20141219Clark Solar3 Comments.pdf

(208) 343-7s00
[phone] (Fax)
McDevitt & Miller LLP
Lawyers
420 West Bannock Stteet
P.O. Box 2564-83701
Boise,Idaho 83702
December 1,9,2074
Chas. F. McDeyitt
DeanJ.floe) Millet
Celeste I( Miller
Via tfand Delivety
JeanJewell, Secretary
Idaho Public Utilities Commission
472W. Washington St.
Boise,Idaho 83720
Re: IYC-E-14-26
tPC-E-14-27
IPC-E-14.28
tPC-E-14-29
rPC-E-14-30
IPC-E-14-31
Mountain Ffome Solat, LLC
Pocatello Solar 1, LLC
Clark Solar 1, LLC
Clatk Solat 2, r.I-Q
Cla* Solat3, LLC
Clark Solar 4, LLC
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Dear Ms. Jewell:
Enclosed for filing is an original and seven (7) copies of the Reply Comments for each of the cases
listed above.
An additional copy of these documents and lettet are included fot retum to me with your file stamp
thereon.
Very Truly Yours,
DJM/hh
Enclosutes
cDevitt & MillerLLP
ORIGINAL
Dean J. Miller (ISB No. 1968)
McDEVTIT & MILLER LLP
420 West Bannock Sfreet
P.O. Box 2564-83701
Boise, D 83702
Tel: [phone]
Fax [phone]
j o@mcdevitt-miller. com
Attorneyfor Mountain Home Solar, LLC, Pocatello Solar 1, LLC, Clark Solar I, LLC, Clark
Solar 2, LLC, Clark Solar i, LLC, and Clark Solar 4, LLC
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
RF:IElrr,:';',
?0lt DEC I 9 PH 3: 32
iiiiil,Jir': ..
IJ i li-lTl i:s (l0i;ii,i ioS I C,
IN TIIE MATTER OF THE APPLICATION
OF IDAHO POWER COMPAI{Y FOR
APPROVAL OR REJECTION OF AI\
ENERGY SALES AGREEMENT WITH
MOUNTATN HOME SOLA& LLC, FOR
THE SALE AI\D PURCHASE OT'
ELECTRIC ENERGY.
IN THE MATTER OT'THE APPLICATION )
OF IDAEO POWER COMPAI\"Y FOR )
APPROVAL OR REJECTTON OF AN )
ENERGY SALES AGREEMENT WITH )
POCATELLO SOLAR 1, LLC, FOR Trrr'. )
SALE AI\D PTIRCHASE OT'ELECTRIC )ENERGY. )
IN THE MATTER OF'TIIE APPLICATION
OF IDAHO POWER COMPAI\-Y F'OR
APPROVAL OR REJECTION OF AII
ENERGY SALES AGREEMENT WITH
CLARK SOLAR I,LLC, FOR THE SALE
AI\D PT]RCHASE OF ELECTRIC
ENERGY.
CASE NO.IPC.E.14.26
INITIAL COMMENTS OF
MOUNTAIN HOME SOLA& LLC,
POCATELLO SOLAR I,LLC, CLARK
soLAR 1, LLC, CLARr( SOLAR 2,
LLC, CLARK SOLAR 3, LLC, and
CLARK SOLAR 4,LLC
CASE NO. IPC-E-I4.27
) cAsE NO. rPC-E-14-28
)
)
)
)
)
)
INITIAL COMMENTS OF MOT NTAIN EOME SOLA& LLC, POCATELLO SOLAR |,LLC, CLARK
soLAR |,LLC, CLARK SOLAR z,LLC, CLARK SOLAR 3, LLC, AND CLARK SOLAR ,LLC-L
IN THE MATTER OF TIIE APPLICATION
OF IDAHO POWER COMPANY FOR
APPROYAL OR REJECTION OF AN
ENERGY SALES AGREEMENT WITH
CLARI( SOLAR z,LLC, FOR THE SALE
AND PT]RCHASE OF ELECTRIC
ENERGY.
