20130729order_no_32861.pdf

Office of the Secretary
Service Date
July 29,2013
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
GRAND VIEW PV SOLAR TWO,LLC,)
)CASE NO.IPC-E-11-15
COMPLAINANT,)
)
v.)
)ORDER NO.32861
IDAHO POWER COMPANY,)
)
RESPONDENT.)
On August 2,2011,Grand View PV Solar Two filed a formal complaint against
Idaho Power Company regarding the parties’negotiation of a Power Purchase Agreement (PPA
or Agreement)under the Public Utility Regulatory Policies Act of 1978 (PURPA).Grand View
is the developer of a proposed 20 megawatt photovoltaic (PV)solar generating project to be
located in Elmore County.In its initial complaint and subsequent Motion for Summary
Judgment filed November 29,2011,Grand View alleged that the sole dispute between the parties
concerned the ownership of renewable energy credits (RECs)in the draft PPA dated March 10,
2011.RECs (also known as green tags,environmental attributes,or renewable trading
certificates)typically represent the environmental attributes associated with 1 megawatt-hour
(MWh)of electricity generated from an eligible renewable energy resource.Order Nos.32580 at
4;32802 at 8.Grand View requested the Commission order Idaho Power to expressly disclaim
ownership of all RECs in the Agreement.Idaho Power and Avista Corporation (an intervenor)
each filed answers to the summary judgment motion arguing that Grand View’s Motion should
be denied in its entirety.
In June 2012,the Commission issued Order No.32580 denying Grand View’s
Motion for Summary Judgment.The parties agreed and the Commission found that no Idaho
law specifically addresses the ownership of RECs.Order No.32580 at 10.The Commission
stated that it “cannot find as a matter of law that ownership of RECs vests solely in Grand
View.”Id.at 13.
After the Commission issued its Order denying summary judgment Grand View filed
two pleadings.first,in July 2012,Grand View filed a Petition for Clarification requesting the
Commission clarify four points in its Summary Judgment Order No.32580.Second,on March
ORDER NO.32861 1
19,2013,Grand View filed a Motion for Declaratory Order.Notwithstanding the parties’
dispute regarding REC ownership,Grand View argues in its Motion for Declaratory Order that a
legally enforceable obligation was created between the parties on March 10,2011 (the date of the
draft PPA).Motion at 1.Idaho Power filed a timely Cross-Petition for Clarification and an
answer opposing the Motion for Declaratory Order.
In this Order,the Commission grants in part and denies in part Grand View’s Petition
for Clarification and rules on the Motion for Declaratory Order.
BACKGROUND
A.Parties
Grand View Solar is an Idaho limited liability company formed for the purpose of
developing its solar project.Order No.32520 at 2.Grand View plans to sell the output from its
solar project to Idaho Power pursuant to a PURPA contract,i.e.,the PPA.Grand View’s
managing member for the project is Robert Paul of Alternative Power Development,Northwest,
LLC.Id.citing Paul Aff.at ¶6.On July 15,2011,Grand View filed a self-executing Notice of
Certification as a “qualifying facility”(QF)with the Federal Energy Regulatory Commission
(FERC).Id.citing FERC Docket No.QF1 1-405.
In September 2011,Avista Corporation filed a Petition to Intervene and the
Commission subsequently granted intervention to Avista.’Order No.32362.Avista and Idaho
Power are both electric public utilities subject to the jurisdiction and regulation of this
Commission.Idaho Code §61-119 and 61-129.
B.Procedural History
The underlying facts and procedural history of this case are set out in Order No.
32520.Briefly,Grand View and Idaho Power engaged in negotiations and discussions regarding
Grand View’s desire to enter into a Power Purchase Agreement (PPA)under PURPA.The
parties tentatively agreed that the PPA would include avoided cost rates for the 20 MW solar
plant based upon Idaho Power’s Integrated Resource Plan (IRP)methodology for PURPA
qualifying projects greater than 100 kW.Order No.32176 at 9.Pursuant to these discussions,
Idaho Power sent Grand View a draft PPA on March 11,2011 (the “March 2011 draft”).
Avista only participated in the summary judgment phase of this proceeding.Avista did not file any responsive
pleadings to Grand View’s Petition for Clarification or the Motion for Declaratory Order.
ORDER NO.32861 2
1.The Initial Complaint.Grand View maintained in its initial complaint (and again
in its Motion for Summary Judgment)that it agreed to all material terms in the March 2011 draft
Agreement except the provision addressing the ownership of RECs.Order No.32580 at 5;
Complaint at 2.Grand View requested the Commission order Idaho Power to delete §8.1 of the
PPA (addressing RECs)and instead insert “a clause in which Idaho Power explicitly disclaims
ownership of the [RECs].”Complaint at 2,6.Grand View asserted that it “is ready and willing
to enter into the standard PURPA PPA with IRP calculated rates that disclaim REC ownership
by Idaho Power.”Id.at ¶8;see also ¶J 9,13.The REC provision in §8.1 of the draft PPA
states:
Under this Agreement,ownership of ...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 any regulatory
body or agency deemed to have authority to regulate these Environmental
Attributes or to implement Federal and/or State laws regarding the same.
March 2011 draft PPA §8.1;Order No.32580 at 6.
2.Summary Judgment.In November 2011,Grand View filed a Motion for
Summary Judgment reiterating its request that the Commission order that “Idaho Power
disclaims ownership of all [RECs]of Grand View’s solar project....“Motion at 2,36.Grand
View maintained that it “clearly owns the RECs for which Idaho Power will not pay and which
no law transfers to Idaho Power.”Id.at 22.In its initial complaint and again on summary
judgment,Grand View acknowledged Idaho Power offered to divide REC ownership equally
(5 0/50)between the parties for the term of the Agreement,or one party taking RECs for the first
10 years and the other party taking RECs for the last 10 years of the Agreement.Complaint at ¶
11-12;Paul Aff at ¶27.Grand View rebuffed these offers arguing that it is entitled to a PURPA
contract “in which REC ownership is disclaimed by Idaho Power.”Complaint at ¶13;Motion at
36.
Grand View’s manager,Robert Paul,acknowledges that §2.1 of the draft PPA “states
that REC ownership will be determined by applicable state or federal laws”(Aff.at ¶22),but
maintains this provision makes the ownership of RECs dependent upon subsequent changes in
state or federal law.Aff.at ¶23.He stated that owning “only one half of the RECs from the
ORDERNO.32861 3
project compromises the financial viability of the project”and compromises Grand View’s
“ability to raise the capital necessary to build and operate the project.”Id.at ¶J 28,29.2
Idaho Power and Avista each filed answers to the Motion opposing Grand View’s
request for summary judgment.The utilities argued that the Motion be denied in its entirety.
