20170515Reply Comments.pdf

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DONOVAN E. WALKER
Lead Counsel
dwal [e-mail]
May 15,2017
VIA HAND DELIVERY
Diane Hanian, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Case No. IPC-E-17-01
Contract Terms, Conditions, and Avoided Cost Pricing for Battery Storage
Facilities - Reply Comments of ldaho Power Company
Dear Ms. Hanian:
Enclosed for filing in the above matter please find an original and seven (7)
copies of the Reply Comments of ldaho Power Company. '
yours,
Ii.,t_i,,
,il.!;sl0i.l
An IDACORP Company
1221 W. ldaho St. (83702)
P.O. Box 70
Boise, lD 83707
Re
t
novan E
DEW:csb
Enclosures
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@ idahopower. com
!N 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
FACILITIES
CASE NO. IPC-E-17-01
REPLY COMMENTS OF IDAHO
POWER COMPANY
Attorney for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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ldaho Power Company ("ldaho Power" or "Comp?ry"), pursuant to the ldaho
Public Utilities Commission's ("Commission") Order Nos. 33729 and 33765, hereby
respectfully submits the following Reply Comments.
I. BACKGROUND
On February 27,2017,ldaho 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
specifically, Idaho Power asked for a declaratory ruling from the Commission that the
REPLY COMMENTS OF IDAHO POWER COMPANY - 1
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 incremental 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 Apri! 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 2O-year
term for projects up to 10 average megawatts ("aMW") in size.
On April 27,2017, Avista Corporation ("Avista") filed Comments, and on April 28,
2017, ldaho Power, Commission Staff ("Staff'), and ldaho Conservation League/Sierra
Club ("lCl/Sierra") filed Comments. Staff and Avista take the position that the Proposed
Battery Storage Facilities be eligible for published rates and contract terms and
conditions consistent with those applicable to the generation source that charges the
batteries. lCUSierra generally object procedurally to the propriety of a declaratory
order, and then seek to challenge the Commission's previous determination and order
regarding two-year maximum term contracts. ln addition to its previously filed
Comments on April 28,2017, ldaho Power offers the following Reply Comments:
' 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."
REPLY COMMENTS OF IDAHO POWER COMPANY - 2
II. REPLY COMMENTS
A. The lssues Presented are Properlv Addressed bv a Declaratorv Order.
As did Franklin Energy Storage, lCUSierra allege that a declaratory ruling is not
the appropriate procedure for ldaho Power's request, stating that battery storage
qualifies as "other" and characterizing ldaho Power's request as an improper attempt "to
alter or amend" previous Commission orders. lCUSierra Comments, p. 3. As stated in
response to Franklin's similar allegations
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 [and now lCUSierra] 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,' 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.
Idaho Power Comments, p. 3.
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.
REPLY COMMENTS OF IDAHO POWER COMPANY.3
ICUSierra improperly attempt to characterize the actual and justiciable
controversy and the real and substantial dispute between the Proposed Battery Storage
Facilities and ldaho Power as to their proper avoided cost pricing and contractual terms
and conditions as a request to alter, amend, revise, and/or reconsider prior Commission
orders, just as Franklin did. The irony with ICl/Sierra's argument is that they then
dedicate the remainder of their Comments to providing a concrete example of an
impermissible collateral attack upon final orders of the Commission. lCUSierra
dedicate more than 13 pages of their 19 page Comments making arguments against the
Commission's implementation of a maximum contract term of two years for projects that
exceed the published rate eligibility cap. lCUSierra Comments, pp. 6-19. Despite the
fact that lCUSierra may now regret, in retrospect, having not made such arguments at
the appropriate time and in the appropriate case, they are not now entitled to collaterally
attack the Commission's final determination as to the maximum contract length for QF
projects that exceed the published rate eligibility cap. lCUSierra's arguments add no
substance to the questions before the Commission other than their impermissible
collateral attack upon Order No. 33357.
ln the present matter, 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 rea! and substantial controversy as to the proper application of this
Commission's implementation of PURPA with regard to specific requests and actual
REPLY COMMENTS OF IDAHO POWER COMPANY - 4
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. Additional Proceedings are not Necessarv.