) CASE NO. rPC-E-t4-29
)
)
)
)
)
)
IN TIIE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
APPROVAL OR REJECTION OF AI\
ENERGY SALES AGREEMENT WITII
CLARI( SOLAR 3, LLC, F'OR THE SALE
AND PURCIIASE OF ELECTRIC
ENERGY.
CASE NO. IPC.E-14.30
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPAIIY FOR
APPROVAL OR REJECTION OF AI\
ENERGY SALES AGREEMENT WITH
cLARr( SOLAR 4,LLC, FOR THE SALE
AND PURCIIASE OF ELECTRIC
ENERGY.
CASE NO. IPC-E.I4.3I
Pursuant to Order Numbers 33162,33163,33164,33165,33166, and33167 these Initial
Comments are filed on behalf of Mountain Home Solar, LLC, Pocatello Solar I,LLC, Clark
Solar 1, LLC, Clark Solar 2, LLC, Clark Solar 3, LLC, and Clark Solar 4, LLCr.
The Managing member of each of the above referenced special purpose limited liability
companies is Intermountain Energy Partners, LLC (IEP), also an Idaho limited liability
company. The above referenced projects are therefore collectively referred to herein as "the IEP
Contracts or the IEP Projects". With minor exceptions, relating to project location and the like,
all of the IEP Contracts contain identical terms and conditions.
I As a counterparty to each of the Energy Sales Agreements, each LLC has a direct interest in the Agreements and a
Petition to Intervene is not required as a pre-condition to frling these Comments. ^See Order No .32222, Case Nos.
IPC-E-10-61, IPC-E-10-62.
INTTIAL COMMENTS OF MOUNTAIN EOME SOLA& LLC, POCATELLO SOLAR |,LLC, CLARK
soLAR 1, LLC, CLARK SOLAR 2,LLC, CLARK SOLAR 3, LLC, AND CLARK SOLAR 4,LLC-2
INTRODUCTION AND SUMMARY OF' ARGUMENT
Each of the IEP Contracts contain altemative Solar Pricing Schedules, labeled as Exhibits
E and F. Each of the IEP Contracts contain the following provision (Paragraph 7.1).
"The Solar Facility Pricing Schedule to be included in this Agreement is disputed by the Parties.
Idaho Power believes Appendix E is the appropriate Solar Facility Pricing Schedule as it
includes an Idaho Power capacity deficit period beginning in202l. The Seller believes
Appendix F is the appropriate Solar Facility Pricing Schedule and it includes an Idaho Power
capacity deficit period beginning in20l6. Both of these pricing schedules were calculated using
the Commission approved Incremental Cost IRP Avoided Cost Methodology, with the only
difference being the starting date of the Idaho Power capacity deficit period. The Parties have
agreed to all other terms and conditions of this Agreement and hereby agree to submit this Solar
Facility Pricing Schedule dispute to the Commission forresolution. The Parties may submit to
the Commission written argument or Comments in support of their respective positions, in
accordance with a procedural schedule mutually agreeable to the Parties and the Commission.
The Parties agree to abide and be bound by the Commission's decision on this issue. The final
Order of the Commission resolving this dispute will be included and become an integral part of
this Agreernent, which the Parties agree to support and uphold".
As stated in the final sentence of paragraphT.l, the IEP Projects will accept the
Commission's choice as to whether Appendix E or Appendix F prices should be included in a
final approved ESA. These Comments are intended to outline for the Commission
considerations it might take into account in making that choice.
There is a complicating factor. In Case No. IPC-E-14-20 (Boise City Solar) the
Commission Staff proposed adjustments to the IRP calculation methodology that resulted in
changes to the prices in Exhibit E, and the parties accepted those adjustments. ln response to
discovery requests, Idaho Power, in each of IEP Contract cases, has submitted to Commission
Staffand to IEP revised Exhibits E and F incorporating the adjustrnents accepted in Boise City
Solar.
