20170428Comments.pdf

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An IDACORP Company
DONOVAN E. WALKER
Lead Counsel
[e-mail]
April2T ,2017
VIA HAND DELIVERY
Diane Hanian, Secretary
!daho Public Utilities Commission
47 2 W est Wash i n gto n Street
Boise, ldaho 83702
Re: Case No. IPC-E-17-01
Contract Terms, Conditions, and Avoided Cost Pricing for Battery Storage
Facilities - Comments of Idaho Power Company
Dear Ms. Hanian:
Enclosed for filing in the above matter please find an origina! and seven (7)
copies of the Gomments of ldaho Power Company.
Very yours,
Donovan E. Walker
DEW:csb
Enclosures
1221 W. ldaho St. (83702)
P.O. Box 70
Boise, lD 83707
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DONOVAN E. WALKER (lSB No. 5921)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
dwalker@ id a hopower. com
Attorney for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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IN THE MATTER OF THE PETITION OF
IDAHO POWER COMPANY FOR A
DECLARATORY ORDER REGARDI NG
PROPER CONTRACT TERMS,
CONDITIONS, AND AVOIDED COST
PRICING FOR BATTERY STORAGE
FAC!LITIES
CASE NO. !PC-E-17-01
COMMENTS OF IDAHO POWER
COMPANY
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Idaho Power Company ("ldaho Power" or "Company"), pursuant to the ldaho
Public Utilities Commission's ("Commission") Order No. 33729, hereby respectfully
submits the following comments.
I. BACKGROUND
On February 27,2017,1daho Power filed a Petition for Declaratory Order with the
Commission seeking a determination as to the proper contract terms, conditions, and
avoided cost pricing to be included in the Public Utility Regulatory Policies Act of 1978
("PURPA") contracts requested by several battery storage facilities. Petition, p. 1. More
COMMENTS OF IDAHO POWER COMPANY - 1
specifically, ldaho Power asked for a declaratory ruling from the Commission that the
proper authorized avoided cost rate for battery storage facilities, such as those
proposed by Franklin Energy Storage One through Four and Black Mesa Energy, as
projects that exceed 100 kilowatt ("kW") nameplate capacity, is the incrementa! cost
lntegrated Resource Plan ("lRP") methodology with a maximum contract term of two
years. Petition, p. 13.
On March 23,2017, the Commission issued Order No. 33729, Notice of Petition
for Declaratory Order and Notice of Modified Procedure, setting forth a schedule for the
submission of comments. On April 5,2017, Franklin Energy Storagel filed Comments.
On April 7,2017, Black Mesa Energy, LLC ("Black Mesa") filed its Comments. The four
Franklin Energy Storage projects and the Black Mesa project (collectively referred to as
"Proposed Battery Storage Facilities" in the Petition and hereafter) generally argue that
they are entitled to published avoided cost rates and standard contracts with a 2}-year
term for projects up to 10 average megawatts ("aMW") in size.
II. COMMENTS
A. The lssues Presented are Properly Addressed by a Declaratory Order.
Franklin Energy Storage ("Franklin") goes to great lengths in its Comments
attempting to characterize ldaho Power's Petition for Declaratory Order as something
else: arguing that ldaho Power's request, rather than seeking a determination of the
parties' legal rights, seeks reconsideration of prior orders and arguing that a Declaratory
Order is not the proper mechanism for the Commission to address the controversy
1 Franklin Energy Storage One, LLC (32 MW); Franklin Energy Storage Two, LLC (32 MW);
Franklin Energy Storage Three, LLC (32 MW); and Franklin Energy Storage Four, LLC (32 MW)
collectively referred to as "Franklin Energy Storage" or "Franklin."
COMMENTS OF IDAHO POWER COMPANY - 2
raised by Franklin's own applications for PURPA contracts with ldaho Power, which
demand published rates and standard contracts with 2O-year terms.
As referenced in the Petition, the Commission has jurisdiction to issue
declaratory orders under Title 61 of ldaho Code. A Declaratory Judgment is proper
where there is "an actual or justiciable controversy" that is "real and substantial," and
"definite and concrete, touching the legal relations of parties having adverse legal
interests." Order No. 33667, pp. 5-6, Case No. IPC-E-16-21.
Franklin attempts to obfuscate the issue by claiming its purported battery storage
qualifying facility ("QF") projects fall into the classification of "other" for purposes of
avoided cost pricing and contract eligibility. However, when each of the proposed
battery storage QFs proposes to supply energy with the same output profile as related
solar generation,2 it is ldaho Power's position that the Proposed Battery Storage
Facilities are properly classified with their generation source-solar-and consequently
only eligible for negotiated avoided cost rates, and limited to a two-year maximum
contract term. Just as the same parties had a "real and substantial dispute" and "an
actual or justiciable controversy" over the appropriate contract term and conditions for
the proposed Jackpot Solar facilities3 there is a real and substantial dispute as to the
proper avoided cost rate and contractual terms and conditions that the Proposed
Battery Storage Facilities are entitled to.
