20120731Answer to Petition for Clarification ETC.pdf

IHO
PNER® RECCi' An IDACORP Company
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JASON B WILLIAMS
Corporate Counsel U 7 iLl 'r
i P, issjoi wilIiamsidahopower.com
July 30, 2012
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83702
Re: Case No. IPC-E-11-15
Grand View PV Solar Two, LLC, vs. Idaho Power Company - Idaho Power
Company's Answer to Petition for Clarification and Cross-Petition for
Clarification
Dear Ms. Jewell:
Enclosed for filing in the above matter are an original and seven (7) copies of
Idaho Power Company's Answer to Grand View PV Solar Two, LLC's Petition for
Clarification and Cross-Petition for Clarification.
Very truly yours,
dson B. Williams
JBW:csb
Enclosures
1221 W. Idaho St. (83702)
P.O. Box 70
Boise, ID 83707
DONOVAN E. WALKER (ISB No. 5921)
JASON B. WILLIAMS (ISB No. 8718)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
dwaIkeridahopower.com
jwilIiamsidahopower.com
RECEIVED
2i JU1 30 1'
uflUiE
Attorneys for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
GRAND VIEW PV SOLAR TWO, LLC,
CASE NO. IPC-E-11-15
Complainant,
VS.
IDAHO POWER COMPANY,
Respondent.
IDAHO POWER COMPANY'S
ANSWER TO GRAND VIEW PV
SOLAR TWO, LLC'S PETITION
FOR CLARIFICATION AND
CROSS-PETITION FOR
CLARIFICATION
Pursuant to the Idaho Public Utilities Commission's ("Commission") RP 57 and
RP 325, Idaho Power Company ("Idaho Power" or "Company"), by and through its
attorneys of record, hereby submits its Answer to Grand View PV Solar Two, LLC's
("Grand View") Petition for Clarification and hereby files this Cross-Petition for
Clarification.
I. BACKGROUND
On August 2, 2011, Grand View filed a Complaint against Idaho Power
requesting that the Commission issue a declaratory judgment that it is entitled to a 20-
IDAHO POWER COMPANY'S ANSWER TO GRAND VIEW PV SOLAR TWO,
LLC'S PETITION FOR CLARIFICATION AND CROSS-PETITION FOR CLARIFICATION -1
year, long-term, fixed rate Public Utility Regulatory Policies Act of 1978 ("PURPA")
Power Purchase Agreement ("PPA") in which Idaho Power would explicitly disclaim any
ownership of the environmental attributes, or Renewable Energy Certificates ("REC"),
associated with the purchase of that energy. Complaint at 2. Grand View demanded
that the Commission require Idaho Power to insert language into its PURPA PPA "to the
effect that Idaho Power makes no claim to REC ownership." Complaint at 6. Grand
View also demanded a declaration that Idaho Power is in violation of PURPA, Federal
Energy Regulatory Commission's ("FERC") implementing regulation, and the
Commission's orders for failing to do so. Id.
On September 6, 2011, Idaho Power filed its Answer to Grand View's Complaint.
In its Answer, Idaho Power stated that neither PURPA, nor this state's implementation
thereof, requires it to disclaim any possible legal claim that it may have to the
environmental attributes associated with its purchase of power from a PURPA
Qualifying Facility ("QF") for the next 20 years. Answer at p 2. In fact, such a
disclaimer has potentially costly consequences for Idaho Power's customers should the
Idaho Legislature or other legal or regulatory body determine some time during the
proposed 20-year term of the contract that the environmental attributes from the
purchase of QF power in Idaho are in fact owned by the purchasing utility and its
customers. Id.