3.The Amended Complaint.While the Motion for Summary Judgment was pending,
Grand View filed an Amended Complaint on December 20,2011.Grand View alleged in its
amended complaint that Idaho Power submitted a new draft PPA on December 2,2011,that
“contains rates and terms and conditions not in the originally tendered contract.”First Amended
Complaint at ¶34,3 Grand View renewed its request that the Commission order Idaho Power to
execute the March 2011 draft PPA and compel the utility to add language that Idaho Power
“disclaim ...ownership of the RECs generated by the operation of Grand View Two’s solar
project.”Id.at 3.On January 25,2012,Idaho Power filed an answer to the first amended
complaint requesting the Commission deny all relief and dismiss the complaint.
4.The Order Denying Summary Judgment.On June 21,2012,the Commission
issued Order No.32580 denying Grand View’s Motion for Summary Judgment.The
Commission’s Order traced the history of RECs and their relationship to renewable portfolio
standards (RPS5)4 adopted in about 25 states.Order No.32520 at 4 citing Steven ferrey,et at.
“Fire and Ice:World Renewable Energy and Carbon Control Mechanisms Confront
Constitutional Barriers,”20 Duke Envtl.L.&Policy F.125 at 146 (Winter 2010).The
Commission noted that approximately 15 states that have adopted RPS programs allow utilities
to use RECs to meet their state-imposed RPS requirements.Id.citing ferrey at 145.The
Commission also noted the issue of REC ownership was an issue to be addressed in Phase III of
its PURPA investigation,Case No.GNR-E-11-03.Id.at n.9.
The Commission also observed that “RECs exist outside the confines of PURPA.
PURPA thus does not address the ownership of RECs....States,in creating RECs,have the
2 Equally dividing RECs with Idaho Power “would undermine Grand View’s entire going concern business by
removing RECs to be produced by the solar QF as a future revenue stream.”Motion for Summary Judgment at 25
citing Paul Affidavit at ¶f 25-29,
Grand View did not submit the December 2011 PPA into the record.
‘A Renewable Portfolio Standard (RPS)typically requires utilities to generate or purchase a certain percentage of
their annual electric generation (their “portfolio”)from designated renewable energy sources,or alternatively,meet
their RPS obligation by the purchase of unbundled RECs from renewable generators.Order No.32580 at 3;
Alliance to Protect Nantucket Sound v.Dept.ofPublic Utilities,959 N.E.2d 413,n.7 (Mass.2011).
ORDERNO.32861 4
power to determine who owns the RECs in the initial instance,and how they may be sold or
traded;it is not an issue controlled by PURPA.”Order No.32580 at 5 (emphasis original)
quoting American Ref-Fuel Company,105 FERC 61,004 at ¶23 (2003),rehrg denied 107 FERC
61,016 (2004)dismissed sub nom.for lack of jurisdiction,Xcel Energy Services v.FERC,407
F.3d 1242 (D.C.Cir.2005).The Commission also quoted approvingly from a Second Circuit
opinion in Wheelabrator Lisbon v.Connecticut Dept.Pub.Utility Control that:
RECs are “tradable certificates ...that correspond to a certain amount of
renewable energy generated by a third party.”American Ref-Fuel,105 FERC
at ¶61,005.Generally speaking,RECs are inventions of state property law
whereby the renewable energy attributes are “unbundled”from the energy
itself and sold separately.The credits can be purchased by companies and
individuals to offset use of energy generated from traditional fossil fuel
resources or ...to satisfy certain requirements that [utilities]purchase a
certain percentage of their energy from renewable resources.
Order No.32580 at 4 (emphasis original)quoting Wheelabrator Lisbon,531 F.3d 183,186 (2d
Cir.2008).“[I]nsofar as RECs are state-created,different states can treat RECs differently.”
Order No.32580 at 5 quoting American Ref-Fuel,107 FERC ¶61,016 at n.4;see Idaho Wind
Partners,136 FERC ¶61,174 at P.10 (Sept.15,2011)(“the sale and trading of RECs are for the
states to determine,and that this is not an issue that PURPA controls.”).
The Commission found that RECs were intangible assets or “non-physical assets
which exist only in connection with something else,i.e.,the purchase of renewable power under
PURPA.”Order No.32580 at 10 citing Black’s Law Dictionary,808 (6th Ed.1990).“In other
words,but for the ‘must purchase’provision of PURPA,there might be no PPA and RECs would
not exist or be created.”Id.(footnote omitted);see Order No.32802 at 12 (“RECs are not
tangible and do not ‘exist’until the renewable QF project produces a MW of power.”).5
The parties acknowledged and the Commission found that no Idaho law implements
an RPS program or addresses the ownership of RECs.Order No.32580 at 9.After reviewing
Grand View’s arguments,the Commission stated that it “cannot find as a matter of law that
ownership of RECs vest solely in Grand View.”Id.at 13.The Commission found that the
language in §8.1 does 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.”Id.at 14.
RECs can also arise in non-PURPA renewable projects.Order Nos.32580 at n.5;32697 at n.9;32802 at 8.
ORDER NO.32861 5
5.Settlement Discussions.In June 2012,Grand View filed a “Notice of Settlement
Discussions.”The developer indicated in its notice that the parties will report on the progress of
those discussions by June 15,2012.No such report was filed.Order No.32580 at 2,n.1.On
February 5,2013,Grand View formally notified the Commission that settlement discussions
“have been fruitless.”The Notice did not disclose the settlement topics or the respective
positions of the parties.
C.Tite Commission ‘s PURPA Investigation
On September 1,2011,shortly after Grand View filed its initial complaint,the
Commission initiated the third phase (Phase III)of its generic investigation into PURPA issues.
Order No.32352,Case No.GNR-E-1 1-03.In its initial Order opening Phase III,the
Commission stated its intent to address the issues of RECs and REC ownership.Id.at 4.As a
party in the first two phases of the Commission’s PURPA investigation,Grand View was also
designated as a party in the Phase III proceeding.Order Nos.32131 at 3;32195 at 4;32352 at 4;
Notice of Parties in Case No.GNR-E-1 1-03 (Sept.21,201 1).6
On December 18,2012,the Commission issued final Order No.32697 addressing
REC ownership.“{A]bsent an agreement between the parties to do otherwise,”the Commission
found it was “reasonable to equally apportion RECs between the utility and QF”when the
PURPA contract is based upon avoided cost rates derived through the IRP methodology.Order
No.32697 at 46.“Because both the utility and QF are contractually and inextricably joined in
the production,sale and purchase of QF power,we find that it is reasonable to apportion the
unbundled RECs by splitting RECs either 50%-50%each year over the life of the PPA,or
equally in terms of years over the length of the contract.”Id.;see also Order No.32802 at 12,
19-20.
