20161213final_order_no_33667.pdf

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE PETITION OF )
IDAHO POWER COMPANY FOR A ) CASE NO. IPC-E-16-21
DECLARATORY ORDER REGARDING )
PROPER A VOIDED COST PRICING FOR ) ORDER NO. 33667
_J_A_C_K_P_O_T_S_O_L_A_R _________ )
Office of the Secretary
Service Date
December 13, 2016
On September 26, 2016, Idaho Power Company filed a Petition asking the
Commission to issue a Declaratory Order regarding proper avoided cost pricing for Jackpot Solar
under the Public Utility Regulatory Policies Act of 1978 (PURPA). The Company seeks a
declaratory ruling stating that the !RP-based avoided cost prices for negotiated (non-standard)
PURP A contracts for Jackpot Solar, including the capacity component, are to be calculated and
reset prior to each successive two-year contract term; and that Jackpot Solar is not entitled to
lock-in an avoided cost rate beyond the two-year maximum contract term.
The Commission issued an Order providing Notice of the Application, Notice of
Modified Procedure, and setting a comment schedule. Order No. 33619. Because the subject
matter of this case presented a potential for generic ramifications, the Commission invited
feedback from potentially-affected utilities. Id. Rocky Mountain Power timely provided such
feedback. Commission Staff and Jackpot Solar timely filed comments. Jackpot Solar filed reply
comments to Staff's comments and the Company timely filed reply comments.
BACKGROUND: PUBLIC UTILITY REGULATORY POLICIES ACT
PURPA was passed as part of the National Energy Act of 1978, to encourage electric
energy conservation, ensure equitable retail rates, and to improve electric service reliability,
among other goals. 16 U.S.C. § 2601 (Findings). Under the Act, the Federal Energy Regulatory
Commission (FERC) prescribes rules for PURPA's implementation. 16 U.S.C. § 824a-3(a), (b).
State regulatory authorities such as this Commission implement FERC rules, and have
"discretion in determining the manner in which the rules will be implemented." Idaho Power
Company v. Idaho Pub. Util. Comm., 155 Idaho 780, 782, 316 P.3d 1278, 1280 (2013) (citing
F.E.R.C. v. Mississippi, 456 U.S. 742, 751 (1982)).
PURP A requires electric utilities, unless otherwise exempted, to purchase electric
energy from QFs. 16 U.S.C. § 824a-3; see also 18 C.F.R. §§ 292.101 (defining QFs),
292.303(a). The purchase rate for PURPA contracts -which must be approved by the state
ORDER NO. 33667
commission shall not exceed the '"incremental cost' to the utility, defined as the cost of energy
which, but for the purchase from [the QF], such utility would generate or purchase from another
source." 16 U.S.C. § 824a-3(d); 18 C.F.R. § 292.101(6) (defining avoided costs); Idaho Power,
155 Idaho at 789,316 P.3d at 1287.
PURP A and FERC's implementing regulations are silent as to contract length;
consequently, the issue is at the discretion of the state commissions. See Afton Energy, Inc. v.
Idaho Power, 107 Idaho 781, 785-86, 693 P.2d 427, 431-32 (1984); Idaho Power, 155 Idaho at
782, 316 P.3d at 1280. In 2015, this Commission reduced the maximum term for PURPA
contracts to two years for individually-negotiated contracts (those not subject to standard
"published" rates). Order Nos. 33357, 33419. When it shortened the term, the Commission also
determined that utilities should establish a capacity deficiency date1 at the time the initial
contract is signed. Order No. 33357 at 25-26; Order No. 33419 at 9, 21-23. As long as the QF
continuously sells power to the utility, the QF would be entitled to payments for capacity, based
on the capacity deficiency date established at the time of the initial contract. Order No. 33357 at
25-26; Order No. 33419 at 9, 21-23.
PETITION FOR DECLARATORY ORDER
Idaho Power stated it has been in negotiations with Jackpot Solar since August 2015
about Jackpot Solar' s various requests, including QF contracts for four 20 MW projects at the
same location, for 20 years each. Petition at 3-4. Idaho Power told Jackpot Solar it was not
entitled to 20-year contracts nor to capacity rates locked-in upon its initial contract under
Commission Order Nos. 33357 and 33419. Id. at 4-7. Jackpot Solar eventually acknowledged
its contract terms were limited to two years, but insisted it was entitled to capacity rates
"calculated at the time [Jackpot Solar] initially enter[s]" a contract with the Company. Id. at 5-6
(quoting Jackpot Solar letter). Idaho Power asserted Jackpot Solar "threaten[ed] legal action
against Idaho Power." Id. at 7.
