20130108Petition for Reconsideration.pdf

McDevitt & Miller LLP
Lawyers
RE'E
420 W. Bannock Street
[phone] P.O. Box 2564-83701 911 1 1 JAN 8 PM 2 50 Chas. F. McDevitt
[phone] (Fax) Boise, Idaho 83702 Dean J. (Joe) Miller
-
'i1L C)MSt.
January 8, 2013
Via Hand Delivery
Jean Jewell, Secretary
Idaho Public Utilities Commission
472 W. Washington St.
Boise, Idaho 83720
Re: Renewable Northwest Project—GNR-E-11-03
Dear Ms. Jewell:
Enclosed for filing in the above matter, please find an original and seven (7) copies of a Petition for
Reconsideration from Order No. 32697 of Renewable Northwest Project.
Kindly return a file stamped copy to me.
Very Truly Yours,
McDevitt & Miller LLP
DeanJ. er
DJM/hh
Enclosures
ORIGINAL
Dean J. Miller (ISB No. 1968)
Chas. F. McDevitt (ISB No. 835)
McDEVITT & MILLER LLP
420 West Bannock Street
P.O. Box 2564-83701
Boise, ID 83702
Tel: [phone]
Fax: [phone]
ioe@mcdevitt-miller. corn
[e-mail]
Attorneys for Renewable Northwest Project
IMJ .Q ) c LU. )i4 LI I L. J
UTUJT; S GOMIMS.S.
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 CALCULATING PUBLISHED
AVOIDED COST RATES
Case No. GNR-E-11-03
PETITION FOR
RECONSIDERATION FROM ORDER
NO. 32697 OF RENEWABLE
NORTHWEST PROJECT
Pursuant to Rule 331 of the Idaho Public Utilities Commission Rules of Procedure,
Renewable Northwest Project ("RNP") respectfully petitions the Idaho Public Utilities
Commission ("Commission") for reconsideration on one issue—renewable energy certificate
("REC") ownership—decided in the Commission's December 18, 2012, Order No. 32697, in the
above-referenced case ("the Order"). RNP does not request a hearing, but rather requests that the
Commission reconsider its determination on REC ownership under the integrated resource
planning methodology ("IRP methodology") by means of additional legal briefing. This issue
merits reconsideration under Rule 331(01) because the Order lacks an adequate legal foundation
for awarding qualifying facility ("QF") RECs to the utility. Even if the Order's legal foundation
PETITION FOR RECONSIDERATION FROM ORDER NO. 32697 OF RENEWABLE NORTHWEST
PROJECT-1
were secure, its logic in relation to the IRP methodology is erroneous and unreasonable. RNP
acknowledges the Commission's effort to achieve a reasonable compromise, but respectfully
submits that the Order's conclusions with respect to REC ownership lack adequate legal and
factual foundation.
A. The Order identifies no state law basis, whether in common law of property
or in legislative enactment, for awarding QF RECs to utilities.
The Order concludes that a REC is an intangible asset whose existence arises only as a
result of the Public Utility Regulatory Policy Act of 1978's ("PURPA's") "must purchase"
provision. (See Order, pages 45-46.) While the Order's statement that "[t]here is no REC without
the QF generating power" (page 46) is accurate, it does not follow that ownership of the REC
necessarily follows the power, nor that selling power pursuant to PJJRPA vests the utility with an
interest in the REC.
Indeed, decisions of the Federal Energy Regulatory Commission ("FERC") have led to
broad agreement that PURPA does not control REC ownership. (See Order, page 45.) With
PURPA providing no basis for awarding RECs to the purchasing utility, the Order must find a
foundation for assigning ownership in Idaho law. Yet, beyond acknowledging that no Idaho
legislative enactment specifically addresses REC ownership (See Order, page 45), the Order does
not examine Idaho property law. The Order is unlawful because it awards RECs to purchasing
utilities in contravention of the basic principle of Idaho common law that vests property rights in
the owner who expends the time and effort to create the property. (See Legal Brief of the Idaho
Conservation League (July 20, 2012), and Legal Brief of RNP (July 20, 2012)).
PETITION FOR RECONSIDERATION FROM ORDER NO. 32697 OF RENEWABLE NORTHWEST
PROJECT-2
The Commission should grant reconsideration on the grounds that the Order identifies no
state law basis for awarding QF-generated RECs to utilities, and seek briefing on how basic
principles of Idaho's common law of property would apply to the question of REC ownership.
B. The Order's 50-50 split is not logically related to the IRP methodology and
unreasonably discriminates against technologies that are forced to use the
IRP methodology.
Even assuming a state law foundation for vesting ownership of QF-generated RECs in
utilities, the Order's 50-50 split lacks a logical relationship to the IRP methodology and
unreasonably penalizes wind and solar resources as compared with other technologies.