On reconsideration,the Commission affirmed its findings in Order No.32697 that
“RECs under the IRP Methodology should be equally shared by the parties while still allowing
for some contractual flexibility.”Order No.32802 at 20.The Commission specifically found
that Idaho common law does not vest RECs exclusively in either the QF or the utility.The
6 on March 12,2012,Idaho Power filed a Motion to Stay its PURPA obligations until such time as the Commission
completed its Phase III PURPA investigation.In Order No.32498,the Commission denied the temporary stay but
found that Idaho Power’s current methodologies for calculating avoided cost rates “do not currently produce rates
that reflect Idaho Power’s avoided costs and are not just and reasonable,nor in the public interest.”Order No.
32498 at 2.Effective March 21,2012,the Commission ordered that all QF contracts or projects over 100 kW “will
be individually evaluated with regard to all terms contained therein.”Id.The Commission said it would conduct a
case-by-case review to ensure QF purchase agreements satistv PURPA requirements.Id.at 3.
ORDER NO.32861 6
Commission found the Connecticut’s Supreme Court opinion in Wheelabrator Lisbon v.Dept.of
Pub.Util.Control.931 A.2d 159,174-75 (Conn.2007)instructive in analyzing REC ownership
issues.Id.at 18-19.“We find especially important the fact that PURPA compels the purchase
[of Qf power]and that utilities must purchase QF power whether needed or not.These facts are
balanced against the Qf’s investment in the renewable facility and the Congressional goal of
promoting renewables.”Id.at 19.No party,including Grand View,sought judicial review of
the Commission’s decision that ownership of RECs should be vested equally in both the utility
and the Qf for IRP-based agreements.Id.at 20.
With this background we turn to the Petition for Clarification and Motion for
Declaratory Order.
PETITIONS FOR CLARIFICATION
On July 9,2012,Grand View filed a Petition for Clarification requesting that the
Commission clarify four points in the Commission’s Summary Judgment Order No.32580.On
July 30,2012,Idaho Power filed an Answer to Grand View’s Petition and a Cross-Petition for
Clarification.Idaho Power urged the Commission to deny Grand View’s clarification request.
The four points of clarification are discussed below.
1.The Timing of REC Ownership and 8.1.Grand View requests the Commission
clarify its Order by requiring Idaho Power to modify §8.1 of the draft PPA.The request is based
upon the Commission’s Order No.32580 requiring that the ownership of RECs be “governed by
applicable state law at the time the contract is executed and approved.”Petition at 1 quoting
Order No.32580 at 14 (emphasis added).Relying on the quoted language,Grand View asserts
the Commission’s Order does not clearly indicate that REC ownership will be based upon
applicable law at the time the contract becomes effective.Petition at 4-5.Grand View argues §
8.1 needs to be clarified so that the Order not be viewed as subjecting REC ownership to future
changes based upon any changes in law throughout the 20-year term of the Agreement.Id.at 5.
Grand View maintains Idaho Power’s position is that §8.1 “is merely a change in law
provision stating that if applicable law determines REC ownership then that applicable law
governs.”Id.quoting Idaho Power’s Answer at 5;see also 8-10.In other words,Grand View
insists that both Idaho Power and Avista suggest that REC ownership is subject to future change
under the PPA if state law changes the ownership of RECs during the term of the Agreement.
Commission Rule 325 allows any person to petition to clarify any Order.IDAPA 31.01.01.325.
ORDER NO.32861 7
Petition at 5.Grand View concludes that subjecting it to future changes regarding the ownership
of RECs during the term of the PPA would violate Section 210(e)of PURPA.Id.at 6.
To clarif,’the Commission’s intent regarding §8.1,Grand View proposes the
Commission order that an additional sentence be added to the REC provision.In particular,
Grand View suggests the underlined sentence below be added to the REC provision in §8.1 of
the draft PPA:
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 any regulatory body or agency deemed to have authority to regulate
these Environmental Attributes or to implement federal and/or State laws
regarding the same.Such ownership will be determined by applicable law in
effect at the time when the legally enforceable obligation is incurred.
Petition at 8.Grand View insists that adding this sentence “will provide the clarity necessary to
ensure that the PPA does not subject Grand View to changed circumstances after the time that it
obligated itself to a legally enforceable obligation to deliver energy and capacity.”Id.
for its part,Idaho Power recommends the Commission deny clarification and not
modify the language of §8.1.Answer/Cross-Petition at 5-6.The utility acknowledges the
Commission’s Order states in two places that REC ownership is to be determined under the
contract by applicable law when the PPA is executed and approved (Order No.32580 at 14).
However,Idaho Power maintains that as a “change of law provision,Section 8.1 simply states
that if a change of law related to [RECs]occurs [during the term of the contract],then that
applicable law governs [REC ownership].”Answer at 6-7.In other words,Idaho Power argued
§8.1 is a “placeholder”which provides that at such time as the ownership of RECs is finally
decided,then that decision will be applicable to the PPA.Idaho Power concludes there is
nothing in PURPA,case law,or in Commission Order No.32580 requiring that the ownership of
RECs be determined at the time the QF and the utility execute a PPA or when the QF incurs a
legally enforceable obligation.Id.at 7.
Commission findings:Before turning to the language of our prior Order and §8.1,
it is helpful to review the positions of the parties concerning the REC issue.The parties had not
entered into a PPA and Grand View instead filed a complaint regarding the REC provision
contained in §8.1 of the draft Agreement.On one side,Grand View maintained in its complaint,
ORDER NO.32861 8
amended complaint,and on summary judgment that it owns the RECs and wants the
Commission to order Idaho Power to disclaim any REC ownership.Now on clarification,Grand
View wants §8.1 to be modified as set out above.On the other side,Idaho Power argues in its
answer that the issue of REC ownership has not been determined8 and that §8.1 does not assign
REC ownership to either Grand View or Idaho Power.Order No.32580 at 1 3-14.Idaho Power
insisted that §8.1 “is merely a change of law provision [which]simply states that if a change of
law related to [RECs]occurs,then that applicable law governs.”Answer at 6-7.Thus,both
Grand View and Idaho Power seek clarification to support their opposing positions.We grant
clarification on this issue.