According to Idaho Power, the Company is capacity sufficient, for purposes of
PURP A contracts, until July 2024. Idaho Power argued that Jackpot Solar' s insistence that it is
entitled to lock-in avoided cost capacity rates at the time of its initial two-year contract is
1 The terms "capacity deficiency date" and "capacity deficit date" interchangeably describe the date when a utility's
Integrated Resource Plan (IRP) forecast shows a need for additional resources to meet total system load. Utilities in
Idaho file IRPs with the Commission every two years as a status report on the utility's ongoing, changing plans to
adequately and reliably serve its customers' future energy needs.
ORDER NO. 33667 2
contrary to Order Nos. 33357 and 33419. Because of their conflicting interpretations of those
Orders, Idaho Power and Jackpot Solar have been unable to agree on PURP A contract terms for
Jackpot Solar' s QF projects. Idaho Power requested a Declaratory Order finding that under the
facts here, the proper avoided cost rate for Jackpot Solar's projects is determined at the start of
each two-year contract term rather than one rate locked-in upon its initial contract. Petition at 5.
COMMENTS
1. Rocky Mountain Power
PacifiCorp dba Rocky Mountain Power stated that the issues in this matter are fact­
specific and "should not affect any party other than Idaho Power Company and Jackpot Solar."
Rocky Mountain Comments at 2. According to Rocky Mountain, "[a]ny ruling in this case must
preserve the current rule of law as it relates to the two-year term of power purchase agreements
and the timing of when capacity rates are to be paid in avoided cost pricing under such
agreements." Id. To the extent any issues here touch upon issues already determined in Order
Nos. 33357 and 33419, Rocky Mountain asserted that an "attempt to change them would be
barred as an improper collateral attack" under Idaho Code § 61-625, which provides that "[a]ll
orders and decisions of the commission which have become final and conclusive shall not be
attacked collaterally."
Rocky Mountain stated that, on the narrow issue of when an avoided cost capacity
rate is calculated and paid, Order No. 33419 "is clear and unambiguous." Id. at 3. Rocky
Mountain then quoted extensively from Order No. 33419, including the Commission's
determination that
[a] capacity rate calculated at the start of each specified term rather than
upon a QF's initial contract, is a truer reflection of the utility's avoided cost
for capacity. The capacity adjustment mechanism thus ensures the QF
receives the full avoided cost of the utility, consistent with FERC regulations.
Id. at 4, quoting Order No. 33419 at 23 (emphasis by Rocky Mountain Power).
2. Jackpot Solar
Jackpot Solar stated that, in Order Nos. 33357 and 33419, "the Commission
established a process by which QFs may obtain certainty as to the utility's first deficit year and
the capacity rate associated with that first deficit year" and that "Idaho Power now seeks to erode
the critical foundation in those orders by restricting QFs to just the identity of the first deficit
year without also identifying the capacity rate associated with that first deficit year." Jackpot
ORDER NO. 33667 3
Solar Comments at 3-4. Jackpot Solar argued that Idaho Power's Petition in this case is a
collateral attack on Order No. 33419 a final Order impermissible under Idaho Code§ 61-625.
Id. at 4. Idaho Power may not, Jackpot Solar contended, challenge a final agency decision for
which no appeal was taken. Id. at 8 (citing Perkins v. Perkins, 119 Colo. 533, 537-538, 205 P.2d
785, 787 (Colo. 1949)(cited with approval by V-I Oil Co. v. County of Bannock, 97 Idaho 807,
810,554 P.2d 1304, 1307 (1976)).
