20130108Petition for Reconsideration.pdf

Benjamin J. Otto (ISB No. 8292)
710 N 6th Street
Boise, ID 83701
Ph: [phone] x 12
Fax: [phone]
[e-mail]
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Attorney for Idaho Conservation League
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE
COMMISSION'S REVIEW OF PURPA QF
CONTRACT PROVISIONS INCLUDING
THE SURROGATE AVOIDED
RESOURCE (SAR) AND INTEGRATED
RESOURCE PLANNING (IRP)
METHODOLOGIES FOR CALULATING
PUBLISHED AVOIDED COST RATES.
CASE NO. GNR-E-11-03
PETITION FOR
RECONSIDERATION
The Idaho Conservation League (ICL) requests the Commission reconsider the portion of
Order No. 32697 resolving the ownership and allocation of Renewable Energy Credits (REC)
pursuant to I.C. § 61-626 and IDAPA 31.01.01.331 - 333. As explained below, this portion of the
Order lacks legal and factual justification and is an abuse of discretion. ICL requests the
Commission grant this petition and establish a briefing schedule to resolve this issue.
The Commission overstepped its authority by exerting jurisdiction over RECs that
Qualifying Facilities (QFs) have not voluntarily dedicated to public use. While ICL agrees the
Commission has broad authority to deal with existing and future rates, this is "a limited
jurisdiction and nothing is presumed in favor of its jurisdiction." McGuire Estates Water Co., V.
Idaho Pub. Utils. Comm'n, 111 Idaho 341 (1986). Order No. 32697 oversteps the Commission's
jurisdiction by presuming, without any analysis or authority, that all RECs are dedicated to
public use. ICL urges the Commission to reconsider this overstep of authority.
The Commission has repeatedly affirmed that RECs are a creation of state property law.
Order No. 32697 at 45, (citing Order No. 32580). Despite this recognition, Order No. 32697 fails
ICL PETITION FOR RECONSIDERATION January 8, 2013
GNR-E-ll-03 1
to grabble with Idaho's laws governing private property rights. This case requires analyzing two
specific legal questions before the Commission has the authority to allocate REC ownership.
First, since RECs are a property interest arising spontaneously, the Commission must determine,
pursuant to the fundamental concepts of private property, who owns the REC in the first
instance. As ICL cited in its legal brief, the Idaho Supreme Court in King v. Chamberlin ruled
that a person who, through their own efforts, collects rain and snow melt on their property holds
such water as private property and is not subject to the dedication to public use of water
prescribed in Article 15 of the Idaho Constitution. 118 P. 1099 (Idaho 1911). This case remains
good law. Likewise, RECs are an asset created through the efforts of QF developers and the
Commission may not presume they are dedicated to public use. Order No. 32697 does not
grapple with this fundamental aspect of private property rights, and instead presumes both the
utility and QF have an equal claim to the REC. The record or the Commission's analysis does not
support this presumption.
Second, the Commission's jurisdiction only extends over assets where the owner makes
an unequivocal dedication to public use. Idaho Public Utils. Comm'n v. Natatorium, 211 P. 533,
533 - 534, (Idaho 1922). All of the case law cited in the Order addressed situations where the
owner dedicated the asset to public use. But the facts of this case are different. A critical
foundation of the Commission's logic in Order No. 32697 is that "the disposition of RECs in now
a term that is found in most, if not all, PURPA contracts." Order No. 32967 at 44. But the
Commission fails to acknowledge that the QFs who do include RECs in these contracts are
making an unequivocal dedication of this property to public use. Of course, once this dedication
is made, the Commission is free to exercise jurisdiction over these terms in PURPA contracts.
This voluntary dedication confers jurisdiction—not solely the existence of the REC. By not
respecting this legal distinction, the Commission exceeded its authority in exerting subject matter
jurisdiction.
ICL PETITION FOR RECONSIDERATION January 8, 2013
GNR-E-1 1-03 2
Regarding the merits of the Commission's allocation of REC ownership, Order No. 32697
lacks legal justification and is not supported by substantial, competent evidence. The Order
attempts to explain that "but for the must purchase provision of PURPA, RECs would not exist
or be created for a PURPA project." Order No. 32697 at 45-46. But this assertion contradicts
the Commission's other legal conclusions. For instance the Commission recognizes that "RECs
did not exist and were not contemplated when PURPA was enacted in 1978." Id at 37.
Moreover, the Commission concludes, "indeed PURPA and REC programs were created for
different reasons." Id. The Commission also admits that RECs do exist in non-PURPA
renewable projects. Id at 46 n. 9. But despite explaining the applicable law, the Commission fails
to justify why, in the context of Order No. 32697, RECs exist only because of PURPA. By
inconsistently applying the legal standards and arbitrarily applying the facts, the Commission
abused its discretion. Bingham v. Montane Resource Associates, 133 Idaho 420 (1999).
The Commission also fails to explain why conceptualizing a REC as an intangible asset
has any legal significance for allocating ownership. Order No. 32697 at 45-46. Although
intangible assets may exist in relation to physical assets, it does not necessarily follow that each
asset cannot be separately traded. In fact, this notion of separately trading physical and
intangible property rights underlies the entire field of intellectual property law. An author is free
to sell a physical book to one buyer and sell the story, the intangible asset, to a movie producer.