Grand View’s request for clarification focuses on the timing of REC ownership by
suggesting that §8.1 be amended to provide that REC ownership will be decided “at the time the
contract becomes effective.”Petition at 4.It asserts “that once ownership is determined based
upon applicable law at the time the contract becomes effective ...REC ownership cannot
change ..when a new law,regulation,or order ...is issued.”Id.Conversely,Idaho Power
requests the Commission clarify that REC ownership under §8.1 of the PPA can change as REC
law changes during the term of the PPAs.Having considered the parties’arguments,the
language of §8.1 and our prior Orders,we find it is appropriate to clarify our prior Order to
eliminate confusion.
At the outset,we recognize when a QF and a utility are unable to agree to terms
contained in a PPA,this Commission has a responsibility to resolve the dispute consistent with
PURPA.Here the dispute concerned an issue that PURPA does not control —the ownership of
RECs.The parties were unable to reach agreement on the disposition or ownership of RECs.As
the parties agreed and the Commission found in its Summary Judgment Order,there was —at that
time —no controlling Idaho law addressing REC ownership.Order No.32580 at 9,13-14.
However,the parties were on notice that REC ownership would be addressed in our parallel
PURPA investigation initiated shortly after Grand View filed its complaint in this case.
Moreover,both Grand View and Idaho Power were parties in the GNR-E-11-03 case.In that
case,the Commission found it was reasonable to equally apportion REC ownership between the
Qf and the utility for solar projects larger than 100 kW,like the Grand View project here.Order
8 At the time Grand View filed its Petition for Clarification (July 2012),the Commission had not decided the REC
ownership issue in Case No.GNR-E-1 1-03.The issue of REC ownership was decided in Order No.32697 issued
December 18,2012.
ORDER NO.32861 9
No.32697 at 46;32802 at 19-20.No party,including Grand View,sought judicial review of that
decision.Having decided the disputed issue of REC ownership in the PURPA investigation in
Order No.32697 (Dec.18,2012),and affirmed in Order No.32802 (May 6,2013),this issue is
now settled.
The language of §8.1 generally provides that REC ownership will be governed by
applicable laws or by those regulatory agencies with authority to regulate RECs.Consistent with
our prior Order No.32580,we find this section does not vest REC ownership in either party.
Order No.32580 at 14.Having determined that REC ownership should be equally divided
(absent agreement of the parties to do otherwise),we find that Grand View’s suggestion to add
the new sentence to §8.1 is unnecessary.Grand View is correct that the phrase “at the time the
contract is executed and approved”does not appear in §8.1 or anywhere in the Agreement.
Petition at 3.On review,we find that this sentence should not be added.
Turning to Idaho Power’s argument,we generally find that changing contract terms in
a PPA (here REC ownership)should not occur.Order No.32580 at 14.While we appreciate the
distinction between an inappropriate “reopener”and a permissible “change in law”provision,the
parties here disputed REC ownership.Qfs (as stated by Grand View in this case)rely upon
revenue from the sale of RECs to finance their PURPA projects.for example,Grand View’s
manager stated that receiving “only one half of the REC [revenue]from the project compromises
the financial viability of the project.”Paul Aff at ¶28.from the Qf’s perspective,knowing all
the terms and conditions of the PPA assists the developer in analyzing its projected cost and
revenue stream.Thus,we find it is appropriate that the ownership of RECs —and the
accompanying revenue from the sale of RECs —should not be subject to change during the
contractual term absent a mutual agreement by the parties to do otherwise.This promotes the
underlying purpose of PURPA by encouraging the development of renewable generation.See
Order Nos.32697 at 46-47;32802 at 12.Here there is no agreement between the parties that the
section is a “change in law”provision.Consequently,we reject Idaho Power’s position that §
8.1 is an allowable change in law provision.
Having found in the PURPA investigation that the ownership of RECs should be
equally divided between the Qf and the utility,we find this result should apply to this case.
Both Grand View and Idaho Power were parties in the PURPA investigation and were advised in
this case that the REC issue would be addressed there.Order No.32580 at 12,n.9;32352 at 4;
ORDERNO.32861 10
3259$;32697.Consequently,we find that §8.1 should be amended to reflect the ownership of
RECs will be split 50/50 between the parties consistent with Order Nos.32697 and 32802.We
further find the phrase “at the time the contract is executed and approved”should be deleted
from our prior Order No.32580.Idaho Code §61-624.We clarify that §8.1 is to be amended
to equally divide REC ownership between Grand View and Idaho Power.
2.Legally Enforceable Obligation.Grand View next requests the Commission
clarify the terms “executed and approved”in Order No.32580 also applies when a “legally
enforceable obligation”is incurred.Petition at 7.Grand View expresses concern that the
language “when the PPA is executed and approved”could be misconstrued as applying to only
written Agreements.Id.Grand View noted that a Qf can perfect a “legally enforceable
obligation without a fully executed and approved agreement.”Id.Thus,this point further
supports Grand View’s efforts at adding the new sentence to §8.1 as shown supra page 8.
Idaho Power urges the Commission to refrain from expanding the scope of
clarification.Answer/Cross-Petition at 5.Idaho Power states it “did not intend for ownership of
RECs [to be determined]at the time the parties executed and the Commission approved a PPA
let alone when a legally enforceable obligation occurs.”Id.at 6.“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.”Id.
Idaho Power further argues that Grand View’s Petition is “a thinly veiled attempt”to
have the Commission “grandfather”the rates contained in the draft March 2011 as the surrogate
to the issue of whether Grand View incurred a legally enforceable obligation as of March 10,
2011 (the date of the March 2011 PPA).Id.at 8.The utility urges the Commission to deny
Grand View’s request to make any findings related to a “legally enforceable obligation until such
time as that issue is briefed by the parties in this case.”Id.at 9.
Commission findings:We deny clarification on this point because Grand View’s
request would unnecessarily expand the scope and change the focus of our prior Order.While
we acknowledge that a legally enforceable obligation may occur outside of a contract,the focus
of our prior Order was the dispute between the parties concerning RECs and the express
language of §8.1 in the Agreement.The issue of REC ownership is now settled.
3.Avoided Cost Rates do not Include RECs.Grand View next requests the
Commission state that the avoided cost rates “will not compensate the [QF]for more than
ORDERNO.32861 11
estimated value of the energy and capacity alone.”Petition at 2.Grand View insists the
Commission’s “Order is problematic because it could be construed [that]nobody owns the RECs
that will be created by Grand View’s [solar project].”Id.at 8.
Idaho Power again urges the Commission to deny clarification of this issue.The
utility notes in its answer the issue of REC ownership is “currently”scheduled to be addressed in
the Commission’s Phase III PURPA investigation in Case No.GNR-E-11-03.9 Idaho Power
maintains hundreds of pages of legal briefs were submitted in that case in July 2012.“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.”Answer at 9.
