in ruling upon Idaho Power's Petition [for Declaratory Order quoted above] failed to adhere
to its own implementation plan.8" Franklin would have been happy had the IPUC applied its now
abandoned implementation plan. However, the IPUC abandoned that plan in favor of a new plan
that is facially unlawful in that it vests with the IPUC the alleged authority to make eligibility
8 Idaho Power Memorandum at p. 13. Emphasis in original.
Franklins' Response Brief to ldaho Power's Motion to Dismiss. --5
Case 1:18-cv-00236-REB Document 48 Filed 11/30/18 Page 7 of 9
determinations under PURPA.e Allegations that an implementation plan is unlawful (as Franklin
asserts herein) arc, by definition implementation claims and not as-applied claims. Simply put,
Implementation claims are claims alleging that a state commission has failed to implement
PURPA, either by not promulgating rules (or orders) under Section 210(Ð or by promulgating
rules (or orders) that do not comply with federal law. See, e.g., Power Res. Group, Inc. v. Pub.
Util. Comm'n of Tex., 422F.2d231,235 (5th Cir. 2005); Indep. Energlt Producers Assn'n v. Cal.
P.U.C.,36 F.3d 848, 856 (9th Cir. 1994).
IV.
CONCLUSION
Based upon the foregoing, Franklin respectfully requests that this Court deny ldaho
Power's Motion to Dismiss.
DATED this 30th day of November 2018
/s/ Robert C. Huntlq¡ Esq.
/s/ Peter.I.Esq.
Attorneys for Plaintiffs
CERTIFICATE OF SERVICE
I hereby certify that on this 30th day of November 2018, I caused a true and correct copy
of the foregoing document to be electronically filed with the Clerk of the Court using the
CM/ECF system, which sent a Notice of Electronic Filing to the following persons:
BrandonKarpenþratdqUkary_e¡(@puqUlalo..e-o_-v_
S c ott Zanzi g S.çAlt,Z4![e-mail] .. gq_v
e This point is fully briefed in Plaintiffls Reply to Idaho Power's Response to Plaintiffs' Motion
for Summary Judgment and in its Response to Idaho Power's Motion for Summary Judgment.
Franklins' Response Brief to Idaho Power's Motion to Dismiss. --6
Case 1:18-cv-00236-REB Document 48 Filed 11/30/18 Page 8 of 9
Steven B. Anderson sbalrùaswbIaw.com
Wade L. Woodard wiwf¿Daswblaw.con-t
D onov an E. W al ker çþ3 ! k e r(@ r dal,ep lty_etçg nl
Franklins' Response Brief to ldaho Power's Motion to Dismiss. --7
Case 1:18-cv-00236-REB Document 48 Filed 11/30/18 Page 9 of 9