On November 29, 2011, Grand View filed a Motion for Summary Judgment
("Grand View SJ Motion") where it asked for a declaratory order from the Commission
requiring Idaho Power to disclaim ownership of all environmental attributes in the
PURPA PPA with Grand View. Grand View SJ Motion at 36. Additionally, Grand View
asked the Commission to declare that it is entitled to a contract with rates that were in
IDAHO POWER COMPANY'S ANSWER TO GRAND VIEW PV SOLAR TWO,
LLC'S PETITION FOR CLARIFICATION AND CROSS-PETITION FOR CLARIFICATION -2
effect on the date of the filing of the Complaint. Id. Grand View alleged that inclusion in
the PPA of a provision that, in effect, states that ownership of environmental attributes,
or RECs, will be determined in accordance with applicable law would violate Section
210(e) of PURPA, the Takings Clause of the U.S. and Idaho Constitutions, and the
Dormant Commerce Clause of the U.S. Constitution.
On December 12, 2011, Avista Corporation filed an Answer to Grand View's SJ
Motion, arguing that the ownership of RECs is currently an unsettled matter of Idaho
law, that Idaho Power's proposed language in the PPA related to RECs is not a contract
"reopener," and that neither the Takings Clause nor Dormant Commerce Clause applied
because the Commission had yet to approve a PPA between Idaho Power and Grand
View.
On December 13, 2011, Idaho Power filed an Answer to Grand View's Motion for
Summary Judgment ("Idaho Power's SJ Answer"). Idaho Power's SJ Answer argued
that the Grand View SJ Motion should be denied in its entirety as ownership of RECs is
an unsettled issue of Idaho law. In addition, Idaho Power argued that the language
proposed by Idaho Power did not violate Section 210(e) of PURPA, was not a contract
"reopener," and that the Takings Clause and Dormant Commerce Clause did not apply.
On June 21, 2012, the Commission issued Order No. 32580 denying Grand
View's SJ Motion. In reaching its decision, the Commission held "that it cannot find as a
matter of law that ownership of RECs vests solely with Grand View." Order No. 32580
at 13. Instead, the Commission found that the language related to RECs as proposed
by Idaho Power did "not definitively confer REC ownership on either Grand View or
Idaho Power. It merely states that REC ownership will be governed by applicable state
law at the time the contract is executed and approved." Order No. 32580 at 14.
IDAHO POWER COMPANY'S ANSWER TO GRAND VIEW PV SOLAR TWO,
LLC'S PETITION FOR CLARIFICATION AND CROSS-PETITION FOR CLARIFICATION -3
Accordingly, the Commission held Idaho Power's proposed language in Section 8.1 of
the PPA was "not a reopener." Id. In addition, the Commission found that the proposed
language in Section 8.1 of the PPA did "not constitute a taking under either the Idaho or
U.S. Constitutions." Order No. 32580 at 15.
On July 10, 2012, Grand View filed a Petition for Clarification on Order No. 32580
("Grand View Petition"). In its filing, Grand View asks the Commission to modify Section
8.1 of the PPA to require the additional language that the ownership of environmental
attributes would be "governed by the applicable state law at the time the contract is
executed and approved." Grand View Petition at I (emphasis in original). Further,
Grand View argues that the phrase "executed and approved' to mean when a 'legally
enforceable obligation' is incurred, as used by the Federal Energy Regulatory
Commission's ('FERC') regulations implementing the Public Utility Regulatory Policies
Act of 1978 ('PURPA')." Grand View Petition 1-2. The Grand View Petition also seeks
a Commission finding "that the avoided cost rates in Grand View's PPA will not
compensate the qualifying facility ('QF') for more than the estimated value of energy
and capacity alone, and that at this time no Idaho law conveys non-energy,
environmental attributes to a purchasing utility without payment to the QF." Grand View
Petition at 2.
Idaho Power now timely files this Answer and Cross-Petition.
II. ARGUMENT
The Commission should deny the relief requested in the Grand View Petition.
Instead, the Commission should clarify that Idaho Power's proposed language related to
the treatment of environmental attributes—i.e., the exact language contained in Section
8.1 of the PPA tendered to Grand View—is allowable under the Commission's rules
IDAHO POWER COMPANY'S ANSWER TO GRAND VIEW PV SOLAR TWO,
LLC'S PETITION FOR CLARIFICATION AND CROSS-PETITION FOR CLARIFICATION -4
implementing PURPA, does not violate Section 210(e) of PURPA, and is not a contract
"reopener." Moreover, the Commission should reject Grand View's attempt to expand
the scope of the issues raised in the Grand View Motion by denying the Grand View
Petition's request to find: (1) that the ownership of environmental attributes is somehow
determined at the time a QF has a legally enforceable obligation and (2) that the
avoided cost rates in Grand View's PPA will not compensate it for more than the
estimated value of energy and capacity alone.