Staff, Avista, and lCUSierra all suggest to some extent that the Commission
institute additional proceedings to examine the proper classification of battery storage
facilities and the proper implementation of PURPA in the state of ldaho for battery
storage facilities. While ldaho Power is not necessarily opposed to such proceedings,
the same are not required for the Commission to issue a declaratory ruling such as that
requested here, applicable to specific requests from specific projects. For the same
reasons that a declaratory order is proper, it is proper for the Commission to determine
the correct avoided cost rate and contract term eligibility for these specific projects at
this time, with no further proceedings necessary. There is no due process infirmity with
regard to Franklin and Black Mesa, as they have been properly noticed, given the
opportunity to participate and respond, and have in fact participated and responded.
Additional proceedings are not necessary to resolve the issue as to the proper
classification, published rate eligibility, and proper contract term as to Franklin and
Black Mesa.
Staff supports the same in its recommendation that Franklin and Black Mesa be
determined eligible for only negotiated avoided cost rates, and a maximum contract
term of two-years. Staff Comments, p. 11. Staff recommends that such declaratory
order be narrowly tailored by the Commission to address the legal dispute between
ldaho Power and the Franklin and Black Mesa proposed projects. ld. Staff further
recommends additional proceedings as a general investigation into the appropriate
REPLY COMMENTS OF IDAHO POWER COMPANY - 5
contract terms for battery storage QFs generally, ld., but the same is not required for the
Commission to issue its declaratory order applicable to Franklin and Black Mesa.
Federal regulations require standard rates be made available to QFs of 100 kW
or less. 18 C.F.R. S 292.304(cX1) lt is within the sole discretion of the state regulatory
authority, here the Commission, as to whether it is in the public interest and whether it
will extend standard, or published, avoided cost rates to proposed QF projects beyond
100 kW. The Commission has two separate considerations that both support the
conclusion that the Proposed Battery Storage Facilities remain eligible for standard
avoided cost rates only up to the federally required 100 kW standard rate eligibility cap.
First, as referenced by both Staff and Avista, a non-generator battery storage facility
should be classified and treated the same as its generation source. ln this case, since
a!! of the Proposed Battery Storage Facilities are proposed as being energized by solar
generation, Staff and Avista agree that they should be subject to the same 100 kW
published rate eligibility cap, and the corresponding limitation of all proposed projects
over the published rate eligibility cap to a maximum term of two-years. Secondly, the
Commission has independent justification and rationale for determining that the
Proposed Battery Storage Facilities be limited to a 100 kW published rate eligibility
threshold in that it is required to prevent the unreasonable disaggregation of larger QF
projects into smaller increments to the detriment of customers. The four proposed
Franklin facilities are all immediately adjacent to each other within the same one-mile
section of !and. ldaho Power's Petition, Attachment 8. The projects purport to be in
compliance with disaggregation rules by claiming separate ownership, but this appears
to be an attempt to get 128 MW of capacity split up into four separate 10 aMW
REPLY COMMENTS OF IDAHO POWER COMPANY - 6
increments, with the goal of qualifying for published rates and 20-year contracts. This
was precisely 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-11-01. Prevention of the harmful disaggregation of projects aimed at
manipulation of the Commission policies and procedures to the detriment of customers
is its own separate, additional rationale and justification that supports limitation of the
Proposed Battery Storage Facilities to a published rate eligibility cap of 100 kW.
C. The Proposed Batterv Storaqe Facilities Have not Established anv Non-
Gontractual, Legally Enforceable Obliqation in this Case.
The Proposed Battery Storage Facilities have not shown that ldaho Power has
refused to honor the required utility purchase obligation mandated by PURPA, nor have
they followed the Commission's required process for establishment of a legally
enforceable obligation ("LEO").
On March 22,2017, Franklin hand delivered to ldaho Power four separate letters
and draft energy sales agreements purporting to claim and establish LEOs to the
published avoided cost rates as well as to 20-year term contracts. Please see
Attachment t hereto. On April 3, 2017, ldaho Power responded by letter to Franklin
identifying several mistaken statements in Franklin's letters and claims and stating that
Franklin has not followed the proper procedure for the establishment of a LEO. Please
see Attachment 2 hereto.
