20130319Motion for Declaratory Order.pdf

Peter J. Richardson (ISB # 3195)
Gregory M. Adams (ISB # 7454)
Richardson & O'Leary, PLLC
515 N. 27th Street
P.O. Box 7218
Boise, Idaho 83702
Telephone: [phone]
Fax: [phone]
[e-mail]
greg(richardsonandoleary.com
ti3iiR 19 A' It:
I D L' L.'
UTILITiES C0Mh4S8iON
Attorneys for Complainant
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
Grand View PV Solar Two, LLC,
Complainant,
VS.
IDAHO POWER COMPANY,
Defendant.
Case No. IPC-E-1 1-15
MOTION FOR DECLARATORY
ORDER REGARDING THE
LEGALLY ENFORCEABLE
OBLIGATION BETWEEN GRAND
VIEW PV SOLAR TWO AND IDAHO
POWER COMPANY
1 BACKGROUND
2 This docket is almost three years old. Grand View PV Solar Two, LLC ("Grand View")
3 lodged its complaint seeking "the standard PURPA PPA with IRP calculated rates that disclaims
4 REC ownership by Idaho Power" against the Idaho Power Company ("Idaho Power" or the
5 "Company") on August 2, 2011.1 Recent orders from the Idaho Public Utilities Commission
6 ("Commission") and from the Federal Energy Regulatory Commission ("FERC") make clear
7 that the time is ripe to close this docket by ordering Idaho Power to honor the Legally
8 Enforceable Obligation ("LEO") created between it and Grand View on March 10, 2011.
Page 1— MOTION FOR DECLARATORY ORDER
It is critical to the resolution of this case that the Commission not lose sight of the TWO
2 issues in contention in this docket. One issue is the ownership of renewable energy credits
("RECs") and the other issue is Grand View's entitlement to a power purchase agreement (PPA)
4 beginning on March 10, 2011. In its order denying Grand View's Motion for Summary
Judgment the Commission addressed just the issue of REC ownership and failed to address the
6 issue of Grand View's LEO.2 However, the Commission recited the uncontested facts in this
7 case at length:
8 Unless otherwise indicated, the following facts do not appear in dispute:
9
10 Grand View's initial complaint alleges that it has been in contact "with Idaho
11 Power for several months discussing contract terms and conditions." Complaint at ¶ 7.
12 Pursuant to these discussions, Idaho Power sent Grand View a draft power purchase
13 agreement (PPA) on March 10, 2011 (hereinafter the "March 2011 draft PPA" or the
14 "March draft"). The March draft PPA contained avoided cost rates for the 20 MW solar
15 plant based upon the Integrated Resource Planning (IRP) methodology for QFs greater
16 than 100 kW. Motion for Summary Judgment at 1, 5. Grand View maintains that it
17 agreed to all material terms in the March draft except the provision addressing the
18 ownership of RECs. Id at 4. Section 8.1 of the draft PPA provides:
19
20 Under this Agreement, ownership of Green Tags and Renewable Energy
21 Certificate (RECs), or the equivalent Environmental Attributes, directly
22 associated with the production of energy from the Seller's Facility sold to Idaho
23 Power will be governed by any and all applicable Federal or State laws and/or any
24 regulatory body or agency deemed to have authority to regulate these
25 Environmental Attributes or to implement Federal and/or State laws regarding the
26 same.
27
28 March 2011 draft PPA (Paul Aff., Exh. 2).
29
30 After the parties were unable to resolve their dispute regarding § 8. 1, the parties
31 discussed two alternatives proposed by Idaho Power. First, Idaho Power suggested that
32 the parties split REC ownership on a 50-50 percent basis. Second, Idaho Power proposed
33 dividing the RECs with Grand View receiving the RECs for the first ten years of the
34 contract and Idaho Power receiving the RECs for the last 10 years of the Agreement.
35 Complaint at ¶J 11, 12; Idaho Power Answer at ¶J 11, 12. After Grand View rejected the
36 two alternatives, Idaho Power states that it agreed to Grand View's request to submit a
37 signed PPA to the Commission for its review including the language of § 8.1 of the PPA
38 quoted above. This would allow Idaho Power to argue to the Commission that § 8.1 of
2 Order No. 32580, June 21, 2012.
Page 2— MOTION FOR DECLARATORY ORDER