INITTAL COMMENTS OF MOUNTATN EOME SOLA& LLC, POCATELLO SOLAR I,LLC, CLARK
soLAR 1, LLC, CLARK SOLAR z,LLC, CLARK SOLAR 3,LLC, AND CLARK SOLAR 4,LLC-3
Following that, Commission Staff submitted another Production Request (Third
Production) requesting another re-calculation of rates for each project. (Staffdid not ask for a re-
calculation price for Clark 3, Case No. IPC-E-14-30). Idaho Power provided to Staffand to IEP
those calculations on December 16,2014 with respect to Exhibit E prices. The Third Production
re-calculation resulted in small reductions to the initial Exhibit E prices.
If the Commission chooses to include Exhibit E prices, in the final ESA, IEP agrees those
prices maybe adjusted to incorporate the Third Production re-calculation. If the Commission
chooses to include Exhibit F prices in the final ESA, IEP agrees those prices may be again re-
calculated consistent with the Third Production re-calculation.2
For the reasons set forth below, the Commission should approve the prices contained in
Exhibit F, as modified by the Boise Ci4r adjustments, and should direct Idaho Power Company to
prepare and file conforming final energy sales agreements for final approval.
FACTS
Each ofthe IEP Contracts were finally executed by the parties on October 13,2014.
Pursuant to paragraph 1.11, the IEP Contracts became binding contractual obligations, as
between the parties, on that date.
As of October 13, 2014, the date the IEP contracts became binding between the parties,
the Commission approved IRP methodology contemplated a first deficit year of 2021, as
reflected by the prices contained in Exhibit E.
2IEP has reservations about the process (changing IRP methodology in a bi-lateral contact approval case) and the
methodology (which is basically incomprehensible to a person of ordinary intelligence) that produced the Third
Production re-calculations. The small price reductions resulting from the Third Production re-calculations are
certainly within a margin of error inherent in avoided cost estimations and it would not be unreasonable to ignore
them. However, from IEP's business perspective, it is not worth the ef;lort required to contest them. IEP, therefore,
accepts the reductions if the Commission choses to order them, for the purpose of these cases, only.
INITIAL COMMENTS OF MOUNTAIN HOME SOLA& LLC, POCATELLO SOLAR |,LLC, CLARK
soLAR 1, LLC, CLARK SOLAR 2,LLC, CLARK SOLAR 3,LLC, AtlD CLARK SOLAR 4,LLC-4
On October 29,2014, in Case No. IPC-E-14-22, Application Con/inning Capacity Deficit
Periodfor IRP Methodolog,t, the Commission iszued Order No. 33159. That Order concluded
that a first deficit year of 2021 was appropriate for use in the IRP methodology. Order No. 33159
is silent as to whether it applies to energy sales agreements already executed and binding
between the parties.
General Framework
A fundamental principle of public utility regulation is that the Commission orders operate
prospectively and the Commission may not engage in retroactive ratemaking. Uah Power v.
IPUC, 107 Idaho 47, 685 P.2d276 (1984). When acting in its legislative capacity, as opposed to
quasi-judicial, Commission orders are only effective prospectively. Order No,32974,
Grandview Solar v. Idaho Power, Case No. IPC-E-I1-5.
Thus, in the absence of other considerations, discussed below, Order No. 33159, issued
on October 29,2014, could only be effective as to contracts executed after that date. Order No.
33159, by its terms, does not pu{port to effect a change in prices for executed contracts, such as
the IEP Contracts, which were in existence on October 29,2014.
Section 1.11, Effective Date
As noted above, each of the ESA's, contain paragraph 1.11, which states:
"1.11 "EEflective Date"-The date stated in the opening paragraph of this Energy Sales
Agreement representing the date upon which this Energy Sales Agreement was fully
executed by both Parties."
The date stated in the opening paragraph representing the date each of the ESAs were
fully executed is October 13, 2014.