First of all, the concept of a LEO, as created by Federal Energy Regulatory
Commission, exists only to prevent the purchasing utility under PURPA form improperly
REPLY COMMENTS OF IDAHO POWER COMPANY - 7
refusing to contract or purchase from a PURPA QF. There has been no showing that
ldaho Power has improperly refused to contract or in any way honor the must-purchase
requirement under PURPA. ldaho Power is in full compliance with the response
timelines set forth in Schedule 73, which governs the process whereby a PURPA QF
sells its output to ldaho Power in the state of ldaho. As outlined in ldaho Power's April
3,2017, letter to Franklin, ldaho Power responded to Franklin's request for an energy
sales agreement within Schedule 73's ten business day response timeframe:
By letter dated February 27, 2017, ldaho Power responded
to your requests stating, "ldaho Power does not agree that
your proposed projects are eligible for published avoided
cost Rate Option 4, Non-Levelized Non-Fueled Rates, with a
2O-year contract term." That letter further advised, "On
February 27, 2017, ldaho Power filed an application to the
ldaho Public Utilities Commission requesting a declaratory
order that determines the contract term and avoided cost
pricing methodology for which your proposed projects may
be eligible. See IPUC Case No. IPC-E-17-01."
Attachment 2, p. 1. Further, as ldaho Power's letter to Franklin goes on to explain,
"ldaho Power has not asked to be excused from PURPA's obligation to purchase.
ldaho Power has asked that the ldaho Public Utilities Commission ('IPUC' or
'Commission') determine the proper rates and contract term that your proposed projects
may be eligible for, if they are indeed PURPA Qualifying Facilities." /d. ldaho Power
has not refused to contract, and thus the principles of LEO are not even applicable.
Secondly, the Proposed Battery Storage Facilities have not followed Schedule
73's required procedure, which sets for the applicable lega! standards established by
the Commission for establishment of a LEO. Schedule 73 states:
d. The indicative pricing proposa! provided to the
Customer pursuant to Section 1.c. will not be final or binding
on either party. Prices and other terms and conditions wil!
REPLY COMMENTS OF IDAHO POWER COMPANY - 8
become final and binding on the parties under only two
conditions:
i. The prices and other terms contained in
an ESA shall become final and binding upon full
execution of such ESA by both parties and approval
by the Commission, or
ii. The applicable prices that would apply
at the time a complaint is filed by a Qualifying Facility
with the Commission shall be final and binding upon
approval of such prices by the Commission and a final
non-appealable determination by the Commission
that:
(a) a "legally enforceable obligation"
has arisen and, but for the conduct of the
Company, there would be a contract, and
(b) the Qualifying Facility can deliver
its electrical output within 365 days of such
determination.
Schedule 73, p.73-5. This procedure and these requirements regarding establishment
of a LEO have been affirmed by the ldaho Supreme Court as consistent with both state
and federal law. ldaho Power Company v. ldaho Public Utilities Commission, 155ldaho
780, 786, 787, 316 P.3d 1278, 1284, 1285 (2013)(Grouse Creek Wind). Here, there is
not even a colorable claim that any of the above-stated requirements have been
attempted, much less established. There is no LEO.
III. CONGLUSION
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. lt is appropriate and within the
exclusive authority of the Commission to act in the public interest to protect customers
REPLY COMMENTS OF IDAHO POWER COMPANY - 9
from manipulation of the Commission's rules and declare that the Proposed Battery
Storage Facilities are subject to a 100 kW published rate eligibility cap.
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 Black Mesa Energy, as projects that exceed 100 kW nameplate capacity, is the
incremental cost IRP methodology with a maximum contract term of two years.
Respectfully submitted this 1sth day of May 2017.
DONOVAN E. WALKER
Attorney for ldaho Power Company
REPLY COMMENTS OF IDAHO POWER COMPANY. 10
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 15th day of May 2017 t served a true and correct
copy of the within and foregoing REPLY COMMENTS OF IDAHO POWER COMPANY
upon the following named parties by the method indicated below, and addressed to the
following:
Gommission Staff
Camille Christen
Deputy Attorney General
ldaho Public Utilities Commission
47 2 W esl Wash ington (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
Franklin Energy Storage One through
Four, LLG
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 Silth 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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REPLY COMMENTS OF IDAHO POWER COMPANY -,11
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
cAsE NO. IPC-E-17-01
IDAHO POWER COMPANY
)
ATTACHMENT 1
Franklin Energy Storage One, LLC
515 N. 27s Street
Boise, Idaho 83702
(208) e38-7901
peter@richardsonadams. com
March 22,2017
Michael Darrington
Energy Contracts Leader
Idaho Power Company
l22l West Idatro
Boise,Idatro
HAND DELIVERY
Re: Legally Enforceable Obligation for Franklin Energy Storage One, LLC
Dear Mr. Darrington:
On January 26 of this year the Franklin Energy Storage One, LLC (Franklin One) submitted a
completed application for a Schedule 73 Energy Sales Agreement. Ten business days later on
February 9,2017, you responded identifring deficiencies in the application. The next day, on
February 10,2017, Franklin One responded, addressing and conecting the deficiencies you
identified. You have not subsequently responded to Franklin One, although your tariffSchedule
73 required to do so within ten business days. Instead, your attorney filed a pleading at the Idatro
Public Utilities Commission (PUC) essentially asking that Idaho Power be excused from its
obligations under the PUC's implementation of PURPA for QF projects other than wind or solar,
so-called "Other Projects."