Commission findings:The Order denying summary judgment is clear and needs no
clarification.In that Order we stated “The PURPA avoided cost rates are intended to
compensate the QF only for the purchased power —avoided cost rates ‘are not intended to
compensate the QF [for RECs].”Order No.32580 at 3,8 citing Morgantown Energy
Associates,139 FERC ¶61,066 at P.47 (April 24,2012);American Ref-Fuel,105 FERC ¶
61,004;Order No.29480.Compensation for “RECs is outside of PURPA,and is not part of the
avoided cost calculation;RECs are separate commodities from the capacity and energy produced
by QFs.If a state chooses to create these separate commodities,they are not compensation for
[QF power].”California FUC,133 FERC ¶61,059 at P.31 n.62 (Oct.21,2010);Order No.
32580 at 8.
The Commission recently confirmed that point in the PURPA investigation case.
Order No.32802 at 12,24 (“we have been steadfast and clear in stating that avoided cost rates do
not compensate QFs for RECs”).Our PURPA investigation Orders also addressed Grand
View’s argument that Order No.32588 “could be construed [that]nobody owns the RECs.”We
find this argument unpersuasive.This issue has been settled by the Commission’s decision that
RECs for solar projects greater than 100 kW shall be equally divided by the utility and the QF.
Consequently,clarification of this point is unnecessary and the request is denied.
4.No Idaho Law Transfers RECs.Finally,Grand View requests the Commission
“clarify”that no Idaho law transfers RECs to a purchasing utility without payment to the QF.
Petition at 8.Although Grand View acknowledges it is the States and not FERC that “have the
power to determine who owns the RECs in the initial instance and how they will be sold or
See supra n.8.
ORDER NO.32861 12
traded”(Petition at 9),the developer requests that the Commission “clarify”that no Idaho law
conveys RECs to a utility without payment to the Qf.Id.at 12.Idaho Power again urges the
Commission to deny clarification of this issue because the issue of REC ownership was
addressed in the Commission’s PURPA investigation,GNR-E-11-03.Answer at 9.
Commission findings:We decline to clarify this issue for two reasons.First,Grand
View seeks clarification regarding the “transfer”of RECs.In our prior Order denying summary
judgment,the Commission observed the utilities and Grand View agreed that no Idaho law or
case addresses the ownership of RECs.Order No.32580 at 9 (record citations omitted);Order
No.32802 at 12.In other words,our prior Order addressed REC ownership and simply does not
address the “transfer”of RECs.Without a determination of ownership,there can be no finding
regarding transfer of such ownership.Thus,Grand View seeks clarification of an issue we did
not address.
Second,our recent Orders concluding Phase III of the PURPA investigation held that
ownership of RECs should vest equally with the Qf and the utility for projects with IRP-based
rates.There is no “transfer”of RECs —RECs are owned equally by both the Qf and the utility.
As the Commission observed in the Summary Judgment Order,Grand View is not “the defacto
owner of all the RECs.”Order No.32580 at 15.Thus,no REC property owned by the QF has
been “transferred”to the utility.Id.citing Wheelabrator Lisbon v.Dept.ofPublic Utit.Control,
283 Conn.672,700,931 A.2d 159,177 (2007).We find the relevant question to be the
ownership of RECs,not the transfer of RECs.Consequently,we decline to address the transfer
of RECs.
MOTION FOR DECLARATORY ORDER
A.Position of the Parties
1.Grand View.On March 19,2013,Grand View filed a Motion for a Declaratory
Order.In its Motion,Grand View makes two arguments that are intertwined.The first issue
concerns the ownership of RECs.More specifically,Grand View argues the Commission’s
December 2012 Order No.32697 in the PURPA investigation holding that REC ownership be
shared between the QF and the utility is not controlling in this case.Motion at 4.In essence,
Grand View insists there was no controlling REC law or policy in Idaho “at the time”Idaho
Power tendered the draft PPA in March 2011,and therefore Grand View must own the RECs.
The Commission should “order Idaho Power to tender an executable [PPA]...containing the
ORDER NO.32861 13
terms and conditions in effect as of the date of the Legally Enforceable Obligation.Furthermore,
Idaho Power should not insert disputed Section 8.1 and should otherwise remain silent as to REC
ownership....“Id.at 7.
Second,Grand View advances a new issue by arguing that a legally enforceable
obligation (LEO)was created between Grand View and Idaho Power on “March 10,2011 [(the
date of the draft PPA)]...and no later than August 2,2011”(the date of Grand View’s initial
complaint).Motion at 1.Grand View argues that the Commission failed to address the legally
enforceable obligation issue in its Summary Judgment Order.Grand View insists it “created a
Legally Enforceable Obligation on Idaho Power’s part to purchase [Grand View’s]PURPA
power.”Id.at 3.Grand View asserts a LEO can be formed without deciding the REC issue.
The parties were in agreement to all terms in the March 2011 draft PPA except for the REC
issue.Idaho Power’s obligation to purchase the output from the project “was not at issue.”
Grand View maintains it “does not have to wait until Idaho Power executes the [PPA]”before
the Commission finds a legally enforceable obligation was created.
Grand View insists that FERC has previously admonished the Commission that “a
LEO may be created unilaterally by a QF independent of the utility’s or Commission’s actions.”
Id.Grand View quotes from fERC’s Grouse Creek Order stating:
a QF,by committing itself to sell to an electric utility,also commits the
electric utility to buy from the QF;these commitments result in either
contracts or in non-contractual,but binding,legally enforceable obligations.
We found that the Idaho Commission’s order in those proceedings,by limiting
the circumstances under which a legally enforceable obligation arose,make a
fully-executed contract a condition precedent to a legally enforceable
obligation.We held that such a condition precedent is inconsistent with
PURPA and our regulations implementing PURPA.
[A]legally enforceable obligation may be incurred before the formal
memorialization of a contract to writing.
Motion at 4-5 citing Grouse Creek Order,142 FERC ¶61,187 ¶15 (2013)(internal citations
omitted).
Grand View maintains the fact it filed a complaint in August 2011 “is sufficient
evidence that Grand View had unilaterally obligated itself and Idaho Power to a legally
enforceable obligation.”Id.at 5.Grand View maintains it has the right to unilaterally create a
LEO without having to resort to a PPA or obtain Idaho Power’s written consent.Id.at 6.
ORDER NO.32861 14
Grand View also notes that FERC has stated in its Grouse Creek Order “that a QF
need not have to even file a complaint in order to create a legally enforceable obligation....“Id.