1 the PPA should be retained, and conversely, Grand View could argue that § 8.1 should be

2 deleted. Idaho Power Answer at 14. After Idaho Power agreed to Grand View's

3 proposal to have the Commission decide the disputed issue, "Grand View instead filed

4 [its] complaint on August 2, 2011. Id.
5
6 The Commission's factual narrative is compelling in the resolution of the question of Grand
7 View's entitlement to the March 10, 2011 'draft' PPA. That PPA is attached as Exhibit 1 t Mr.
8 Paul's affidavit in support of Grand View's Motion for Summary Judgment. Grand View had
9 agreed to all terms but the single issue that Idaho Power and Grand view had initially agreed to
10 submit to the Commission for resolution. The only outstanding issue at the time was who owned
11 the RECs. The question of Idaho Power's obligation to purchase the output from this QF was
12 not at issue. As discussed more fully below, Grand View had, at that time, created a Legally
13 Enforceable Obligation on Idaho Power's part to purchase its PURPA power.

14 In construing the disputed § 8.1 in its order denying Grand View's Motion for Summary
15 Judgment, the Commission modified the meaning of that disputed section by adding the
16 requirement that "REC ownership will be governed by applicable state law at the time the
17 contract is executed and approved." Of course, the phrase "at the time the contract is executed
18 and approved" does not appear in the March 10, 2011, PPA and it does not appear in § 8.1 of that
19 agreement. Grand View lodged a petition for clarification of the Commission's order on July 9,

20 2012, pointing out that:

21 QFs can create a legally enforceable obligation without a fully executed and approved

22 agreement. See 18 C.F.R. § 292.304(d)(2); Cedar Creek Wind, 137 FERC ¶ 61,006

23 (2011). The Commission had determined that QFs can create a legally enforceable
24 obligation without obtaining a fully executed agreement. See In Re Cedar Creek Wind,

25 IPUC Order No. 32419 at 8-9, Case Nos. PAC-E-11-0 1, -02, -03, -04, -05 (2011). Grand
26 View submits that the date at which all rates and terms of the contract - including REC
27 ownership - should be determined is the date that the QF creates a legally enforceable

28 obligation, whether by fully executed agreement or otherwise.4
3 Id. at5-6.
Petition for Clarification p.7.
Page 3— MOTION FOR DECLARATORY ORDER

I Grand View's Petition for Clarification has been pending before the Commission for almost nine
2 months without Commission action. In the meantime, the Commission issued a decision in a
3 separate docket in which ownership of RECs were adjudicated in a generic context. In GNR-E-

4 11-03, the so-called 'generic avoided cost docket,' the Commission ruled that when the avoided

5 cost rates are determined using the IRP methodology, the utility and the developer will split the
6 ownership rights on a 50 - 50 percent basis.5 That order was issued on December 18, 2012, and
7 should not be controlling on Grand View's REC ownership because Grand View had created its
8 LOE in March of 201 1.6

9 THERE CAN BE NO QUESTION OF GRAND VIEW'S

10 CREATION OF A LEGALLY ENFORCEABLE OBLIGATION

11 The facts recited by the Commission in its order denying Grand View's Motion for
12 Summary Judgment demonstrate beyond a doubt that a LOE exists between Grand View and

13 Idaho Power. The Commission's decision on reconsideration makes it clear that it is waiting to
14 determine REC ownership until a "contract is executed and approved."7 However, Grand View
15 does not have to wait until Idaho Power executes the contract for the Commission to approve it
16 in order to have created a LEO, at which time the legal status of REC ownership is determined.