Franklin further attempts to obscure the real issues by arguing that the facts are
not submitted under oath, are somehow "mere allegations," and suggesting that the
2 See Attachments 1-5, which show the output profile of the Proposed Battery Storage Facilities
to almost exactly match the generation shape and profile of solar generation facilities.
3 See Case No. IPC-E-16-21.
COMMENTS OF IDAHO POWER COMPANY - 3
Commission should have a full evidentiary hearing. Again, this is an unnecessary and
meritless diversion. The only facts necessary for the Commission's legal determination
as to the proper avoided cost rate and contractual terms and conditions that the
Proposed Battery Storage Facilities are eligible for are the applications and documents
that were submitted by the Proposed Battery Storage Facilities themselves. No
evidentiary hearing is necessary or required for the Commission to consider and issue a
declaratory ruling as to whether the Proposed Battery Storage Facilities are eligible for
published or for negotiated avoided cost rates and contractual terms.
ldaho Power received, in just over two weeks' time, multiple requests totaling 148
megawatts ("MW") from proposed battery storage facilities and disagrees with the
Proposed Battery Storage Facilities as to the proper application of the Commission's
implementation of PURPA with regard to published avoided cost rate eligibility and the
maximum contract term applicable to such projects. There is a real and substantial
controversy as to the proper application of this Commission's implementation of PURPA
with regard to specific requests and actual and existing facts, applicable to the
Proposed Battery Storage Facilities. lt is appropriate for the Commission to issue a
declaratory order in this case.
B. The Proposed Batterv Storaqe Facilities should be Subiect to the 100 kW
Published Rate Eliqibilitv Cap.
Again, Franklin goes through great efforts in its Comments discussing and
alleging that ldaho Power is somehow "factually mistaken" about the nature of its
proposed facilities. First of all, ldaho Power is merely taking at face value the
applications, letters, demands, and materials-all provided by the Proposed Battery
Storage Facilities themselves. !f there are factual mistakes, misrepresentations, or the
COMMENTS OF IDAHO POWER COMPANY - 4
like then they originate with the Proposed Battery Storage Facilities themselves, and not
with ldaho Power. With regard to the theoretical and potential benefits of the Proposed
Battery Storage Facilities, Franklin alleges, "ldaho Power mistakenly questions the
ability of the facilities to 'provide ancillary grid services, such as reserve capacity, surge
capacity, load-balancing, or voltage support; firming of variable generation; or time-
shifting generation to match load.' . . . ldaho Power is factually mistaken as the projects
have the ability to do all of the above to varying degrees. . . . ldaho Power never once
inquired of the projects as to their ability to provide these services." Franklin
Comments, p. 14.
This argument by Franklin entirely misses the point. lt is not about whether the
Proposed Battery Storage Facilities have the ability to do any or all of these referenced
things. lt is the fact that-taking their applications, demands, and provided materials at
face value-the Proposed Battery Storage Facilities are demanding entitlement to
published avoided cost rates, which are based and set at the theoretical "avoided" cost
of a combined-cycle, natural gas, .combustion turbine under the surrogate avoided
resource methodology, and standard contract terms and conditions that are designed to
be "off-the-shelf' provisions available to small PURPA QF projects. Even assuming the
Proposed Battery Storage Facilities can provide all of the referenced "benefits" and be
"dispatchable"-the Proposed Battery Storage Facilities have not proposed doing so,
and it is not possible to realize, recognize, or provide for these possibilities under the
published avoided cost rates and standard contract. If any of these possible benefits
were to be considered at all it is only by classifying the Proposed Battery Storage
facilities over 100 kW as being subject to the negotiated rates determined by the
COMMENTS OF IDAHO POWER COMPANY - 5
incremental cost IRP methodology, which starts with consideration of the actual output
profile of the proposed facilities. Additionally, as required by Schedule 73, all of the
Proposed Battery Storage Facilities submitted hourly output profiles with their
applications, and that output profile shows an output curve and delivery of energy that
matches the output of a solar facility.
Furthermore, Franklin's reference to being dispatchable or "providing scheduled
and dispatchable electricity in forward-looking time blocks" is without merit and
essentially meaningless. The Proposed Battery Storage Facilities have not proposed to
sell or provide their energy deliveries in such a manner at all. They have proposed to
deliver in an output profile that looks exactly like the output from a solar facility. Even
further, the nature of a mandatory purchase PURPA transaction does not give
operational control or any dispatchability to the purchasing utility. The mandatory
purchase requires the utility to take the QF's "put" of energy to the utility whenever the
QF itself determines it can "put" such energy to the utility. The
"QF" is motivated to "put" and pass through to the utility all the kilowatt-hours it can in
order to maximize its profits. The purchasing utility has no dispatchable control of an
independent QF project, and PURPA does not allow the economic dispatch of PURPA
resources, which is how the purchasing utility is required to prudently operate and
dispatch its own generation. ln any event, this theoretical benefit, even if it did exist,
could not be recognized, priced, or provided for with the standard rates and contract
that the Proposed Battery Storage Facilities are demanding.
