20161108Comments.pdf

DAPHNE HUANG, ISB NO. 8370
CAMILLE CHRISTEN, ISB NO. 10177
DEPUTY ATTORNEYS GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
4 72 W. WASHING TON STREET (83702-5918)
P.O. BOX 83720
BOISE, ID 83720-0074
Telephone: [phone]
E-mail: [e-mail]
cami I [e-mail]
Attorneys for the Commission Staff
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· · . ::~)\ii\ ISSI N
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE PETITION OF
IDAHO POWER COMP ANY FOR A
DECLARATORY ORDER REGARDING
PROPER A VOIDED COST PRICING FOR
JACKPOT SOLAR
)
) CASE NO. IPC-E-16-21
)
) STAFF COMMENTS
) __________________ )
Commission Staff, by and through Daphne Huang and Camille Christen, Deputy
Attorneys General, now submit the following comments in response to the Commission's Notice
of Petition and Notice of Modified Procedure. Order No. 33619.
A. Background
1. Petition/or Declaratory Order
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 (PURP A). The Company states that Jackpot
Solar is requesting avoided cost pricing for four qualifying facilities (QF), each planned to have a
nameplate capacity of 20 MW. The Company states that Jackpot Solar is requesting avoided
cost pricing under the Company's incremental cost Integrated Resource Planning (IRP) method
(as opposed to published or standard rates available to smaller QFs), calculated at the time of
contracting.
The Company states that Jackpot Solar has said that it intends to continuously sell its
power to the Company under PURP A for a period of 20 years. According to Idaho Power, it is
capacity sufficient, for purposes of PURP A contracts, until July 2024. The Company states
STAFF COMMENTS 1 NOVEMBER 8, 2016
Jackpot Solar has requested and argues it is entitled to avoided cost capacity rates, calculated at
the time of the initial two-year contract, that are then locked-in for the duration of subsequent
contract terms. The Company states that Jackpot Solar has referred to Commission Order Nos.
33357 and 333419 as supporting its interpretation.
The Company states that it has refused Jackpot Solar's request to lock-in avoided cost
capacity rates at the time of the initial two-year contract. The Company argues that Jackpot
Solar's interpretation is contrary to the Commission's decisions in Orders No. 33357 and 33419.
The Company argues that the Commission was clear in those Orders that the proper avoided cost
capacity rate is established at the start of each two-year contract term.
The Company seeks a declaratory ruling stating that the !RP-based avoided cost prices
for negotiated (non-standard) PURP A contracts, including the capacity component, are to be
calculated and reset prior to each successive two-year contract term; and that a QF is not entitled
to lock-in an avoided cost rate beyond the two-year maximum contract term.
2. Public Utilities Regulatory Policies Act
The Public Utilities Regulatory Policies Act (PURP A) was passed as part of the National
Energy Act of 1978. The Act's goals include the encouragement of electric energy conservation,
efficient use of resources by electric utilities, and equitable retail rates for electric consumers, as
well as the improvement of electric service reliability. 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 the Idaho
Public Utilities Commission implement FERC rules, but 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). In
Idaho, the purchase rate for a utility's contract to purchase QF energy under PURP A must be
approved by this Commission. Idaho Power, 155 Idaho at 789,316 P.3d at 1287. The purchase
rate for PURP A contracts 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).
STAFF COMMENTS 2 NOVEMBER 8, 2016
PURPA and FERC's implementing regulations are silent as to contract length;
consequently, the issue is in the Commission's discretion. 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. Since PURPA was first implemented in Idaho, this Commission has
periodically modified the maximum length for PURPA contracts. See Order No. 29029. In
2015, the term was reduced 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 date 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 Commission decided that 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.
B. Rocky Mountain Power Comments
In its Notice, the Commission invited feedback from affected utilities. Order No. 33619.
PacifiCorp dba Rocky Mountain Power filed comments, noting its belief that the issues before
the Commission 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 raised in this case
touch upon issues already determined in Commission Order Nos. 33357 and 33419, Case No.