Whether a REC is an intangible characteristic of the QF facility or the energy it produces, the
mere fact of its intangibility does not decide the proper allocation of ownership. Instead, like
intellectual property, allocating ownership of RECs requires grappling with fundamental
principles of property law. By not undertaking this effort, Order No. 32697 lacks legal
justification for the allocation of REC ownership and thus the Commission acted outside its legal
authority.
ICL PETITION FOR RECONSIDERATION January 8, 2013
GNR-E-11-03 3
The disparate allocation of RECs under the SAR and IRP methodology is also
fundamentally flawed. ICL agrees with the premise that because the SAR methodology
contemplates avoiding a gas-fired resource, then SAR based contracts do not transfer RECs.
Order No. 32697 at 46. This same reasoning should apply to the IRP methodology. However, the
Commission here reaches an unsupported conclusion. While the IRP methodology may consider
that utilities have renewable resources in their current generation stack, this consideration only
extends to the operational characteristics of the system as a whole. These operational
considerations inform the load and resource balance and identify future needs that QF purchases
could avoid. And, for Idaho Power, the 2011 IRP preferred portfolio over the next ten years
consist primarily of a gas plant and a transmission line, neither of which produce RECs. Idaho
Power 2011 IRP at 7, table 11.1 Further, while the IRP rates may reflect the generation
characteristics of the resources—the energy and capacity they may deliver—RECs capture
something completely different, the environmental attributes of the resource. And at least in
Idaho and for Idaho ratepayers, utilities are not required to acquire RECs, rather utilities choose
to do so. There simply is no logical basis to conclude that pricing the energy and capacity of a QF
somehow causes utilities to avoid procuring REC generating resources.
For all the reasons stated above, allocating half of the RECs produced by a QF to a utility
lacks substantial, compete evidence and is an abuse of discretion. ICL urges the Commission to
grant this petition and establish a briefing schedule to reconsider this aspect of Order No. 32697.
Respectfully submitted this 8 ' day of January 2013,
Benjamin J. Otto
Idaho Conservation League
'ICL hereby requests the Commission take official notice of Idaho Power's 2011 IRP pursuant
to IDAPA 31.01.01.263.
ICL PETITION FOR RECONSIDERATION January 8, 2013
GNR-E-1 1-03 4
CERTIFICATE OF SERVICE
I hereby certify that on this 8th day of January 2013 I delivered true and correct copies of
the foregoing PETITION FOR RECONSIDERATION to the following persons via the method of
service noted:
Hand delivery:
Jean Jewell
Commission Secretary (Original and seven copies provided)
Idaho Public Utilities Commission
427 W. Washington St.
Boise, ID 83702-59
Electronic Mail only:
PUC
Donald L. Howell, II
Kristine Sasser
Deputy Attorneys General
Idaho Public Utilities Commission
472 W. Washington
Boise ID 83702
[e-mail]
[e-mail]
Idaho Power
Donovan E. Walker
Jason B. Williams
Idaho Power Company
1221 West Idaho Street
Boise, Idaho 83707-0070
[e-mail]
[e-mail]
A vista
Michael G. Andrea
Avista Corporation
1411 E. Mission Ave.
Spokane, WA 99202
[e-mail]
Rocky Mountain Power
Daniel Solander
PacifiCorp/dba Rocky Mountain Power
201 S. Main St., Suite 2300
Salt Lake City, UT 84111
[e-mail]
ICL PETITION FOR RECONSIDERATION
CERTIFICATE OF SERVICE
GNR-E-11-03
NIPPC
Peter J. Richardson
Gregory M. Adams
Richardson & O'Leary, PLLC
515 N. 27th Street
Boise, ID 83702
[e-mail]
[e-mail]
Robert D. Kahn, Executive Director
Northwest and Intermountain Power
Producers Coalition
117 Minor Ave., Suite 300
Seattle, WA 98101
[e-mail]
Simplot
Peter J. Richardson
Gregory M. Adams
Richardson & O'Leary, PLLC
515 N. 27th Street
Boise, ID 83702
[e-mail]
[e-mail]
Don Sturtevant, Energy Director
J.R. Simplot Company
P.O. Box 27
Boise, ID 83707
[e-mail]
Grandview Solar II
January 8, 2013
Peter J. Richardson
Gregory M. Adams
Richardson & O'Leary, PLLC
515 N. 27th Street
Boise) ID 83702
[e-mail]
[e-mail]
Robert A. Paul
Grandview Solar II
1590 Vista Circle
Desert Hot Springs, CA
[e-mail]
Exergy Development
Peter J. Richardson
Gregory M. Adams
Richardson & O'Leary, PLLC
515 N. 27th Street
Boise, ID 83702
[e-mail]
[e-mail]
James Carkulis
Managing Member
Exergy Development Group of Idaho
802 W. Bannock St., Suite 1200
Boise, ID 83702
[e-mail]
Dr. Don Reading
2070 Hill Road
Boise, ID 83702
[e-mail]
Adams County Board of Commissioners
Peter J. Richardson
Gregory M. Adams
Richardson & O'Leary, PLLC
515 N. 27th Street
Boise, ID 83702
[e-mail]
[e-mail]
Bill Brown, Chair
Board of Commissioners of Adams County
P.O. Box 48
Council, ID 83612
[e-mail]
Clearwater Paper Corp
Peter J. Richardson
Gregory M. Adams
Richardson & O'Leary, PLLC
515 N. 27th Street
Boise, ID 83702
[e-mail]
[e-mail]
Mary Lewallen
Clearwater Paper Corporation
601 W. Riverside Ave., Suite 1100
Spokane, WA 99201
[e-mail]
Dynamis Energy
Ronald Williams
Williams and Bradbury, P.C.