A. The Commission Should Not Modify the Lanuae of Section 8.1.
Idaho Power's proposed language in Section 8.1 of Grand View's PPA is as
follows:
Under this Agreement, ownership of Green Tags and
Renewable Energy Certificate (RECs), or the equivalent
environmental attributes, directly associated with the
production of energy from the Seller's Facility sold to Idaho
Power will be governed by any and all applicable Federal or
State laws and/or regulatory body or agency deemed to
have authority to regulate these Environmental Attributes or
to implement Federal and/or State laws regarding the same.
The Commission found that this language is not a contract "reopener." Order No.
32580 at 14. In making this finding, the Commission also found that the "plain language
of § 8.1 would not subject the PPA to changing conditions. Consequently, we find that §
8.1 is not preempted by PURPA." Order No 32580 at 15. This is the crux of the
Commission's finding. It is clear and unambiguous.
Grand View, however, latches onto an additional sentence in Order No. 32580
and attempts to extrapolate its meaning into requiring the Commission to add language
to Section 8.1. Specifically, Grand View focuses on the sentence stating, "As indicated
above, § 8.1 of the March 2011 draft PPA merely reflects that REC ownership will be
IDAHO POWER COMPANY'S ANSWER TO GRAND VIEW PV SOLAR TWO,
LLC'S PETITION FOR CLARIFICATION AND CROSS-PETITION FOR CLARIFICATION -5
determined by applicable law when the PPA is executed and approved." Order No.
32580 at 14. Grand View reads this sentence to mean that the "Commission's Order
implicitly acknowledged therefore that once ownership is determined based upon
applicable law at the time the contract becomes effective, such ownership cannot
change at some future date when a new law, regulation, or order on the topic is issued."
Grand View Petition at 4. Idaho Power disagrees that this was the Commission's intent.
The plain language of Section 8.1 does not include the modifier "at the time the
contract is executed and approved" which is found in the Order. While the
Commission's Order suggests, on two different occasions, that this modifier is included
in the language proposed in Section 8.1, the Commission's Order also specifically finds
that Section 8.1, as proposed by Idaho Power, is not a contract reopener, would not
subject the PPA to changing conditions, and is not preempted by PURPA. Grand View
has focused on this conflicting language and asks the Commission to modify the
language of Section 8.1 to add the following sentence at the end of the provision: "Such
ownership will be determined by applicable law in effect at the time when the legally
enforceable obligation is incurred." Grand View Petition at 8.
In drafting Section 8.1, Idaho Power did not intend that ownership of
environmental attributes would occur at the time the parties executed and the
Commission approved a PPA, let alone when a legally enforceable obligation occurs.
Idaho Power did not make any arguments to this effect in responding to the Grand View
SJ Motion. Instead, Idaho Power has consistently argued that the language of Section
8.1 is merely a change of law provision, which the Commission found neither violates
nor is preempted by PURPA. See, Idaho Power's SJ Answer at 5, 8-9, and 9-10; Order
No. 32850 at 14-15. As a change of law provision, Section 8.1 simply states that if a
IDAHO POWER COMPANY'S ANSWER TO GRAND VIEW PV SOLAR TWO,
LLC'S PETITION FOR CLARIFICATION AND CROSS-PETITION FOR CLARIFICATION -6
change of law related to environmental attributes occurs, then that applicable law
governs. In Idaho Power's SJ Answer, Idaho Power provided arguments with
supporting law demonstrating how such change of law provisions neither violate Section
210(e) of PURPA nor are they preempted by PURPA. See, Idaho Power's Answer at
10-16 (providing authority that the proposed PPA language is not a contract reopener;
Section 210(e) of PURPA does not preempt or prohibit this provision; the PPA language
does not reopen the contract to require future negotiations; that state law, not PURPA,
governs RECs; and that the proposed language has no impact on the avoided cost rate,
does not require renegotiation, and does not modify the contract). There is nothing in
PURPA, case law interpreting PURPA, nor in Commission Order No. 32580 requiring
that ownership of environmental attributes must be determined at the time the QF and
purchasing utility execute a PPA or when the QF incurs a legally enforceable obligation.
