20131125Answer to Petition for Reconsideration.pdf

38ffi*.
An IDACORP CompanY
rii u'22
DONOVAN E. WALKER
Lead Counsel
[e-mail]
November 25,2013
VIA HAND DELIVERY
Jean D. Jewell, Secretary
ldaho Public Utilities Commission
47 2 W est Wash i ngto n Street
Boise, ldaho 83702
Re: Case No. IPC-E-11-15
Grand View PV Solar Two, LLC, vs. Idaho Power Company - ldaho Power
Company's Answer to Petition for Reconsideration
Dear Ms. Jewell:
Enclosed for filing in the above matter are an original and seven (7) copies of
Idaho Power Company's Answer to Petition for Reconsideration.
'.' .. ,.., -* i
i -."'
"nrr tJi,U ?5Ltl1..t:., ' '*
--"\ i'a...l: ri
Very tru{y yours,&-Lru
Donovan E. Walker
DEW:csb
Enclosures
1221 W. ldaho St. (83702)
P.O. Box 70
Boise, lD 83707
DONOVAN E. WALKER (lSB No. 5921)
JULIA A. HILTON (lSB No. 7740)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
dwalker@idahopower. co m
ihilton@ ida hopower. com
Attorneys for ldaho Power Company
GRAND VIEW PV SOLAR TWO, LLC,
COMPLAINANT,
V.
IDAHO POWER COMPANY,
CASE NO. !PC-E-11-15
IDAHO POWER COMPANY'S
ANSWER TO PETITION FOR
RECONSIDERATION
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
RESPONDENT.
ldaho Power Company ("ldaho Powe/' or "Company"), in accordance with ldaho
Code S 61-626 and RP 331.05, hereby responds to the Petition for Reconsideration of
final Order No. 32913 issued October 29,2013, filed by Grand View PV Solar Two, LLC
("Grand View").
Grand View has failed to demonstrate that the ldaho Public Utilities
Commission's ("Commission") Order No. 32913 is unreasonable, unlawful, erroneous,
or not in conformity with the !aw. RP 331.01. The Commission's Order No. 32913 is
based upon substantial and competent evidence in the record. The Commission
IDAHO POWER COMPANY'S ANSWER TO PETITION FOR RECONSIDERATION - 1
regularly pursued its authority and was acting within its discretion. Consequently,
reconsideration should be denied.
!. INTRODUCTION
Grand View makes conclusions that are fallacies of logic, and misstates the
factual record in its Petition for Reconsideration. Grand View fails to address the
primary issue considered by the Commission in its determination that Grand View did
not gain entitlement to a previously effective avoided cost rate through a legally
enforceable obligation: Grand View did not obligate itself to the previously effective
rates, and thus did obligate the utility and its customers. No legally enforceable
obligation was created.
II. THE COMMISSION'S PRIOR ORDERS
On June 21, 2012, the Commission denied Grand View's Summary Judgment
Motion, holding that "it cannot find as a matter of law that ownership of RECs vests
solely in Grand View." Order No. 32580, p. 13. The Commission further stated that the
language proposed by ldaho Power was not a takings under either the ldaho or U.S.
Constitutions, and that it did "not definitively confer REC ownership on either Grand
View or ldaho Power. !t merely states that REC ownership wil! be governed by
applicable law at the time the contract is executed and approved." Order No. 32580,
pp.14-15.
On July 29,2013, the Commission denied Grand View's Motion for a Declaratory
Order alleging that it had obtained the right to a previously effective avoided cost rate
pursuant to a legally enforceable obligation. Order No. 32861. The Commission found
that Grand View failed to make a binding and unconditional offer to sel! power to the
IDAHO POWER COMPANY'S ANSWER TO PETITION FOR RECONSIDERATION - 2
utility, and thus did not create a legally enforceable obligation to the previously effective
rates. Order No. 32861 , p.20. However, although the Commission specifically found
that Grand View "had not perfected a LEO on March 11,2011, August 2,2011,
November 29, 2011, or December 20,201'1, we note the parties did engage in
settlement negotiations." ld., p. 22. The Commission allowed Grand View an
opportunity to present "evidence that it created a legally enforceable obligation without
conditions." ld. Grand View made an additiona! submission to the Commission, and
ldaho Power responded to the same, and Grand View filed an additional reply. Order
No. 3291 3, p.2.