The PUC has not excused ldaho Power from its PURPA obligations. Schedule 73 provides that
Idatro Power had ten business days from February 10,2017 to respond if it identified any further
deficiencies in Franklin One's application, or if there are no defrciencies to provide a "pricing
proposal containing terms and conditions." Idaho Power has not provided notice of any further
deficiencies nor has it provided the required pricing proposal or terms and conditions.
Because Franklin One will be making PURPA authorized sales based on ldaho Power's
published avoided cost rates, the pricing proposal is a mere formality. As you know, the prices
are already established as they are published in the Commission's most recent avoided cost order
from June of 2016. The terms and conditions of Idaho Power's firm energy sales agreement
(FESA) for PURPA projects have been fully vetted and are reflected in the most recent such
agreement approved by the Commission for "Other Projects."
Under PURPA, a QF such as Franklin One, may obligate itself to sell to the purchasing utility
without the need for a bilaterally executed agreement. In doing so, the QF also obligates the
utility to buy its PURPA qualified electrical output. The Franklin One project has already made
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MAR 2 2 2017
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such a commitment and has therefore also obligated Idatro Power to purchase all of the electrical
output from the Franklin One project. The Franklin One project evidenced its comminnent by
having fully complied with the formal process established by the Idaho PUC for obtaining
pricing and a FESA. Idatro Power has chosen not to comply and has apparently instead relied on
its pending filing at the PUC to be excused from its PURPA obligations as they relate to the
Franklin One Project. The PUC has taken no action on Idaho Power's request. In the meantime,
Idaho Power's unwarranted delay and failure to comply with Schedule 73 is causing Franklin
One to incur significant, needless costs.
As noted above, it is not necessary enter into a formal contract to perfect the legally enforceable
obligation that has been created between Franklin One and Idaho Power. However, as a
courtesy, and in order to erase any doubt on Idatro Power's part as to the obligation assumed by
Franklin One to sell its electrical output to Idatro Power - and Idaho Power's obligation to
purchase that output at published avoided cost rates - Franklin One is hereby tendering its FESA
incorporating Idatro Power's published avoided cost rates for "Other Projects" and incorporating
all terms and conditions required and/or approved by this Commission in the recent past for such
projects.
Attached are two executed FESA originals, one for your files and one for our files. Please return
one fully executed original once it has been signed by Idatro Power. We are looking to a long
and mutually beneficial relationship.
Richardson
Counsel for Franklin Energy Storage One, LLC
Cc: Donovan Walker w/o enclosures
Franklin Energy Storage Two, LLC
515 N.27n Street
Boise,Idaho 83702
(208) e38-7e01
peter@richardsonadams. com
L)ct 1,*ufl
March 22,2017
Michael Darrington
Energy Contacts Leader
Idatro Power Company
1221 West Idaho
Boise,Idatro
HAND DELIVERY
Re: Legally Enforceable Obligation for Franklin Energy Storage Two, LLC
Dear Mr. Darrington:
On January 26 of this year the Franklin Energy Storage Two, LLC (Franklin Two) submiued a
completed application for a Schedule 73 Energy Sales Agreement. Ten business days later on
February 9,20t7, you responded identifuing deficiencies in the application. The next day, on
February 10,2017, Franklin Two responded, addressing and correctrng the deficiencies you
identified. You have not subsequently responded to Franklin Two, although your tariffSchedule
73 required to do so within ten business days. Instead, your attorney filed a pleading at the Idatro
Public Utilities Commission (PUC) essentially asking that Idatro Power be excused from its
obligations under the PUC's implementation of PURPA for QF projects other than wind or solar,
so-called "Other Projects."