As stated in ldaho Power's Petition, the Proposed Battery Storage Facilities'
Schedule 73 applications are specifically designed in such a way as to circumvent the
COMMENTS OF IDAHO POWER COMPANY - 6
Commission's rules and requirements in its implementation of PURPA for the state of
ldaho. The four proposed Franklin Energy Storage facilities are all located adjacent to,
and in the same vicinity as the previously proposed four, 20 MW each, Jackpot Solar
facilities. See Case No. IPC-E-16-21. Their own application materials identify the
interconnection facilities for the nearby Jackpot Solar facilities. The four proposed
Jackpot Solar facilities have the same developer, Robert Paul, and the same legal
counsel, Peter Richardson, as the four proposed Franklin Energy Storage facilities. The
proposed Black Mesa storage facility submitted almost identical documents as the four
proposed Franklin Energy Storage facilities, and the developers of all five proposed
projects had some level of involvement with the Grand View Solar project, an 80 MW
PURPA solar QF under contract with ldaho Power. As was made clear by the
Commission in the previously referred to Jackpot Solar case, Case No. IPC-E-16-21,
solar QFs are subject to a 100 kW published rate eligibility cap, and for any projects that
exceed the published rate eligibility cap, the maximum contract term is limited to two
years. Pricing for such facilities is determined at the start of each two-year contract
term. Order No. 33667.
The non-generator Proposed Battery Storage Facilities have proposed to classify
themselves without regard to the solar generation that will energize their batteries, and
further proposed to disaggregate into 10 aMW increments, which would avoid
application of the 100 kW published rate cap and associated two-year contract term
limitation for projects over the cap. The Franklin projects purport to be in compliance
with disaggregation rules by claiming separate ownership, but are specifically
configured in such a way in an attempt to get 128 MW of capacity split up into four
COMMENTS OF IDAHO POWER COMPANY - 7
separate 10 aMW increments, with the goal of qualifying for published rates and 20-year
contracts. This was the practice that the Commission determined to prevent when it
first implemented a temporary reduction to a 100 kW published rate eligibility cap for
wind and solar projects, Order No. 32176, and then made that 100 kW published rate
cap permanent for wind and solar QFs. Order No. 32262. See Case Nos.
GNR-E-10-04, GNR-E-1 1-01 .
Once again, the Commission is faced with a rush of proposed PURPA projects
that appear to be configuring themselves in such a manner as to circumvent the
Commission's rules implementing PURPA to the direct detriment of ldaho Power
customers, which is contrary to PURPA. The Proposed Battery Storage Facilities share
the modular, and easily disaggregated, nature of wind and solar generation referenced
by the Commission in its orders limiting those resource types to 100 kW for published
rate eligibility. The 148 MW of Proposed Battery Storage Facilities' requests for energy
sales agreements also came in a large amount of proposed MW in a very short time,
again similar to the previous wind and solar development. lt is appropriate and within
the exclusive authority of the Commission to act in the public interest to protect
customers from this manipulation of the rules and extend the 100 kW published rate
eligibility cap to battery storage projects.
ilt. coNcLUStoN
A Declaratory Judgment is within the Commission's jurisdiction and authority,
and is necessary and proper in this case to resolve a real and substantial controversy
between the parties as to the proper avoided cost rate and contract terms and
conditions for the Proposed Battery Storage Facilities.
COMMENTS OF IDAHO POWER COMPANY - 8
ldaho Power respectfully requests that the Commission issue a declaratory
order, without prejudice to ldaho Power's position on the validity of the underlying self-
certifications, finding that the Proposed Battery Storage Facilities are subject to the
same 100 kW published avoided cost rate eligibility cap applicable to wind and solar
facilities. More specifically, that the proper authorized avoided cost rate for battery
storage facilities, such as those proposed by Franklin Energy Storage One through Four
and BIack Mesa Energy, as projects that exceed 100 kW nameplate capacity, is the
incremental cost IRP methodology with a maximum contract term of two years.
Respectful ly submitted this 27th day of April 201
OVAN E. WALKER
Attorney for ldaho Power Company
COMMENTS OF IDAHO POWER COMPANY - 9
CERTIFICATE OF SERVICE
t HEREBY CERTIFY that on this 27th day of February 2017 I served a true and
correct copy of the within and foregoing COMMENTS OF IDAHO POWER COMPANY
upon the following named parties by the method indicated below, and addressed to the
following:
Commission Staff
Camille Christen
Deputy Attorney General
ldaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
Franklin Energy Storage One through
Four, LLC
Peter J. Richardson
RICHARDSON ADAMS, PLLC
515 North 27th Street (83702)
P.O. Box 7218
Boise, ldaho 83707
Black Mesa Energy, LLC
Brian Lynch
Black Mesa Energy, LLC
P.O. Box 2731
Palos Verdes, California 90274
ldaho Conservation League
Benjamin J. Otto
ldaho Conservation League
710 North Sixth Street
P.O. Box 844
Boise, ldaho 83701
Sierra Club
David Bender
Earthjustice
3916 Nakoma Road
Madison, Wisconsin 537 1 1
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Christa Bearry, Legal