Accordingly, the Commission should clarify that the modifying language found in Order
No. 32580 and advocated by Grand View (e.g., that ownership of environmental
attributes will be determined by applicable law in effect at the time when the PPA is
executed and approved and/or at the time the QF incurs a legally enforceable
obligation) is not applicable to the change of law provision Idaho Power offered in
Section 8.1 of the draft PPA tendered to Grand View.
B. The Commission Should Deny Grand View's Request to Expand the Scope
of the Issues Raised by Grand View's Motion for Summary Judgment.
The Grand View SJ Motion sought resolution of a very narrow issue—that the
Commission order Idaho Power to affirmatively disclaim ownership of environmental
attributes in the Grand View PPA. As described above, the Commission denied this
request, and in so doing, found that Idaho Power's proposed language in Section 8.1 of
the PPA neither violated nor was preempted by PURPA. In the Grand View Petition,
IDAHO POWER COMPANY'S ANSWER TO GRAND VIEW PV SOLAR TWO,
LLC'S PETITION FOR CLARIFICATION AND CROSS-PETITION FOR CLARIFICATION -7
Grand View seeks not only that the Commission add language to Section 8.1, but also
that the Commission expand the scope of what was requested by the Grand View SJ
Motion and find that the ownership of environmental attributes is determined by
applicable law at the time Grand View incurred a legally enforceable obligation. Grand
View Petition at 7-8. The Commission should reject this request because it is beyond
the scope of the issues briefed in the Grand View SJ Motion and responded to by the
answering parties, Idaho Power included.
Importantly, Grand View amended its original complaint on December 20, 2011,
nearly one month after it filed its Summary Judgment Motion with the Commission.
While not explicitly using the phrase "legally enforceable obligation," the Amended
Complaint adds a claim alleging "grandfathering" and asking the Commission to require
"Idaho Power to execute the March 10, 2011 tendered contract at the rates contained
therein as offered by Idaho Power and with the addition of language disclaiming
ownership of the RECs generating by the operation of Grand View Two's solar project."
Amended Complaint at 3 (emphasis added). Thus, while the Commission has now
ruled on the REC issue, the issue of whether Grand View incurred a legally enforceable
obligation as of March 10, 2011, appears to still be a live controversy before this
Commission. Grand View's request in the Grand View Petition, asking that the
Commission add language stating that the ownership of environmental attributes will be
determined by applicable law in effect at the time when the legally enforceable
obligation is incurred, appears to be a thinly veiled attempt to somehow have the
Commission predetermine or set precedent for Grand View's pending claim that it had a
legally enforceable obligation as of March 10, 2011. The Commission should reject
Grand View's attempt to skew the record for its own benefit in this proceeding and deny
IDAHO POWER COMPANY'S ANSWER TO GRAND VIEW PV SOLAR TWO,
LLC'S PETITION FOR CLARIFICATION AND CROSS-PETITION FOR CLARIFICATION -8
its request to make any finding related to legally enforceable obligation until such time
as that issue is briefed by the parties in this case.
In addition, the Grand View Petition asks the Commission to make a finding that
the avoided cost rates in Grand View's PPA will not compensate Grand View for more
than the estimated value of the energy and capacity and that no existing law conveys
non-energy, environmental attributes to an Idaho purchasing utility without payment to
the QF for those non-energy attributes. Grand View Petition at 8-12. Similar to its
argument related to whether a legally enforceable obligation existed as of March 10,
2011, Grand View again attempts to generate evidence to use either in this or other
proceedings by asking the Commission to make findings on issues that are beyond the
scope of the narrow issued briefed on summary judgment.