17 This Commission has been the subject of multiple actions wherein FERC has admonished
18 that a LEO may be created unilaterally by a QF independent of the utility's or Commission's
19 actions. As recently as last week FERC again admonished the Idaho Commission:

20 As we stated in Cedar Creek, "a QF, by committing itself to sell to an electric utility, also

21 commits the electric utility to buy from the QF; these commitments result either in

22 contracts or in non-contractual, but binding, legally enforceable obligations." [citation
GNR-E-1 1-03 at p. 46.
6 On February 5, 2012 the Commission granted reconsideration on the question of REC ownership. Even though
Order No. 32697 is final and has not been stayed, the Commission decision on the ownership of RECs may still be
subject to change.
7 Order No. 32580 at p. 14.
Page 4— MOTION FOR DECLARATORY ORDER

I omitted] We found that the Idaho Commission's orders in those proceedings, by limiting

2 the circumstances under which a legally enforceable obligation arose, made a fully-

3 executed contract a condition precedent to a legally enforceable obligation. We held that

4 such a condition precedent is inconsistent with PURPA and our regulations implementing

5 PURPA, however, because state restrictions mandating that a legally enforceable

6 obligation may be created only by a fully-executed contract are inconsistent with PURPA

7 and the Commission's regulations implementing PURPA. [citation omitted] In addition,

8 we found that the Idaho Commission's limitation on the conditions for legally

9 enforceable obligation formation overlooked "the fact that a legally enforceable

10 obligation may be incurred before the formal memoralization of a contract to writing."

11 [citation omitted] Indeed we stressed that:
12

13 [T]he phrase legally enforceable obligation is broader than simply a contract

14 between an electric utility and a QF and that the phrase is used to prevent an

15 electric utility from avoiding its PURPA obligations by refusing to sign a

16 contract, or as here, delaying the signing of a contract, so that later and lower

17 avoided cost is applicable.8
18
19 It was on August 2, 2011, that Grand View took the extraordinary measure of actually lodging a
20 complaint with the Commission requesting that Idaho Power execute its standard PURPA PPA

21 using the 'IRP' methodology for calculating rates. In its pleading, Grand View, complained that,
22 inter alia: "Idaho Power is in violation of PURPA, FERC's implementing regulations and this
23 Commission's orders;" that "Idaho Power ... resume inserting language in standard PURPA
24 PPAs to the effect that Idaho Power makes no claim to REC ownership;" and that "Idaho Power
25 refuses to enter into the standard PURPA PPA that disclaims REC ownership". Standing alone,
26 the fact that Grand View lodged a complaint back in August of 2011 is sufficient evidence that
27 Grand View had unilaterally obligated itself and Idaho Power to a legally enforceable obligation.

28 Indeed Idaho Power presumes the existence of a legally enforceable obligation in the way
29 it crafted its Answer to Grand View's Complaint. Idaho Power answered:

30 However, Idaho Power admits that it agreed to Grand View's request to submit a signed

31 contract for the Commission's review containing the proposed language cited above [

32 8.1] - to which Idaho Power would seek Commission approval, and to which Grand

33 View would seek rejection of, and Grand View would advocate that the contract remain
8 Grouse Creek Wind Park, LLC, Grouse Creek Wind Park II, LLC Docket Nos. EL 13-39-000, at P. 15. 142 FERC
¶61,187. March 15, 2013.
Page 5— MOTION FOR DECLARATORY ORDER

I silent as to REC ownership - and that the parties would accept the Commission's

2 determination approving or rejecting the language in the signed contract. Upon Idaho

3 Power's agreement to this proposal by Grand View to submit the issue to the

4 Commission in a signed contract with the parties' rights reserved to argue alternatively as

5 described above, Grand View instead filed this complaint.9
6
7 Idaho Power's Admission presupposes the execution of a contract with the parties rights reserved
on the REC issue. That can only mean the parties had a mutual agreement as to all other issues
9 or else Idaho Power would not have admitted it was prepared to sign the PPA, albeit with REC
10 reservations. That said, it is, according to FERC, irrelevant that Idaho Power may have been

11 willing to sign the contract. Grand View has the unfettered right to unilaterally create a LEO
12 without Idaho Power's written consent. That is what it did, at a minimum, when it lodged its
13 complaint seeking an order from the Commission on the question of execution of a standard
14 PURPA agreement that disclaimed REC ownership.