1015 W, Hays St.
Boise, ID 83702
[e-mail]
Wade Thomas, General Counsel
Dynamis Energy, LLC
776 W. Riverside Dr., Suite 15
Eagle, ID 83616
[e-mail]
Renewable Energy Coalition
Ronald Williams
Williams and Bradbury, P.C.
1015 W, Hays St.
Boise, ID 83702
[e-mail]
John R. Lowe, Consultant
Renewable Energy Coalition
12050 SW Tremont St.
Portland, OR 97225
[e-mail]
Interconnect Solar Development, LLC
R. Greg Ferney
Mimura Law Office, PLLC
2176 E. Franklin Rd., Suite 120
Meridian, ID 83642
ICL PETITION FOR RECONSIDERATION January 8, 2013
CERTIFICATE OF SERVICE
GNR-E-1 1-03
[e-mail]
Bill Piske, Manager
Interconnect Solar Development, LLC
1303 E. Carter
Boise, ID 83706
[e-mail]
Intermountain Wind, LLC
Dean J. Miller
McDevitt & Miller, LLP
P.O. Box 2564
Boise, ID 83701
[e-mail]
Paul Martin
Intermountain Wind, LLC
P.O. Box 353
Boulder, CO 80306
[e-mail]
Twin Falls and North Side Canal Companies
C. Thomas Arkoosh
Capitol Law Group, PLLC
205 N. 10th St., 4th Floor
P0 Box 2598
Boise, ID 83701
[e-mail]
Brian Olmstead, General Manager
Twin Falls Canal Company
P.O. Box 326
Twin Falls, ID 83303
[e-mail]
Ted Diehl, General Manager
North Side Canal Company
921 N. Lincoln St.
Jerome, ID 83338
[e-mail]
Birch Power Company
Ted Sorenson, P.E.
Birch Power Company
5203 South 1 1th East
Idaho Falls, ID 83404
[e-mail]
Idaho Windfarms, LLC
Dean J. Miller
McDevitt & Miller, LLP
P.O. Box 2564
Boise, ID 83701
[e-mail]
Glenn Ikemoto
Margaret Rueger
Idaho Windfarms, LLC
672 Blair Avenue
Piedmont, CA 94611
[e-mail]
[e-mail]
Blue Ribbon Energy
M.J. Humphries
Blue Ribbon Energy, LLC
4515 S. Ammon Road
Ammon, Id 83406
[e-mail]
Arron F. Jepson
Blue Ribbon Energy LLC
10660 South 540 East
Sandy UT 84070
[e-mail]
Renewable Northwest Project
Dean J. Miller
McDevitt & Miller, LLP
P.O. Box 2564
Boise, ID 83701
[e-mail]
Megan Walseth Decker
Senior Staff Council
Rnewable Northwest project
421 SW 6th St, Suite 1125
Portland, OR 97204
[e-mail]
Snake River Alliance
Liz Woodruff
Ken Miller
Snake River Alliance
P0 Box 1731
Boise, ID 83701
ICL PETITION FOR RECONSIDERATION January 8, 2013
CERTIFICATE OF SERVICE
GNR-E-l1-03 3
[e-mail]
[e-mail]
Energy Integrity Project
Tuana Christensen
Energy Integrity Project
769N 1100E
Shelly, ID 83274
[e-mail]
Idaho Wind Partners I, LLC
Deborah E. Nelson
GIVENS PURSLEY LLP
601 Bannock St
P0 Box 2720
Boise, ID 83701
[e-mail]
Ridgeline Energy LLC
Dean J. Miller
Chas F. McDevitt
MecDevitt & Miller, LLP
420 W. Bannock St.
Boise, ID 83702
Mountain Air Projects, LLC
J. Kahle Becker
The Alaska Center
1020 W. Main St. Suite 400
Boise, ID 83702
Telephone: [phone]
Facsimile: [phone]
[e-mail]
Michael J. Uda
Uda Law Firm, P.C.
7 W. 6th Avenue, Suite 4E
Helena, MT 59601
Telephone [phone]
Facsimile: [phone]
[e-mail]
Benjamin J. Otto
Idaho Conservation League
ICL PETITION FOR RECONSIDERATION January 8, 2013
CERTIFICATE OF SERVICE
GNR-E-1 1-03 4