Specifically, the issue of REC ownership in relation to PURPA contracts is
currently teed-up in Commission Case No. GNR-E-1 1-03. Hundreds of pages of legal
briefs were submitted in that case on July 20, 2012, and a three-day hearing is
scheduled for August 7-9. Grand View is a party to that proceeding and may be
attempting to generate findings from the Commission in this case to use in Case No.
GNR-E-1 1-03.
Even if this is not Grand View's intent, Grand View has failed to demonstrate the
need for the Commission to make this requested finding. Grand View argues that "the
Commission's Order is problematic because it could be construed to conclude that—
although REC ownership must be determined at the time the parties become obligated
to the PPA—at this time, nobody owns the RECS that will be created by Grand View's
QF." Grand View Petition at 8 (emphasis added). As described above, Idaho Power
hereby asks the Commission to confirm that Section 8.1 of the PPA does not require
IDAHO POWER COMPANY'S ANSWER TO GRAND VIEW PV SOLAR TWO,
LLC'S PETITION FOR CLARIFICATION AND CROSS-PETITION FOR CLARIFICATION -9
that a determination related to RECs be made at the time the PPA is executed and
approved by the Commission. If this is indeed the outcome, then there is no need to
make additional findings related to Grand View's request as the issue will be moot.
Accordingly, the Commission should deny Grand View's request.
III. CONCLUSION
The Commission should reject the additional findings requested by the Grand
View Petition. Instead, the Commission should clarify that Section 8.1 of the draft PPA,
as tendered by Idaho Power to Grand View, need not be modified to require language
stating that ownership of environmental attributes is based upon the applicable law
when the PPA is executed and approved or when a QF has a legally enforceable
obligation. The Commission should also reiterate that the change of law provision of
Section 8.1 neither violates PURPA nor this Commission's rules. Lastly, the
Commission should reject Grand View's request for additional findings on issues that
are beyond the scope of the issues raised on summary judgment.
Respectfully submitted this 30th day of July 2012.
—
ea~~~
A
WILLIAMS (:JA
rney for Idaho Power Company
IDAHO POWER COMPANY'S ANSWER TO GRAND VIEW PV SOLAR TWO,
LLC'S PETITION FOR CLARIFICATION AND CROSS-PETITION FOR CLARIFICATION -10
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 30th day of July I served a true and correct copy
of IDAHO POWER COMPANY'S ANSWER TO GRAND VIEW PV SOLAR TWO,
LLC'S PETITION FOR CLARIFICATION AND CROSS-PETITION FOR
CLARIFICATION upon the following named parties by the method indicated below,
and addressed to the following:
Commission Staff
Kristine Sasser
Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, Idaho 83720-0074
Grand View PV Solar Two, LLC
Peter J. Richardson
Gregory M. Adams
RICHARDSON & O'LEARY, PLLC
515 North 27th Street (83702)
P.O. Box 7218
Boise, Idaho 83707
Avista Corporation
Michael G. Andrea, Senior Counsel
Avista Corporation
1411 East Mission Avenue, MSC-23
Spokane, Washington 99202
X Hand Delivered
U.S. Mail
Overnight Mail
FAX
X Email Kris. Sasserpuc.idaho.gov
Hand Delivered
X U.S. Mail
Overnight Mail
FAX
X Email peter(ãrichardsonandoIearv.com
qreQ(richardsonandoIearv.com
_Hand Delivered
X U.S. Mail
Overnight Mail
FAX
X Email michael.andrea)-avistacorp.com
Clint Kalich Hand Delivered
Manager, Resource Planning and Analysis X U.S. Mail
Avista Corporation Overnight Mail
1411 East Mission Avenue, MSC-7 FAX
Spokane, Washington 99202 X Email cIint.kalichavistacorp.com
.... .
Christa Bearry, Legal Assistant ()
IDAHO POWER COMPANY'S ANSWER TO GRAND VIEW PV SOLAR TWO,
LLC'S PETITION FOR CLARIFICATION AND CROSS-PETITION FOR CLARIFICATION -11