15 Moreover, FERC's Grouse Creek order made it clear that a QF need not have to even file

16 a complaint in order to create legally enforceable obligation:

17 A contract serves to limit and/or define bilaterally the specifics of the relationship

18 between the QF and the utility. A contract may also limit and/or define bilaterally the

19 specifics of the legally enforceable obligation at the heart of the relationship. But the

20 obligation can pre-date the signing of the contract. Moreover, the tool of"seek[ing] state

21 regulatory authority assistance to enforce the PURPA-imposed obligation" does not mean

22 that seeking such assistance is a necessary condition precedent to the existence of a

23 legally enforceable obligation. The Idaho Commission's requirement that a QF formally

24 complain "meritorious[ly]" to the Idaho Commission before obtaining a legally

25 enforceable obligation would both unreasonably interfere with a QFs right to a legally

26 enforceable obligation [citation omitted] and also create practical disincentives to

27 amicable contact formation. Such obstacles to QFs are at odds with the Commission's

28 regulations implementing PURPA. They are not reasonable conditions for a state

29 PURPA process. 10
30

31 It is clear, then, that Grand View has gone the 'extra mile' in terms of creating a legally
32 enforceable obligation. Grand View actually took the, according to FERC, unnecessary step of
Idaho Power Company's Answer p. 6. Emphasis provided.
10 Grouse Creek, supra at 17.
Page 6— MOTION FOR DECLARATORY ORDER
I seeking state regulatory assistance through the filing a complaint seeking a Commission ordered
2 PURPA agreement.
3 PRAYER FOR RELIEF
4 WHEREFORE Grand View Solar PV Two, LLC respectfully requests this Commission
5 issue its order declaring that it created a legally enforceable obligation between it and Idaho
6 Power as of March 10, 2011, and no later than August 2, 2011, and order Idaho Power to tender
7 an executable contract to that effect containing rates and terms and conditions in effect as of the
8 date of the Legally Enforceable Obligation. Furthermore, Idaho Power should not insert
9 disputed Section 8.1 and should otherwise remain silent as to REC ownership in the contract
10 pursuant to the Commission's ruling in Order No. 32580.
11
Respectfully submitted this 19th day of March 2013.
RICHARDSON AND O'LEARY, PLLC
2M. s
Peter J. Richardson (ISB No: 3195)
Gregory M. Adams (ISB No. 7454)
Attorneys for Complainant
12
Page 7— MOTION FOR DECLARATORY ORDER
1 CERTIFICATE OF SERVICE
2
3 I HEREBY CERTIFY that on the 19th day of March, 2013, a true and correct copy of the
4 within and foregoing MOTION FOR DECLARATORY ORDER OF GRAND VIEW PV
5 SOLAR TWO, LLC was served in the manner shown to:
6
7
Ms. Jean Jewell X Hand Delivery
Commission Secretary U.S. Mail, postage pre-paid
Idaho Public Utilities Commission - Facsimile
472 W. Washington (83702) ) Electronic Mail
P0 Box 83720
Boise, ID 83720-0074
Lisa Nordstrom X Hand Delivery
Donovan Walker U.S. Mail, postage pre-paid
Idaho Power Company - Facsimile
P0 Box 70 X Electronic Mail
Boise, Idaho 83707-0070
[e-mail]
[e-mail]
Kriss Sasser X Hand Delivery
Deputy Attorney General U.S. Mail, postage pre-paid
Idaho Public Utilities Commission - Facsimile
472 W. Washington X Electronic Mail
Boise ID 83702
Scott.woodbury(puc.idaho.gov
Clint Kalich Hand Delivery
Avista Corporation XU.S. Mail, postage pre-paid
1411 E. Mission Ave. MSC-7 - Facsimile
Spokane, WA 99202 X Electronic Mail
[e-mail]
Michael G. Andrea Hand Delivery
Avista Corporation XU.S. Mail, postage pre-paid
1411 E. Mission Ave. MSC-23 - Facsimile
[e-mail] X Electronic Mail
Nina Curtis, Administrative Assistant
Page 8— MOTION FOR DECLARATORY ORDER