Grand View also observed in that same Order that FERC declared:
The Idaho Commission’s requirement that a QF formally complain
“meritoriously”to the Idaho Commission before obtaining a legally
enforceable obligation would both unreasonably interfere with a Qf’s right to
a legally enforceable obligation and also create practical disincentives to
amicable contract formation.Such obstacles to Qfs are at odds with the
[FERC’s]regulations implementing PURPA.
Motion at 6 quoting Grouse Creek Order at [40].Thus,the Commission should find that a
legally enforceable obligation was created on March 11,2011,and no later than August 2,2011.
Id.at7.
2.Idaho Power’s Answer.On April 2,2013,Idaho Power filed its answer opposing
Grand View’s Motion for Declaratory Order for several reasons.first,Idaho Power takes issue
with Grand View’s characterization of events in this case.More specifically,Idaho Power
asserts this is the first instance where Grand View argued it had perfected a legally enforceable
obligation in March or August 2011.Answer at 5,12.The disputed issue in the initial
complaint,the amended complaint and summary judgment concerned RECs.Id.at 12.The
utility states it was willing to enter into a contract with Grand View but Grand View chose not to
obligate itself to deliver power to Idaho Power without Idaho Power disclaiming all the RECs.
Id.at 5.The utility asserts a “legally enforceable obligation cannot be created when a Qf refuses
to contract with a utility.”Id.Idaho Power maintains that Grand View repeatedly refused to
obligate itself to sell power to Idaho Power between March 10,2011 (the date of draft PPA)and
before August 2,2011 (the date Grand View filed its complaint).Id.at 6.“[Grand View’s]
refusal to contract or obligate itself...,especially in the context of a utility willing and ready to
enter into a PURPA [PPA],cannot be used to create a legally enforceable obligation.”Id.at 13-
14.
Second,Idaho Power argues a legally enforceable obligation (LEO)only arises in the
context of what avoided cost rates can be assessed.Answer at 7 citing 1$C.F.R.§292.304.The
utility insists that the LEO concept “was intended as a mechanism to determine the time for a
calculation of the rate.”Id.The Company also notes a LEO is the mechanism used to prevent
utilities from avoiding its PURPA obligations by refusing to sign a contract.Id.citing Grouse
ORDER NO.32861 15
Creek Order,142 FERC 61,187 at ¶36 (2013).The Company maintains a LEO is intended to
remedy a situation where the utility has acted in bad faith or delayed/refused to contract.Id.at 8.
In this case,Idaho Power asserts it has not acted in bad faith or caused delay,and Grand View is
the party which refused to contract.
Third,Idaho Power maintains a legally enforceable obligation reflects the creation of
“mutual obligations”to ensure that a party cannot unilaterally force or bind another party against
its will.Id.at 9.The utility takes issue with Grand View’s assertion that it has an “unfettered
right to unilaterally create”a LEO.Id.citing Motion at 6.Idaho Power argues that this is “a
gross overstatement and undermines ‘the carefully constructed concepts of mutual obligations
under state contract law ‘Id.at 10.“FERC intended that ...a legally enforceable
obligation should be reciprocal.”Id.at 8.Idaho Power argues that if avoided cost rates had
increased since March 2011,Grand View would not be arguing that a LEO was perfected in
2011.The concept was “not intended to be used in a situation where a Qf refuses to contract
with a utility.”Id.at 9.
Finally,Idaho Power relies upon several Idaho Supreme Court cases to support its
argument that a LEO was not formed.In particular,the Company stated that the Idaho Supreme
Court in A.W.Brown v.Idaho Power Co.,121 Idaho 812,828 P.2d $41 (1992),upheld the
Commission’s decision that there was no PURPA contract and that the Qf was not entitled to
earlier (and higher)avoided cost rates when it did not make a reciprocal commitment or
obligated itself to provide power to the utility.Answer at 10-11.
3.Grand View’s Reply.On April 8,2013,Grand View filed a reply to Idaho
Power’s answer.Grand View reiterates that it created a legally enforceable obligation (LEO)
unilaterally.Reply at 2.Relying on FERC’s Grouse Creek Order,Grand View states that:
once a QF makes itself available to sell to a utility,a legally enforceable
obligation may exist prior to the formation of a contract.A contract serves to
limit and/or define bilaterally the specifics of the relationship between the QF
and the utility.A contract may also limit and/or define bilaterally the
specifics of the legally enforceable obligation at the heart of the relationship.
Id.(emphasis original)citing 142 FERC ¶61,187 at PP 16-17.Grand View reiterates that the
parties had agreed to all the terms in the PPA with the exception of the REC provision.Thus,the
question for the Commission is “not whether the contract was signed,but whether and when a
legally enforceable obligation was created.”Id.at 3.
ORDER NO.32861 16
Grand View insists that if Idaho Power is allowed to avoid a legally enforceable
obligation to purchase QF power,then any utility could avoid a LEO by “including in the PPA
itself a provision it knew would be unacceptable to the QF.”Id.at 5.Grand View also
maintains that the Idaho Supreme Court cases relied upon by Idaho Power do not support the
utility’s position.More specifically,Grand View distinguishes the Rosebud case from this case
by noting that Rosebud rejected Idaho Power’s entire offer.“Grand View,unlike Rosebud,
unconditionally committed to sell its electric output for a specific term and for a specific price.
Grand View,unlike Rosebud,was ready[,]willing and able to perform.Its performance was not
conditioned upon vendor,supplier or financial approval.Grand View was obligated.”Id.at 7.
Grand View restates from its initial complaint that it is “ready and willing to enter into the
standard PURPA PPA with IRP calculated rates that disclaim REC ownership by Idaho Power.”
Id.at 8 citing Complaint at 3.
B.Commission findings
1.The REC Issue.We first turn to Grand View’s argument that because REC
ownership was not decided when the PPA was drafted in March 2011,there should be no REC
provision in the Agreement.The Commission’s PURPA investigation Orders resolving the REC
dispute “should not be controlling on Grand View’s REC ownership because Grand View had
created its LEO in March 2011.”Motion at 4.We find this argument unpersuasive for two
reasons.First,Grand View’s REC argument ignores the fact that the REC dispute was the
gravamen of the initial complaint and summary judgment.It now suggests that we simply ignore
the REC dispute —the very heart of Grand View’s complaint,amended complaint and Motion for
Summary Judgment.Grand View’s argument to simply separate the REC dispute from the
legally enforceable obligation issue is inconsistent with the facts and the positions of the parties.
Grand View concedes that when it filed its complaint,the “only outstanding issue at the time was
who owned the RECs.”Motion at 2.The facts of this case demonstrate without a doubt there
was a dispute about REC ownership and the Commission was asked to resolve that disputed
issue.