Also, according to Jackpot Solar, Idaho Power's Petition does not meet the standard
for when a state agency may issue a declaratory order. Id. at 5. Jackpot Solar argued, "a state
agency is limited in its ability to issue a declaratory order to those situations where it is necessary
to remove uncertainty as to rights, status, and legal relations." Id., citing Sweeney v. Amer. Nat 'l
Bank, 62 Idaho 544, 115 P.2d 109 (1941). Jackpot Solar contended the Commission's Orders
are clear and conclusive, and if the Commission were to "accept Idaho Power's invitation to
modify the order, such modification would violate the minimum due process rights of all QFs
and potential QFs who justifiably rely on the stability and integrity of the Commission's orders."
Id. Jackpot Solar acknowledged that the Commission may clarify Orders, but it states that the
Commission may not make substantive changes to fundamental rights through a "clarification,"
and that "such wholesale changes can only be made through full evidentiary hearings." Id. at 8.
3. Commission Staff
Staff agreed with Rocky Mountain that Order No. 33419 is clear and unambiguous
that a capacity rate is calculated for each specified two-year term. Staff Comments at 4. Staff
noted that in the Order, the Commission "directed utilities to establish a capacity deficiency date
at the time when a QF's initial !RP-based contract is signed, to recognize that 'a QF
continu[ ously] provid[ing] energy to a utility through [ such date] will be paid for its capacity
contribution."' Id. (quoting Order No. 33419 at 22). Further, "until a QF enters into a contract
during which that capacity deficit date occurs, the avoided cost capacity rate is zero." Id.
(quoting Order No. 33419 at 22).
In addition, Staff agreed with Rocky Mountain Power that, "to the extent Jackpot
Solar intends to attack the language of Order Nos. 33357 or 33419, ... such attack is barred by
Idaho Code § 61-625, which precludes collateral attack on a Commission order that is final and
conclusive." Id. Staff concluded that it "supports a declaratory order providing that Jackpot
ORDER NO. 33667 4
Solar is not entitled to lock in an avoided cost capacity rate at the time of any initial contract with
Idaho Power during which Idaho Power is capacity surplus." Id at 4, 5.
4. Jackpot Solar's Reply to Staff
Jackpot Solar filed a reply asserting that it "has not initiated an 'attack on the
language of Order Nos. 33357 or 33419,"' but is "actively defending and justifiably relying on
the explicit findings in those orders." Jackpot Solar Reply at 2. Jackpot Solar further argued,
"[t]o the extent that Staff also asserts that the plain language of those orders must be altered to
support Idaho Power's attack ... then Staffs attack must also fail" for the reasons described in
Jackpot Solar' s comments. Id.
5. Idaho Power's Reply
Idaho Power noted that the Commission directly addressed the argument now made
by Jackpot Solar, in a "dedicated subsection" of Order No. 33419. Idaho Power Reply at 2.
Idaho Power highlighted that Jackpot Solar's counsel here is the same attorney who represented
Clearwater Paper Corporation and J .R. Simplot Company in raising the argument in a Petition
for Reconsideration of Order No. 33357, which the Commission ultimately rejected in Order No.
33419. Id.
According to Idaho Power, it does not seek any change, modification, or
interpretation of the Commission's Orders; rather, it seeks a declaratory ruling as to the proper
avoided cost pricing applicable to Jackpot Solar's requests for QF contracts. Id. at 3. Idaho
Power stated it provided two-year indicative pricing to Jackpot Solar, consistent with the
Commission's Orders and the Company's Schedule 73, and that Jackpot Solar rejected it. Id.
Idaho Power emphasized that Jackpot Solar has not addressed the Commission's direct findings
on this issue. Idaho Power thus reiterated its request for a Declaratory Order.
COMMISSION FINDINGS AND DECISION
This Commission has jurisdiction over Idaho Power Company, an electric utility,
pursuant to the authority and power granted it under Title 61 of the Idaho Code and PURP A.
The Commission has authority under PURPA and FERC's implementing regulations to set
avoided costs, order electric utilities to enter into fixed-term obligations for the purchase of
energy from QFs, and implement FERC rules.
Also, the Commission has jurisdiction to issue declaratory orders under Title 61 of
the Idaho Code and the Idaho Uniform Declaratory Judgments Act of 1933, Idaho Code §§ IO-
ORDER NO. 33667 5
1201 et seq. See Utah Power & Light v. Idaho Pub. Util. Comm 'n, 112 Idaho 10, 12, 730 P.2d
930, 932 (1986) (PUC had jurisdiction to determine which regulated electrical utility had the
right to be the sole supplier of electricity to electric customer under the Uniform Declaratory
Judgments Act). A declaratory judgment "must clarify and settle the legal relations at issue, and
afford leave from uncertainty and controversy which gave rise to the proceeding." Harris v.