On October 29, 2013, the Commission having considered the entire record for
this matter, as well as the additional submissions of the parties, affirmed its prior Orders
and found that Grand View "failed to present persuasive evidence that it is entitled to
ownership of all the RECs or that it perfected a legally enforceable obligation with ldaho
Power." Order No. 32913, p. 2. The Commission denied the requested relief from
Grand View's Complaint, requesting that the Commission order ldaho Power to disclaim
all ownership of Renewable Energy Credits ('REC') in the power sales agreement, and
also denied Grand View's request for a declaratory order that it had perfected a Iegally
enforceable obligation. ld., p. 27.
III. THE COMMISSION PROPERLY FOUND THAT GRAND VIEW DlD NOT
CREATE A LEGALLY ENFORCEABLE OBLIGATION
ldaho Power argued that Grand View did not create a legally enforceable
obligation because Grand View, not ldaho Power, was the party that refused to obligate
itself to the previously effective rates, and did not obligate itself to deliver power to ldaho
Power. ldaho Power's Answer to Grand View's Motion for Declaratory Order, p. 5. The
IDAHO POWER COMPANY'S ANSWER TO PETITION FOR RECONSIDERATION - 3
Commission, upon full consideration of the facts of the case, found that Grand View
refused to make a commitment to supply power to ldaho Power, and thus did not create
a legally enforceable obligation. Order No. 32913, pp. 20,21, and 26. The Commission
recognized that "there are two genera! methods by which a QF can provide power to
utilities: (1) by entering into a signed contract with the utility; or (2\ pursuant to a legally
enforceable obligation (LEO)." Order No. 32861, p. 18 (citations omitted). The
Commission recognized that the purpose for the concept of a legally enforceable
obligation is "to prevent the utilities from circumventing the 'must purchase' PURPA
provision 'merely by refusing to enter into a contract with the' QF." /d. (citations
omitted). The Commission also recognized that the determination of a legally
enforceable obligation is a matter within the authority of the state commission. ld., p. 19
(citations omitted). The Commission determined, based upon the facts of the case, that
Grand View failed to make a binding and unconditional offer to sell power to the utility,
and thus did not create a legally enforceable obligation.
The Commission relied upon the precedent of several ldaho Supreme Court
cases in its determination, as well as cases offering guidance from the federal courts
and Federal Energy Regulatory Commission. A.W. Brown v. ldaho Power Company,
121 ldaho 812, 817, 828 P.2d 841, 846 (1992)("must show that but for the actions of the
utility it was otherwise entitled to a contract [or LEO]. ln most cases, this will entai!
makinq a comprehensive bindino offer . . . .")(emphasis added); Rosebud Enterprises v.
ldaho PUC,131 ldaho 1, 6, 951 P.2d 521, 526 (1997XOF not entitled to earlier avoided
cost rate because it had not legally obligated itself to deliver power to the utility,
"Rosebud made its willingness to commit to 'a definite agreement' expresslv conditioned
IDAHO POWER COMPANY'S ANSWER TO PETITION FOR RECONSIDERATION - 4
on its obtainino concessions from vendors, financiers, and suppliers."); Armco Advanc,e
Materials v. Pennsylvania PUC,579 A.2d 1337,1347 (Pa.1990XA LEO does not exist
when the QF has not unconditionally obligated itself to provide power "and remains free
to walk away from the transaction without liability.").
The Commission refened to several sections of the record upon which it relied
upon in reaching its determination. Order No. 32861, pp. 19-22 (Grand View's
Complaint, Affidavit of Grand View's manager, Paul Affidavit, pleadings in the record);
Order No. 32913, pp. 20,21,22, and 24 (Grand View's Complaint and Amended
Complaint, Grand View's Motion for Summary Judgment, Grand View's Motion for
Declaratory Order, e-mai! communications in ldaho Powe/s Reply Attachment 1, both
parties' additiona! submissions post Order No. 32861, Affidavit of Grand View's
manager, Paul Affidavit).
The Commission's Order No.32913 is based upon substantial and competent
evidence in the record. The Commission regularly pursued its authority and was acting
within its discretion. Consequently, reconsideration should be denied.
IV. GRAND VIEW'S ARGUMENTS !N ITS PETITION FOR
Grand View first alleges that "The Commission continues to adhere to the fiction
that a legally enforceable obligation and a contract are one and the same[.] They are
not the same thing, and this Commission has clearly conflated the two distinct
concepts." Petition for Reconsideration, p. 2. This is clearly without merit. The
Commission has stated on several occasions, and again in its Orders for this matter,
that it recognizes, "There are two general methods by which a QF can provide power to
utilities: (1) by entering into a signed contract with the utility; or (2) pursuant to a legally
IDAHO POWER COMPANY'S ANSWER TO PETITION FOR RECONSIDERATION - 5
enforceable obligation (LEO)." Order No. 32861, p. 18. Furthermore, Grand View's
statement suffers a fallacy of logic, in that there are numerous occasions, namely when
the parties have a fully executed contract, when a contract and legally enforceable are
in fact one and the same thing. A fully executed and approved contract is always a
legally enforceable obligation; however, a legally enforceable obligation in the PURPA
context may not always be represented by a fully executed and approved contract.