TNITTAL COMMENTS OF MOUNTATN HOME SOLA& LLC, POCATELLO SOLAR |,LLC, CLARK
soLAR |,LLC, CLARK SOLAR z,LLC, CLARK SOLAR 3, LLC, AND CLARK SOLAR 4,LLC-5
The Commission has consistently held that the effective date stated in an energy sales
agreement is the date upon which the rights of the parties become fixed and legally binding. See,
OrderNo.2727l,A.W. Brownv.Idaho Power, CaseNo. IPC-E-88-9;OrderNos.32256,32300,
Case Nos. IPC-E-10-59, IPC-10-60,ln Re: Rainbow Ranch, (holding that contracts with
effective dates one day after a Commission deadline should be rejected) . See also, Order No.
32299, Case Nos. IPC-E-I0-61, IPC-E-62,ln Re: Grouse Creek.
Role of Contracts
The Idaho Supreme Court has recognizedthat contracts between utility companies and
other parties are protected from government interference by Idaho Constitution Art. I Sec. 16,
which provides that "no law impairing the obligation of contracts shall ever be passed". Bunker
Hill v. Washington Water Power 98 Idaho 249,561 P .2d,391 (1977); Agricultural Products v.
Utah Power 557 P.2d 61,7 (1976).
A limited exception to the constitutional protection of contracts arises from the state's
police powers. However, the Supreme Court has recognizedthat the police power is not
unlimited and the "state may not interfere with a utility contract unless it finds that the rate is so
low as the adversely affect the public interest-as where it might impair to financial ability of the
public utility to continue its service, cast upon other consumers an excessive burden or be unduly
discriminator!'. CDA Dairy Queen v. State Insurance Fund, 154 Idaho 379,299 P.2d 186, 192
(2013).
Grouse Creek and A.IY. Brown
The most recent Idatro Supreme Court decision relating to contract formation and
Commission approval of contracts is Grouse Creek Wind Park LLC v. Idaho Power Company,
155 Idalro 780, 316 P.3d1278 (2103). There, the Commission established abright-line date of
INITIAL COMMENTS OF MOUNTATN HOME SOLA& LLC, POCATELLO SOLAR |,LLC, CLARK
soLAR 1, LLC, CLARK SOLAR 2,LLC, CLARK SOLAR 3, LLC, AND CLARK SOLAR 4,LLC-6
December 14,2010 as a deadline for submitted fully executed energy sales agreements. The
energy sales agreements for the Grouse Creek projects were fully executed on December 28,
2010. (316 P.3d 1283). The Grouse Creek projects argued a legally enforceable obligation was
created prior to December 14,2010. The Supreme Court held that where aptrty executes a sales
agreement with a stated effective date, the party may not claim the existence of a prior legally
enforceable obligation: "Because the parties voluntarily negotiated their power purchase
agreement, which provided that the effective dates were December 28, whether there could have
a legally enforceable obligation prior to entering into those agreements is irrelevant..." (316 P.3d
1286). See also, Jones, J, concurring: "By ceding to Idaho Power the ability to established the
effective date of contracts...Grouse Creek was clearly taking a garnblo--one which it lost." (316
P.3d 1291)
Significantly, the Court in Grouse Creeh affirmed its prior holding inA.W. Brown Co., v.
Idaho Power Company,l2l Idaho 812,828P.2d841(1992),ffirmedinRosebudEnterprises,
Inc. v. Idaho Public Utilities Comtn'n (l3l Idaho 1,952P.2d 521 (1977). In A.W. Brown the
Court upheld the Commission's position that a legally enforceable obligation comes into being
on the date a written agreement becomes effective by its terms.