Cassia County, 106 Idaho 513,517,681 P.2d 988 (1984) (citing Sweeney v. Am. Nat'l Bk., 62
Idaho 544, 115 P.2d 109 (1941)). For a declaratory judgment to be rendered, there must be "an
actual or justiciable controversy" that is "real and substantial," and "definite and concrete,
touching the legal relations of parties having adverse legal interests." Id. at 516 (quoting Aetna
L(fe Ins. Co. v. Haworth, 300 U.S. 227, 240-41 (1937)).
1. The Commission has Jurisdiction to Issue a Declaratory Order in this Case
Under the applicable statutes and case precedent, and in light of the circumstances
here, we have jurisdiction to issue a Declaratory Order. Idaho Power believes Jackpot Solar is
not entitled to avoided cost capacity rates at the time of the initial contract for the future term in
which Idaho Power becomes capacity deficient; Jackpot Solar believes it is so entitled. Both
parties assert their respective contrary positions are clear. Jackpot Solar contends that, because
its interpretation of Order Nos. 33357 and 33419 is clear, there is "no uncertainty as to the legal
rights of the parties," thus a Declaratory Order is inappropriate. Jackpot Solar Comments at 5.
We find no cogent connection between Jackpot Solar's argument and its conclusion, and
therefore reject it.
Jackpot Solar's position fails to acknowledge that Jackpot Solar has been unable to
negotiate the necessary terms of a QF contract because of the pmiies' conflicting interpretations
of Order No. 33417. The fact that Idaho Power and Jackpot Solar both believe their opposing
positions are clear is the very core of the parties' legal uncertainty that is, their inability to
detennine the requisite terms governing their contractual relations. Also, the circumstances here
support that, but for Idaho Power's and Jackpot Solar's conflicting interpretations of Order No.
33417, Jackpot Solar would have a real and concrete ability to enter a PURPA contract with
Idaho Power. We thus have jurisdiction under Idaho Code §§ 10-1201 et seq. and related
precedent, and find it appropriate to issue a Declaratory Order to resolve the uncertainty over the
parties' legal rights.
ORDER NO. 33667 6
2. Under Order Nos. 33357 and 33419, Jackpot Solar's avoided cost capacity rates are to be
calculated at the start of each two-year term, based on the deficit date determined at the
time of its initial contract.
As agreed by all commenting parties in this matter, Order No. 33419 is clear and
unambiguous. We find no need to amend, modify, or clarify it. In addition, we find that Idaho
Power's Petition in this case is not an attack on that Order. As we stated in Order No. 33419 in
rejecting the argument then-made by Jackpot Solar's current counsel (that QFs are entitled to
forecasted capacity rates), "[w]e find the [QFs] misunderstand our Order and FERC regulations."
Order No. 33419 at 22.
With this Order, and under the unambiguous language of Order No. 33419, we
declare that Jackpot Solar is "entitled to receive avoided cost capacity rates for the specified term
calculated at either the time of delivery or at the time [Jackpot Solar] enter[s] into [its]
contract/obligation." Id. (emphasis original). Idaho Power is to "establish [Jackpot Solar's]
capacity deficiency date when [the] QF's initial IRP-based contract is signed." Id., citing Order
No. 33357 at 25-26. "[U]ntil [Jackpot Solar] enters into a contract during which that capacity
deficit date occurs, the avoided cost capacity rate is zero." Id. Jackpot Solar's first non-zero
avoided cost capacity rate is to be calculated at the start of the two-year contract term during
which the capacity deficiency date occurs.
ORDER
IT IS HEREBY ORDERED that Idaho Power's Petition for Declaratory Order is
granted as set forth above.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order with regard to any
matter decided in this Order. Within seven (7) days after any person has petitioned for
reconsideration, any other person may cross-petition for reconsideration. See Idaho Code § 61-
626.
ORDER NO. 33667 7
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of December 2016.
ATTEST:
ORDER NO. 33667 8