The PUC has not excused Idaho Power from its PURPA obligations. Schedule 73 provides that
Idatro Power had ten business days from February I0,2017 to respond if it identified any further
deficiencies in Franklin Two's application, or if there are no deficiencies to provide a "pricing
proposal containing terms and conditions." Idaho Power has not provided notice of any further
deficiencies nor has it provided the required pricing proposal or terms and conditions.
Because Franklin Two will be making PURPA authorized sales based on Idaho Power's
published avoided cost rates, the pricing proposal is a mere formality. As you know, the prices
are already established as they are published in the Commission's most recent avoided cost order
from June of 2016. The terms and conditions of Idaho Power's firm energy sales agreement
(FESA) for PURPA projects have been fully vetted and are reflected in the most recent such
agreement approved by the Commission for "Other Projects."
Under PURPA, a QF such as Franklin Two, may obligate itself to sell to the purchasing utility
without the need for a bilaterally executed agreement. In doing so, the QF also obligates the
utility to buy its PURPA qualified electrical output. The Franklin Two project has already made
0 EGEIUE
MAR 2 2 2017
0_B
such a commitnent and has therefore also obligated Idatro Power to purchase all of the electrical
output from the Frartklin Two project. The Franklin Two project evidenced its commitment by
having fully complied with the formal process established by the Idatro PUC for obtaining
pricing and a FESA. Idatro Power has chosen not to comply and has apparently instead relied on
its pending filing at the PUC to be excused from its PURPA obligations as they relate to the
Franklin Two Project. The PUC has taken no action on Idatro Power's request. In the meantime,
Idaho Power's unwarranted delay and failure to comply with Schedule 73 is causing Franklin
Two to incur significant, needless costs.
As noted above, it is not necessary enter into a formal contract to perfect the legally enforceable
obligation that has been created between Franklin Two and Idatro Power. However, as a
courtesy, and in order to erase any doubt on Idaho Power's part as to the obligation assumed by
Franklin Two to sell its electrical output to Idatro Power - and Idaho Power's obligation to
purchase that output at published avoided cost rates - Franklin Two is hereby tendering its FESA
incorporating Idatro Power's published avoided cost rates for "Other Projects" and incorporating
all terms and conditions required and/or approved by this Commission in the recent past for such
projects.
Attached are two executed FESA originals, Two for your files and Two for our files. Please
retum Two fully executed original once it has been signed by ldaho Power. We are looking to a
long and mutually beneficial relationship.
Richardson
Counsel for Franklin Energy Storage Two, LLC
Cc: Donovan Walker w/o enclosures
0 EGEIUE
MAR 2 2 Z\flFranklin Energy Storage Three, LLC
515 N. 27tr Street
Boise,Idaho 83702
(208) e38-7e01
Peter@richardsonadams. com ildct 'tcLn\c{_ c tiurru
March 22,2017
Michael Darrington
Energy Contacts Leader
Idatro Power Company
1221 West Idatro
Boise,Idaho
HAND DELIVERY
Re: Legally Enforceable Obligation for Franklin Energy Storage Three, LLC
Dear Mr. Darrington:
On January 26 of this year the Franklin Energy Storage Three, LLC (Franklin Three) submitted a
completed application for a Schedule 73 Energy Sales Agreement. Ten business days later on
February 9,2017, you responded identiffing deficiencies in the application. The next day, on
February 10,2017, Franklin Three responded, addressing and correcting the deficiencies you
identified. You have not subsequently responded to Franklin Three, although your tariff
Schedule 73 required to do so within ten business days. Instead, your attorney filed a pleading at
the Idaho Public Utilities Commission (PUC) essentially asking that Idaho Power be excused
from its obligations under the PUC's implementation of PURPA for QF projects other than wind
or solar, so-called "Other Projects."
The PUC has not excused ldatro Power from its PURPA obligations. Schedule 73 provides that
Idatro Power had ten business days from February 10,2017 to respond if it identified any further
deficiencies in Franklin Three's application, or if there are no deficiencies to provide a "pricing
proposal containing terms and conditions." Idaho Power has not provided notice of any further
deficiencies nor has it provided the required pricing proposal or terms and conditions.