Second,both Grand View and Idaho Power were parties to the PURPA investigation
that decided the REC issues.Both parties were aware that the issue of REC ownership was to be
decided in that case.We noted in our Summary Judgment Order in this case that parties in the
PURPA investigation were addressing REC ownership.Order No.32580 at 12,n.9.The
ORDER NO.32861
Commission found in its Summary Judgment Order that Idaho Power has not permanently
“waived its rights to RECs or that ...REC ownership vests entirely with Qfs.”Id.at 12.We
found in our PURPA investigation Orders that RECs in situations such as this case should be
equally divided between the QF and the utility.Grand View was a party to the PURPA
investigation and neither raised the applicability argument in that case or petitioned for judicial
review.Moreover,the Commission’s REC decision in Order No.32697 was made in December
2012,well in advance of Grand View’s current Motion for Declaratory Order filed in April 2013.
Having found that REC ownership should be equally divided in our PURPA investigation
between the utility and the QF (especially where both Idaho Power and Grand View were
parties),it is appropriate to consistently apply the REC determination in this case.
2.The LEO Issue.We next turn to Grand View’s assertion that it created a legally
enforceable obligation in March 2011 (when Idaho Power tendered the draft PPA)or no later
than August 2,2011 (when Grand View filed its initial complaint against Idaho Power in this
matter).PURPA generally requires electric utilities such as Idaho Power to purchase the output
from “qualifying facilities (QFs)”at rates set by State regulatory commissions.16 U.S.C.§
824a-3(a)(2).This mandatory purchase requirement is often referred to as the “must purchase”
provision of PURPA.FERCv.Mississippi,456 U.S.472,451 (1982).
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 enforceable obligation
(LEO).1$C.F.R.§292.304(d);Power Resource Group v.PUC of Texas,422 F.3d 231,237 (5th
Cir.2005).FERC specifically adopted the concept of a legally enforceable obligation to prevent
utilities from circumventing the “must purchase”PURPA provision “merely by refusing to enter
into a contract with the”QF.Power Resource,422 F.3d at 23$quoting Regulations
Implementing Section 210 ofthe Public Utility Policies Act of 1978,45 Fed.Reg 12,214,12,224
(Feb.25,1980);Cedar Creek Order,137 FERC ¶61,006 at P.32 (2011).Under either a
contract or LEO there are reciprocal obligations:a QF unconditionally commits itself to sell
power to the utility and the utility commits to buy that power from the QF.“These commitments
thus result either in contracts or in non-contractual,but binding,legally enforceable obligations.”
Cedar Creek Order at ¶32.
In addition,each Qf has the option to provide power to the utility under avoided cost
rates calculated at either:(1)the time of delivery;or (2)at the time a legally enforceable
ORDERNO.32861 18
obligation (LEO)is incurred.Afton Energy v.Idaho Power Co.,107 Idaho 781,787,693 P.2d
427,433 (1984)citing 1$C.F.R.§292.304(d).
When examining claims that a LEO has been created it is up to the States to determine
the specific parameters of individual QF power purchase agreements,including the
date at which a legally enforceable obligation is incurred under State law.Similarly,
whether the particular facts applicable to an individual Qf necessitate modifications or
other terms and conditions of the Qf’s contract with the purchasing utility is a matter
for the States to determine.
Order No.32635 at 9 citing West Penn Power Co.,71 FERC ¶61,153 at 61,495 (1995);Power
Resource,422 F.3d at 239 (‘FERC has given each State the authority to decide when a LEO
arises in that State.”).
Returning to the facts of this case,we note that Grand View and Idaho Power have
not entered into a PPA.Grand View now asserts that it perfected a LEO on the date that Idaho
Power tendered the draft PPA (March 11,2011),or no later than August 2,2011 (the date Grand
View filed its initial complaint).Our review of the record reveals that Grand View did not
mention the term “legally enforceable obligation”in its initial complaint,in its amended
complaint from December 2011,and only mentioned LEO once in passing in its November 2011
Motion for Summary Judgment.1°
Grand View generally asserts it was ready,willing and able to supply power to Idaho
Power.While Grand View may have been ready,we find the record does not support that it was
willing and able to supply power.More specifically,Grand View’s offer to supply power to
Idaho Power was an offer with two conditions:(1)the removal of §8.1;and (2)Idaho Power
disclalming any ownership of RECs.In its formal complaint,Grand View says it is “ready and
willing to enter into the standard PURPA PPA with IRP calculated rates that disclaim REC
ownership by Idaho Power.”Initial Complaint at ¶8.In its initial complaint’s prayer for relief,
Grand View asks the Commission to order “Idaho Power to resume inserting language in
standard PPAs to the effect that Idaho Power makes no claim to REC ownership.”Id.at 6.
Again,in its amended complaint,Grand View restates the requested relief from its initial
complaint.Amended Complaint at 1-2.The prayer for relief in its amended complaint requests
Grand View asserts in its Motion that the Commission failed to address the LEO issue on summary judgment.
Motion at 3.However,Grand View did not raise this issue in its summary judgment motion.Indeed,the issuesraisedinitsMotionconcernedRECs.The Commission need “not decide an issue not raised in the moving party’s
motion for summaiyjudgment.”Esser Electric v.Lost River Ballistics Technologies,145 Idaho 912,919,188 P.3d
854,861 (2008).
ORDER NO.32861 19
the Commission order Idaho Power to execute the March 10,2011 drafi contract “with the
addition of language disclaiming ownership of the RECs Id.at 3.Also,in its Motion for
Summary Judgment,Grand View requested the Commission order Idaho Power to disclaim
“ownership of all [REC5],and order that Idaho Power enter into such a PPA with rates calculated
under the methodology in effect on the date of the filing of Grand View’s complaint.”Motion at
2,36.
Based upon these facts contained in the pleadings,we find that Grand View failed to
make a binding and unconditional offer to sell power to the utility,which the utility could accept.
In other words,Grand View’s purported LEO was conditioned upon the removal of §8.1 and the
utility disclaiming all REC ownership.Thus,we find Grand View did not make a binding and
unconditional legally enforceable obligation to provide power to the utility.