Section 21.1
Each of the Agreernents contains a section 21.1 which provides in part:
"This Agreement shall onlybecome finally effective upon the Commission's approval of
all terms and provisions hereof without change or condition and declaration that all
payments to be made to Seller hereunder shall be allowed as prudently incurred expenses
for ratemaking purpo ses. "
INITIAL COMMENTS OF MOUNTATN HOME SOLA& LLC, POCATELLO SOLAR |,LLC, CLARK
soLAR |,LLC, CLARK SOLAR 2, LLC, CLARK SOLAR 3, LLC, AtlD CLARK SOLAR 4, LLC-7
In previous cases the Commission has relied on similar contract clauses to, in effect,
over'ride the signature date of agreements and to approve "grandfathering" entitlement to rates
existing before the signature date. See, Order No. 32024, Case No. IPC-E-10-15,ln re: Cargill;
Order No. 29951, Case No. IPC-E-05-33, In Re: Salmon Falls; Order No. 32104, Case No. IPC-
E-10-22,ln Re: Yellowstone Power.
Lr all of those cases, however, the triggering event-the date of change in rates-
occurred before the contract signafure date. Here, the triggering event-the issuance of Order
No, 33159 on October 29,2014----occurred after the signature effective date.
The issue presented here, then, is how to harmonize and give effect to both ESA
paragraph I . I 1 , Effective Date and ESA paragraph 21 . 1 , Commission Approval. IEP recognizes
that in Grouse Creek, the Supreme Court said that because of paragraph 2l.l the Commission is
not obligated to accept the prices contained in an ESA.
Grouse Creek is distinguishable, however, because it did not involve, as here, an Order
issued after the effective signature date. Grouse Creek does not answer the question presented
here. And, it goes without saylng, Grouse Creek certainly did not say the Commission must
reject prices in place on the signature effective date.
In light of the foregoing, IEP recommends, therefore, the Commission adhere to well-
established principle that Commission orders operate in a prospective way only; they do not look
back and re-adjust rights that came into existence before the Order was issued.
For the foregoing reasons, IEP respectfully recommends that the Commission approve
the ESA's prices contained in Schedule F.
INITIAL COMMENTS OF MOUNTAIN HOME SOLA& LLC, POCATELLO SOLAR |,LLC, CLARK
soLAR 1, LLC, CLARK SOLAR z,LLC, CLARK SOLAR 3,LLC,AND CLARK SOLAR 4, LLC-8
Dated this \'\day of Decernber, 2014.
Attomeyfor Mountain Home Solar, LLC, Pocatello
Solar 1, LLC, Clark Solar l, LLC, Clark Solar 2,
LLC, Clark Solar 3, LLC, and Clark Solar 4, LLC
rNrrIAL COMMENTS OF MOUNTAIN HOME SOLA& LLC, POCATELLO SOLAR 1, LLC, CLARK
soLAR |,LLC, CLARK SOLAR z,LLC, CLARK SOLAR 3,LLC, AND CLARK SOLAR 4,LLC-9
CERTIFICATE OF SERVICE
I hereby certiff that on *" -gH, of Decenrb er,20l4,I caused to be served, via the
method(s) indicated below, true and correct copies of the foregoing document, upon:
Hand Delivered &
U.S. Mail ..i
Fax
Fed. Express
Email
Hand Delivered
U.S. Mail
Fax
Fed. Express
Email
Hand Delivered
U.S. Mail
Fan
Fed. Express
Email
Jean Jewell, Secretary
Idaho Public Utilities Commission
47 2 W est Washington Steet
P.O. Box 83720
Boise, D 83720-0074
jj ewell@puc. state.id.us
Kristine Sasser, Deputy Attorney General
Idaho Public Utilities Commission
472W. Washington St.
Boise,Idatro 83720
[e-mail]. gov
Donovan E. Walker
Randy C. Allphin
Regulatory Dockets
Idaho Power Company
1221 West Idaho Street
P.O. Box 70
Boise,ID 83707
dwalker@i dahopower. com
rallphin@i dahopower. com
dockets@i dahopower. com
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INITIAL COMMENTS OF MOT]NTAIN HOME SOLA& LLC, POCATELLO SOLAR 1, LLC, CLARK
soLAR 1, LLC, CLARK SOLAR 2,LLC, CLARK SOLAR 3, LLC, AltD CLARK SOLAR 4, LLC-10