IPC-E-15-01 , Rocky Mountain asserts 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 asserts that, on the narrow issue of when an avoided cost capacity rate is
calculated and paid, Commission Order No. 33419 "is clear and unambiguous." Rocky
Mountain Comments at 3. Rocky Mountain then quotes 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
STAFF COMMENTS 3 NOVEMBER 8, 2016
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).
C. Staff Comments
Staff agrees with Rocky Mountain. First, Staff believes that Order No. 33419 is clear and
unambiguous that a capacity rate is calculated for each specified two-year term.
In Order No. 33357, we determined that "the specified term" for new standard
!RP-based contracts is two years. Thus [QFs] are entitled to receive avoided cost
capacity rates for the specified term calculated at either the time of delivery or at
the time they enter into their contract/obligation.
Order No. 33419 at 22 ( emphasis original). As quoted by Rocky Mountain, the Commission
went on to find that "[a] capacity rate calculated at the start of each specified [two-year] term
rather than upon a QF's initial contract, is a truer reflection of the utility's avoided cost for
capacity." Id. at 23. 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.
at 22. The Commission noted, "until a QF enters into a contract during which that capacity
deficit date occurs, the avoided cost capacity rate is zero." Id.
Given the language of the Commission's Orders, Jackpot Solar is not entitled to lock-in
an avoided cost capacity rate at the time of its initial contract, to apply to any and all future two­
year contracts. Rather, Jackpot Solar is entitled to lock-in a capacity deficiency date, at which
time it would receive an avoided cost capacity rate. The rate would be calculated at the start of
the two-year term during which the capacity deficiency date occurs. Accordingly, Staff supports
a Declaratory Order providing that Jackpot 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.
Second, to the extent Jackpot Solar intends to attack the language of Order Nos. 33357 or
33419, Staff agrees with Rocky Mountain that such attack is barred by Idaho Code § 61-625,
which precludes collateral attack on a Commission Order that is final and conclusive. The
Commission's Order No. 33357 provided:
THIS IS A FINAL ORDER. Any party interested in this Order (or in issues
finally decided by this Order) or in interlocutory Orders previously issued in [this
case] may petition for reconsideration within twenty-one (21) days of the service
STAFF COMMENTS 4 NOVEMBER 8, 2016
date of this Order with regard to any matter decided m this Order or m
interlocutory Orders previously issued in [this case].
Order No. 33357 at 33. In Order No. 33419, the Commission provided:
THIS IS A FINAL ORDER ON RECONSIDERATION. Any party aggrieved by
this final Order on Reconsideration or other final or interlocutory Orders
previously issued in this Case ... may appeal to the Supreme Court of Idaho
pursuant to the Public Utilities Law and the Idaho Appellate Rules.
Order No. 33419 at 27.
The time for reconsideration, appeal, or other challenge to these Orders, entered August
20, 2015 and November 5, 2015 respectively, has passed. Idaho Code§§ 61-626, 61-627. The
language from these final and conclusive Orders does not support Jackpot Solar's request to
lock-in an avoided cost capacity rate at the time of an initial two-year contract during which
Idaho Power is not capacity deficient. Accordingly, Staff recommends that the Commission
issue a Declaratory Order that Jackpot Solar is not entitled to lock-in an avoided cost capacity
rate at the time of an initial two-year contract with Idaho Power during which Idaho Power is
capacity surplus.
Respectfully submitted this ~ay of November 2016.
~ Camille Christen
Deputy Attorneys General
N:IPC-E-16-2 l_djh_cc_Staff Comments
STAFF COMMENTS 5 NOVEMBER 8, 2016
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 8TH DAY OF NOVEMBER 2016,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF IN
CASE NO. IPC-E-16-21, BY MAILING A COPY THEREOF, POSTAGE PREPAID, TO
THE FOLLOWING:
DONOVAN E WALKER
LEAD COUNSEL
IDAHO POWER COMPANY
POBOX70
BOISE ID 83707-0070
E-mail: [e-mail]
[e-mail]
PETER J RICHARDSON
RICHARDSON ADAMS PLLC
PO BOX 7218
BOISE ID 83702
E-mail: [e-mail]
SECRETARY
CERTIFICATE OF SERVICE