Nonetheless, the Commission clearly recognized, analyzed, and reached its
conclusions understanding and recognizing the premise that the QF could be entitled to
rates in effect and represented in the parties' signed contract, or pursuant to a legally
enforceable obligation, just as the text of the federa! regulation reads. See 18 C.F.R. S
2e2.304(d).
Grand View also erroneously contends that ldaho Power refused to contract
without claiming ownership of RECs. Petition for Reconsideration, p. 5. Grand View
stated, "ldaho Power, in violation of Order No. 29840, chose to make its contracting
practices subject not merely to Grand View's granting it a right of first refusal to
purchase, but subject to Grand View's outright gifting of half of its RECs to the power
company. The Commission's final order is thus arbitrary . . . .' /d. (emphasis in
original). First of all, this is a misstatement of the facts. The draft contract did not
contain any language whereby ldaho Power proposed to claim ownership of RECs. As
opposed to Grand View's assertions that it made in its Complaint proceedings that it,
the QF, owned all RECs, the contract provision to which Grand View objected stated
that REC ownership would be determined by the proper authority to make such
determination. ldaho Power accepted Grand View's proposal to sign a contract,
IDAHO POWER COMPANY'S ANSWERTO PETITION FOR RECONSIDERATION - 6
containing the rates in effect at that time, and submit the determination as to the
contract provisions regarding RECs to the Commission. lt was Grand View that refused
to obligate itself to those rates, terms, and conditions; instead, it chose to file a
Complaint demanding that the Commission order ldaho Power to disclaim any REC
ownership. lf Grand View wanted to obligate itself, it had the opportunity to do so, but
refused. ldaho Power, to the contrary, was willing to enter into the contractual
obligation at that time, but Grand View refused. There was no legally enforceable
obligation created because Grand View refused to obligate itself.
Grand View then argues that the Commission did not address its claim that the
Commission's Order is impermissible, retroactive ratemaking. First of all, Grand View's
argument assumes that there is a previously effective legally enforceable obligation,
which there is not. Consequently, with no previously effective obligation, the
Commission's current rules, regulations, policies, practices, and determinations would
be applicable to a transaction between Grand View and ldaho Power. Additionally, as
recognized by the Commission, although a determination as to REC ownership had not
been made at the time Grand View initially filed its Complaint, that determination was
made in parallel proceedings, to which both Grand View and ldaho Power were parties,
and that determination was made while Grand View's Complaint and LEO issues were
still pending with the Commission. Grand View's claim of retroactivity simply does not
!ie.
v. coNcLustoN
Grand View has failed to demonstrate that the Commission's Order No. 32913 is
unreasonable, unlawful, erroneous, or not in conformity with the law. RP 331.01. The
IDAHO POWER COMPANY'S ANSWER TO PETITION FOR RECONSIDERATION - 7
Commission's Order No. 32913 is based upon substantial and competent evidence in
the record. The Commission regularly pursued its authority and was acting within its
discretion. Consequently, ldaho Power respectfully requests that the Commission deny
Grand View's Petition for Reconsideration.
DATED at Boise, ldaho, this 25th day of
Attorney for ldaho Power Company
IDAHO POWER COMPANY'S ANSWER TO PETITION FOR RECONSIDERATION - 8
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 25th day of November 2O1g I served a true and
correct copy of IDAHO POWER COMPANY'S ANSWER TO PETITION FOR
RECONSIDERATION upon the following named parties by the method indlcated below,
and addressed to the following:
Commission Staff
Donald L. Howell, ll
Deputy Attomey General
ldaho Public Utilities Commission
47 2 W est Washington (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
Grand View PV Solar Two, LLC
Peter J. Richardson
Gregory M. Adams
RICHARDSON ADAMS, PLLC
515 North 27th Street (83702)
P.O. Box 7218
Boise, Idaho 83707
X Hand Delivered
U.S. Mail
,Overnight Mail
FAXX Email don.howel!@puc.idaho.sov
Hand DeliveredX U.S. Mail
_Ovemight Mail_FAXX Email [e-mail]
[e-mail]
IDAHO POWER COMPANY'S ANSWER TO PETITION FOR RECONSIDERATION - 9