The Order's intended logic is apparently that QF-generated RECs should be awarded to
the utility if the utility would have acquired RECs in connection with generating the same
quantity of electricity itself. The Order reasons that the surrogate avoided resource ("SAW')
methodology sets avoided cost rates based on a combined cycle generator ("CCCT") that would
not produce RECs, whereas the IRP methodology sets rates based on a portfolio that includes
some renewable resources. (See Order, page 46.) Thus, the Order concludes, QFs whose avoided
costs are set using the SAR methodology will retain all their RECs, while QFs whose avoided
costs are set using the IRP methodology will relinquish half of their RECs. (See Order, page 46-
47.) This reasoning is flawed.
An avoided cost rate should be an estimate of the cost of the incremental utility
generation that the QF allows the utility to avoid. The SAR methodology estimates this cost by
assuming that the source of incremental generation is a new CCCT. The IRP methodology does
so by evaluating the specific cost of the likely sources of incremental generation at the times that
the QF is expected to deliver energy. There is no evidence in the current record that the sources
of incremental generation identified by the IRP methodology are likely to be renewable
PETITION FOR RECONSIDERATION FROM ORDER NO. 32697 OF RENEWABLE NORTHWEST
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resources whose RECs would be owned by the utility. If the utility's incremental resource is not
a renewable resource, it is not logical to assume that the utility would acquire RECs by
generating the electricity itself. None of the relevant utilities' IRPs suggest that 50 percent of
incremental utility generation is expected to come from renewable resources.
Furthermore, in this case, basing REC ownership on use of the SAR methodology versus
the IRP methodology results in baseless discrimination against wind and solar QFs. The Order
requires wind and solar QFs larger than 100 kW to use the IRP methodology, while retaining the
SAR methodology for other resource technologies up to 10 average megawatts. Preventing
"disaggregation" of large projects into PURPA-sized chunks is the only rationale for this
differential treatment. (See Order, pages 13-14.) As our position in GNR-E- 11-01 made clear,
RNP strongly disagrees with using the blunt instrument of a 100 kW published rate threshold to
address the problem of disaggregation. But the utility's incremental generating resource—the
resource on which the avoided cost must be based—does not change based on one's view of the
assertedly "unique characteristics of wind and solar resources to disaggregate" (See Order, page
13) or the best policy for addressing that problem. In other words, the rationale for using the IRP
methodology (preventing disaggregation) does not relate to or support differential treatment for
equivalent RECs. The Order unreasonably discriminates among generating technologies, with no
discernible rationale, when it assigns RECs from QFs sized 100 kW to 10 aMW to utilities only
for wind and solar technologies.
In short, the logical foundation of the Order's approach to REC ownership—that the
utility's incremental generating resource might be a renewable resource from which it would
earn RECs, such that the avoided cost includes some utility ownership of RECs—does not
support the Order's conclusion that the incremental generation under the IRP methodology
PETITION FOR RECONSIDERATION FROM ORDER NO. 32697 OF RENEWABLE NORTHWEST
PROJECT-4
would come from renewable resources in any quantity, let alone 50 percent. The effect of this
determination is to treat RECs from wind and solar QFs differently from RECs from other,
similarly-sized QFs with no logical foundation.
C. Conclusion
As argued in GNR E-11-01, RNP believes that the pricing and supply problems presented
by disaggregation can and should be addressed by a policy instrument sharper than limiting wind
and solar QFs to a 100 kW published rate threshold. This result is particularly inequitable for
solar projects, for which no evidence of issues with disaggregation was presented. Should the
Commission wish to revisit this differential treatment of generating technologies in the future,
RNP remains interested in offering constructive suggestions.
For the present, RNP simply requests that the Commission reconsider its approach to
REC ownership. The issue deserves a careful examination of the underlying principles of state
property law, as well as the logic and fairness of assigning to utilities an asset that they would
not generate themselves, and for which avoided cost rates do not compensate QFs.
In this regard, RNP notes that the Order's 50-50 split depending on rate methodology
appears to be a solution of the Commission's own invention. To RNP's knowledge, no party
presented a similar concept on the record and parties did not have the opportunity to comment
upon such a proposal. Granting Reconsideration would give the Commission the opportunity to
consider opinions of the parties regarding the chosen methodology.
WHEREFORE, RNP respectfully requests:
1.That this Petition be granted;
2.That the Commission establish a schedule for the filing of additional legal briefs.
PETITION FOR RECONSIDERATION FROM ORDER NO. 32697 OF RENEWABLE NORTHWEST
PROJECT-5
DATED this day of January, 2013.