Our finding that the offer was conditional and not a binding offer is supported by
several Idaho Supreme Court cases.In A.W.Brown v.Idaho Power Company,our Supreme
Court examined a claim made by a QF that it had perfected a LEO and was entitled to prior
avoided cost rates.121 Idaho 812,$28 P.2d 841 (1992).In discussing,the necessary criteria for
a LEO,the Court stated that the Qf “must show that but for the actions of the utility it was
otherwise entitled to a contract [or LEO].In most cases this will entail making a comprehensive
binding offer....“121 Idaho at 817,828 P.2d at $46 (emphasis added).In Rosebud Enterprises
V.Idaho PUC,131 Idaho 1,951 P.2d 521 (1997),rehrg denied (1998),the Court held that the
QF was not entitled to an earlier avoided cost rate because it had not legally obligated itself to
deliver power to the utility.In affirming this Commission’s decision,the Court observed that
“Rosebud made its willingness to commit to ‘a definite agreement’expressly conditioned on its
obtaining concessions from vendors,financiers,and suppliers.”Id.at 6,951 P.2d at 526.While
most of the PPA terms in this case were not in dispute,we nevertheless find that Grand View’s
LEO offer was conditional and not binding.A legally enforceable obligation is a binding
commitment to deliver power to the utility.A 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.”Armco Advanced Materials v.Pennsylvania PUC,579 A.2d1337,
1347 (Pa.1990).failure to satisfy the two conditions here would allow Grand View to walk
away from its conditional offer.Id.;see also In re Midatlantic Cogen,1993 WL 561981*7
N.J.B.R.C.(N.J.1993).
ORDER NO.32861 20
These two cases are consistent with a third PURPA case,Idaho Power Co.v.
Cogeneration,134 Idaho 738,9 P.3d 1204 (2000).In Cogeneration,the Idaho Supreme Court
was examining a PURPA case involving Idaho Power and another QF.In that case,the Qf
tendered payment of a security deposit “conditioned on Idaho Power’s recognizing that an event
offorce majeure had occurred.”134 Idaho at 746,9 P.3d at 1212.The Court affirmed the trial
court’s finding that the QF’s offer of the security payment was conditional “and therefore did not
legally constitute a tender.”Id.The Court went on to observe that the district court correctly
reasoned that the Qf’s offer did not constitute a tender because it was not unconditional.Id.
In this case,Grand View has not indicated that receiving anything less than all REC
revenue would be satisfactory.Grand View acknowledges that Idaho Power offered “to split
REC ownership between Idaho Power and Grand View Solar Two on a fifty/fifty percent basis”
or the first 10 years and last 10 years of the PPA.Initial Complaint at ¶11-12.Grand View
specifically rejected that offer and stated that it “seeks a contract in which REC ownership is
disclaimed by Idaho Power.”Id.at ¶13.11 In its prayer for relief in its initial complaint,Grand
View asked the Commission to “Requir[eJ Idaho Power to resume inserting language in standard
PURPA PPAs to the effect that Idaho Power makes no claim to REC ownership.”Id.at 6;
Amended Complaint at 3.Thus,we cannot find that Grand View would have accepted anything
less than all the RECs.
‘During the parties 2011 negotiations,Grand View’s counsel suggested in an e-mail dated June 8,2011,the QF is
“willing to sign the [Agreement]with the REC language you have [in §8.11 if we make it contingent upon whether
the Commission specifically requires that language.In other words,we sign and submit two versions of the
[Agreement]:one with the language [of 8.1]...and one without and we accept the judgment of the Commission
as the final outcome.”Idaho Power Answer to Amended Complaint,Atch.1.In response to this suggestion by
Grand View,Idaho Power’s counsel in a July 10,2011 e-mail offered to submit the disputed §8.1 to the
Commission for resolution.The utility suggested to Grand View that it add language to §8.1 clearly pointing out
that the REC provision was in dispute.The text proposed to be added to §8.1 was contained in a July 10,2011 emailfromIdahoPower’s counsel to Grand View’s counsel.The proposed addition read:
As of the date of this Agreement,Idaho Power seeks inclusion of the above language in Article 8.
Seller seeks to have Article 8 remain blank.The parties have agreed to all other terms and
conditions of this Agreement,and hereby agree to submit the issue of whether to include the above
language in Article 8 or to leave Article 8 blank in this Agreement to the Commission for its
determination.The parties intend to submit comments to the Commission supporting their
respective positions,and hereby agree to abide by the Commission’s determination of this issue in
this Agreement.The final Order of the Commission in response to the inclusion of Article 8
language will be included and become an integral part of this Agreement,which the parties agree
to support and uphold.
Id.Grand View rejected Idaho Power’s offer and instead filed its initial complaint on August 2,2011.
ORDERNO.32861 21
The affidavit of Grand View’s manager also calls into question whether Grand View
is able to perform under a legally enforceable obligation.Grand View’s manager,Robert Paul,
stated in his supporting affidavit,that Grand View’s business plan is based upon selling all the
RECs associated with this project.Aff.at ¶24.He stated that without the ability to sell all the
RECs,the “project’s financial viability will be compromised.”Aff at ¶25,28.He also declared
that the project’s profitability,his ability to raise the capital necessary to build and operate the
project would also be compromised”if Grand View could not sell all of the RECs.Id.at ¶26,
29.He “had no objections to Idaho Power’s draft contract other than the clause clouding
ownership of the RECs.But for that clause,I would have signed the Power Purchase Agreement
on behalf of Grand View PV Solar Two.”Aff.at ¶12.We find these statements undermine
Grand View’s argument that it was willing and able to mutually obligate itself to supply power.
We find its offer to supply power was contingent upon removal of §8.1 and the inclusion of
language ordering Idaho Power to disclaim RECs in their entirety.
Although we find based on the record before us that Grand View had not perfected a
LEO on March 11,2011,August 2,2011,November 29,2011,or December 20,2011,we note
the parties did engage in settlement negotiations.However,Grand View has not asserted nor has
it provided any evidence that it made an unconditional offer that would give rise to a legally
enforceable obligation.Consequently,we find Grand View has not sufficiently demonstrated that
it created a legally enforceable obligation.Thus,Grand View’s Motion for a Declaratory Order
is denied.
ORDER
IT IS HEREBY ORDERED that Grand View’s Petition for Clarification and Idaho
Power’s Cross-Petition for Clarification are granted in part and denied in part as set out above.
IT IS FURTHER ORDERED that Grand View’s Motion for Declaratory Order is
denied.
IT IS FURTHER ORDERED that if Grand View has evidence that it created a legally
enforceable obligation without conditions,then it may present such evidence to the Commission
within seven days of the date of this Order.If Grand View makes such a filing,then Idaho
Power may file a response within 14 days of the service date of this Order.
ORDER NO.32861 22
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this Z9 “
day of July 2013.
P1E!SIDENN
MACK A.REDFORICMMI1SSIONER
1ezL /L’L
MARSHA H.SMITH,COMMISSIONER
ATTEST:
Ji D.JewellU
Commission Secretary
bls/O:IPC-E-1 1-1 5_dh2
ORDER NO.32861 23