Because Franklin Three will be making PURPA authorized sales based on Idatro Power's
published avoided cost rates, the pricing proposal is a mere formality. As you know, the prices
are already established as they are published in the Commission's most recent avoided cost order
from June of 2016. The terms and conditions of Idaho Power's firm energy sales agreement
(FESA) for PURPA projects have been fully vetted and are reflected in the most recent such
agreement approved by the Commission for "Other Projects."
Under PURPA, a QF such as Franklin Three, may obligate itself to sell to the purchasing utility
without the need for a bilaterally executed agreement. In doing so, the QF also obligates the
utility to buy its PURPA qualified electrical output. The Franklin Three project has already
made such a commitnent and has therefore also obligated ldatro Power to purchase all of the
elechical output from the Franklin Three project. The Franklin Three project evidenced its
commitment by having fully complied with the formal process established by the Idatro PUC for
obtaining pricing and a FESA. Idatro Power has chosen not to comply and has apparently
instead relied on its pending filing at the PUC to be excused from its PURPA obligations as they
relate to the Franklin Three Project. The PUC has taken no action on Idaho Power's request. [n
the meantime, Idalro Power's unwarranted delay and failure to comply with Schedule 73 is
causing Franklin Three to incur significant, needless costs.
As noted above, it is not necessary enter into a formal contract to perfect the legally enforceable
obligation that has been created between Franklin Three and Idatro Power. However, as a
courtesy, and in order to erase any doubt on Idaho Power's part as to the obligation assumed by
Franklin Three to sell its electrical output to Idatro Power - and Idatro Power's obligation to
purchase that output at published avoided cost rates - Franklin Three is hereby tendering its
FESA incorporating Idaho Power's published avoided cost rates for "Other Projects" and
incorporating all terms and conditions required and/or approved by this Commission in the
recent past for such projects.
Attached are Three executed FESA originals, Three for your files and Three for our files. Please
return Three fully executed original once it has been signed by Idaho Power. We are looking to
a long and mutually beneficial relationship.
i-.-,.-*;W
Counsel for Franklin Energy Storage Three, LLC
Cc: Donovan Walker w/o enclosures
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MAR 2 2 ZO17
CNBy
Franklin Energy Storage Four, LLC
515 N.27m Sneet
Boise,Idatro 83702
(208) e38-7e01
peter@richardsonadams. com \tla hrrrytr{ r t irt-g.r{
March 22,2017
Michael Darrington
Energy Contacts Leader
Idatro Power Company
1221 West Idaho
Boise,Idatro
HAND DELIVERY
Re: Legally Enforceable Obligation for Franklin Energy Storage Four, LLC
Dear Mr. Darrington:
On January 26 of this year the Franklin Energy Storage Four, LLC (Franklin Four) submitted a
completed application for a Schedule 73 Energy Sales Agreement. Ten business days later on
February 9,2017, you responded identiffing deficiencies in the application. The next day, on
February 10,2017, Franklin Four responded, addressing and correcting the deficiencies you
identified. You have not subsequently responded to Franklin Four, although your tariffSchedule
73 required to do so within ten business days. Instead, your attorney filed a pleading at the ldatro
Public Utilities Commission (PUC) essentially asking that ldatro Power be excused from its
obligations under the PUC's implementation of PURPA for QF projects other than wind or solar,
so-called'oother Projects."
The PUC has not excused Idatro Power from its PURPA obligations. Schedule 73 provides that
Idaho Power had ten business days from February 10,2017 to respond if it identified any further
deficiencies in Franklin Four's application, or if there are no deficiencies to provide a "pricing
proposal containing terms and conditions." Idaho Power has not provided notice of any further
deficiencies nor has it provided the required pricing proposal or terms and conditions.
Because Franklin Four will be making PURPA authorized sales based on ldatro Power's
published avoided cost rates, the pricing proposal is a mere formality. As you know, the prices
are already established as they are published in the Commission's most recent avoided cost order
from June of 2016. The terms and conditions of Idaho Power's firm energy sales agreement
(FESA) for PURPA projects have been fully vetted and are reflected in the most recent such
agreement approved by the Commission for "Other Projects."