McDevitt & Miller, LLP
V
~ean J. i1le
Attorney for Renewable Northwest Project
PETITION FOR RECONSIDERATION FROM ORDER NO. 32697 OF RENEWABLE NORTHWEST
PROJECT-6
CERTIFICATE OF SERVICE
I hereby certify that on the .!ay of January, 2013, I caused to be served, via the method(s)
indicated below, true and correct copies of the foregoing document, upon:
Hand Delivered
U.S. Mail J
Fax
Fed. Express J
Email
Hand Delivered
U.S. Mail
Fax
Fed. Express
Email
Hand Delivered
U.S. Mail
Fax
Fed. Express
Email
Hand Delivered J
U.S. Mail
Fax
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Hand Delivered
U.S. Mail
Fax
Fed. Express
Email
Jean Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
P.O. Box 83720
Boise, ID 83720-0074
[e-mail]
Donovan E. Walker
Idaho Power Company
1221 W. Idaho Street
P.O. Box 70
Boise, ID 83707
[e-mail]
Donald L. Howell, II
Kristine A. Sasser
Deputy Attorneys General
Idaho Public Utilities Commission
472 W. Washington (83702)
P0 Box 83720
Boise, ID 83720-0074
[e-mail]
[e-mail]
Michael C. Andrea
Avisita Utilities
P.O. Box 3727
1411 E. Mission Ave
Spokane, WA 99220-3727
[e-mail]
Daniel Solander
Rocky Mountain Power
One Utah Center
201 S. Main Street, Suite 2300
Salt Lake City, UT 84111
[e-mail]
PETITION FOR RECONSIDERATION FROM ORDER NO. 32697 OF RENEWABLE NORTHWEST
PROJECT-7
Dr. Don Reading Hand Delivered
6070 Hill Road U.S. Mail
Boise, Idaho 83703 Fax
[e-mail] Fed. Express J
Email
Ronald L. Williams Hand Delivered
Williams Bradbury U.S. Mail
1015 W. Hays Street Fax
Boise, ID 83702 Fed. Express
[e-mail] Email
Glenn Ikemoto Hand Delivered
Margaret Rueger U.S. Mail
Idaho Wind Farms, LLC Fax
672 Blair Avenue Fed. Express
Piedmont, California 94611 Email '4L
[e-mail]
[e-mail]
Greg Ferney Hand Delivered
Mimura Law Office U.S. Mail
2176 E. Franklin Road Fax
Meridian, ID 83642 Fed. Express
[e-mail] Email
C. Thomas Arkoosh Hand Delivered
Lori Thomas U.S. Mail
Capital Law Group, PLLC Fax
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Boise, Idaho 83701
[e-mail]
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Don Schoenbeck Hand Delivered
RCS U.S. Mail
900 Washington Street, Suite 780 Fax
Vancouver, WA 98660 Fed. Express
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Robert D. Kahn Hand Delivered
Executive Director U.S. Mail
Northwest and Intermountain Power Fax
Producers Coalition Fed. Express
117 Minor Ave., Suite 300 Email
Seattle, WA 98101
[e-mail]
PETITION FOR RECONSIDERATION FROM ORDER NO. 32697 OF RENEWABLE NORTHWEST
PROJECT-8
Don Sturtevant Hand Delivered
Energy Director U.S. Mail
J.R. Simplot Company Fax
P0 Box 27 Fed. Express
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[e-mail]
James Carkulis Hand Delivered
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Exergy Development Group of Idaho, LLC Fax
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John R. Lowe Hand Delivered
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Bill Piske, Manager Hand Delivered
Interconnect Solar Development, LLC U.S. Mail
1303 E. Carter Fax
Boise, ID 83706 Fed. Express
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Wade Thomas Hand Delivered
General Counsel U.S. Mail
Dynamis Energy, LLC Fax
776 W. Riverside Dr., Suite 15 Fed. Express
Eagle, ID 836 16 Email
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Brian Olmstead Hand Delivered
General Manager U.S. Mail
Twin Falls Canal Company Fax
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[e-mail]
Ted Diehl Hand Delivered
General Manager U.S. Mail
North Side Canal Company Fax
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Jerome, ID 83338 Email
[e-mail]
PETITION FOR RECONSIDERATION FROM ORDER NO. 32697 OF RENEWABLE NORTHWEST
PROJECT-9
Peter J. Richardson
Gregory M. Adams
Richardson & O'Leary, PLLC
P0 Box 7218
Boise, ID 83702
[e-mail]
[e-mail]
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Bill Brown, Chair Hand Delivered
Board of Commissioners of Adams County U.S. Mail
PO Box 48 Fax
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Benjamin J. Otto Hand Delivered
Idaho Conservation League U.S. Mail
710 N. Sixth Street (83 702) Fax
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Ken Miller Hand Delivered
Liz Woodruff U.S. Mail
Snake River Alliance Fax
P0 Box 1731 Email
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kmillersnakeriveralliance.org
lwoodruff@snakeriveralliance.o
Mary Lewallen Hand Delivered S.

Clearwater Paper Corporation U.S. Mail
601 W. Riverside Ave., Suite 1100 Fax J
Spokane, WA 99201 Email
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Birch Power Company U.S. Mail
5203S.11thE. Fax
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Michael J. Uda
J. Kahle Becker
Uda Law Firm, P.C.
7 West 6th Ave., Ste 4E
Helena, MT 59601
[e-mail] ;
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Fax
Email
PETITION FOR RECONSIDERATION FROM ORDER NO. 32697 OF RENEWABLE NORTHWEST
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Deborah E. Nelson
Kelsey J. Nunez
Givens Pursley LLP
601 W. Bannock St.
Boise, Idaho 83702
[e-mail]
[e-mail]
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1 -2 w6r.
PETITION FOR RECONSIDERATION FROM ORDER NO. 32697 OF RENEWABLE NORTHWEST
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