Under PURPA, a QF such as Franklin Four, may obligate itself to sell to the purchasing utility
without the need for a bilaterally executed agreement. [n doing so, the QF also obligates the
utility to buy its PURPA qualified electrical output. The Franklin Four project has already made
such a commitment and has therefore also obligated ldalro Power to purchase all of the electrical
output from the Franklin Four project. The Franklin Four project evidenced its commitment by
having fully complied with the formal process established by the Idaho PUC for obtaining
pricing and a FESA. Idaho Power has chosen not to comply and has apparently instead relied on
its pending filing at the PUC to be excused from its PURPA obligations as they relate to the
Franklin Four Project. The PUC has taken no action on Idatro Power's request. In the meantime,
Idaho Power's unwarranted delay and failure to comply with Schedule 73 is causing Franklin
Four to incur significant, needless costs.
As noted above, it is not necessary enter into a formal contract to perfect the legally enforceable
obligation that has been created between Franklin Four and Idatro Power. However, as a
courtesy, and in order to erase any doubt on Idaho Power's part as to the obligation assumed by
Franklin Four to sell its electrical output to Idatro Power - and Idatro Power's obligation to
purchase that output at published avoided cost rates - Franklin For.r is hereby tendering its FESA
incorporating Idatro Power's published avoided cost rates for "Other Projects" and incorporating
all terms and conditions required and/or approved by this Commission in the recent past for such
projects.
Attached are Four executed FESA originals, Four for your files and Four for our files. Please
return Four fully executed original once it has been signed by ldaho Power. We are looking to a
long and mutually beneficial relationship.
Counsel for Franklin Energy Storage Four, LLC
Cc: Donovan Walker w/o enclosures
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
GASE NO. IPC-E-17-01
IDAHO POWER COMPANY
ATTACHMENT 2
<rHffi[,
An loAcoRP comDany
DONOVAN E. WALKER
Lead Counsel
dwa [e-mail]
April 3, 2017
Peter Richardson
Franklin Elergy Storage One, Two, Three, and Four, LLC
515 N.27tn Street
Boise, lD 83702
peter@ ri cha rd son adams. com
VIA ELECTRONIC MAIL ONLY
Re: Franklin Energy Storage One, Two, Three, and Four, LLC
Mr. Richardson
I write in response to your letters dated March 22, 2017, which seek to establish legally
enforceable obligations on behalf of the four proposed Franklin Energy Storage
projects.
Your letters are mistaken in their claim that ldaho Power did not provide a response to
your February 10, 2017, submittals within Schedule 73's ten business day response
timeframe. By letter dated February 27,2017, Idaho Power responded to your requests
stating, "ldaho Power does not agree that your proposed projects are eligible for
published avoided cost Rate Option 4, Non-Levelized Non-Fueled Rates, with a 20-year
contract term." That letter further advised, "On February 27,2017,ldaho Power filed an
application to the ldaho Public Utilities Commission requesting a declaratory order that
determines the contract term and avoided cost pricing methodology for which your
proposed projects may be eligible. See IPUC Case No. IPC-E-17-01."
Your letters are also mistaken in their claim that ldaho Power has asked to be "excused
from its obligations under the PUC's implementation of PURPA". ldaho Power has not
asked to be excused from PURPA's obligation to purchase. ldaho Power has asked
that the ldaho Public Utilities Commission ("|PUC" or "Commission") determine the
proper rates and contract term that your proposed projects may be eligible for, if they
are indeed PURPA Qualifying Facilities.
Your letters are additionally mistaken in their claim that, "The PUC has taken no action
on ldaho Power's request." ldaho Power's petition in Case No. IPC-E-17-01was before
the Commission in its regularly scheduled, public Decision Meeting on March 20,2017,
1:30 p.m., at which the Commission determined to issue a Notice of Petition and Notice
1221 W' ldaho 5t. (83702)
PO. 8ox 70
Boise. lD 83707
Peter Richardson
April 3, 2017
Page 2 of 2
of Modified Procedure as well as a procedural schedule, adopting Commission Staffs
proposed schedule from Staffs March 15, 2017, Decision Memorandum. The
Commission subsequently issued its written Notice of Petition for Declaratory Order and
Notice of Modified Procedure, Order No. 33729, on March 23,2017.
As you are well aware from your participation in past cases and dockets, your attempted
"tendering" of a 'FESA' is not the properly established procedure for determination of
the proper rates, term, and/or conditions of required PURPA purchases or of
establishment of a legally enforceable obligation. Please see Schedule 73 and ldaho
Power Company v. ldaho Public Utilities Commission, 155 ldaho 780, 316 P.3d 1278
(201 3)(Gro use Creek Wind).
Si
E. Walker