20170713final_order_no_33785.pdf

Office of the Secretary
Selwice Date
July 13,2017
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE PETITION OF )IDAHO POWER COMPANYFORA )CASE NO.1PC-E-17-01
DECLAMTORY ORDERREGARDING )PROPERCONTRACTTERM,S )CONDITION,S AND AVOIDED COST )PRICINGFORBATTERY STORAGE )ORDERNO.33785
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On February 27,2017,ldaho Power Company filed a Petition asking the Commission
to issue a Declaratory Order regarding proper contract terms,conditions,and avoided cost
pricing for five battery storage facilities requesting contracts tmder the Public Utility Regulatory
Policies Act of 1978 (PURPA).The Cornmission issued a Notice of Petition and Notice of
Modifed Procedlzre setting deadlines for comments from the battery storage facilities,affected
utilities,Staff,and any interested persons.Order No.33729.The Commission also granted a
joint Petition to Intervene by Sien'a Club and Idaho Conservation League (1CL).Order No.
33743.
The Commission received comments from the battery storage facilities -Frnnklin
Energy,LLC and Black Mesa,LLC -followed by comments om Commission Staff,Avista
Corporation,Sien'a Club/ldaho Conservation League (lCL),and Idaho Power.Each of the
parties,except Black Mesa,also filed reply comments.See Order No.33765 (granting Frnnklin
Energy's unopposed Motion to extend deadline for reply comments).With this Order,the
Commission grants IPC'S request for a Declaratory Order.
BACKGROUND:PUBLICUTILITY REGULATORYPOLICIESACT
PURPA was passed as part of the National Energy Act of 1978.The Act's goals
include the encolzragement of electric energy conservation,efficient use of resolzrces by electric
utilities,and equitable retail rates for electric consumers,as well as the improvement of elecic
service reliability.16 U.S.C.j 2601 (Findings).Under the Act,the Federal Energy Regulatory
Commission (FERC)prescribes Esbroad,generally applicable rules''for PURPA'S
implementation.Portland General Electric Co.v.FERC,854 F.3d 692,(D.C.Cir.2017);16
U.S.C.j 824a-3(a),(b).The Act also requires state public-utilitycommissions to implement
FERC'S nzles at the local level.''PortlandGeneral Electric,854 F.3d 692;16 U.S.C.j 824a-
3(t),State commissions tsmay comply with the statutory requirements by issuing regulations,by
OOER NO.33785 1
resolving disputes on a case-by-case basis,or by taking any other action reasonably designed to
give effect to FERC'S rules.''FERC v.Mississippi,456 U.S.742,751 (1982).State
commissions have t<discretion in determining the mnnner in which the rules will be
implemented.''Idaho Power Company v.IdahoPub.Util.Comm.,155 Idaho 780,782,316 P.3d
1278,1280 (2013).
PURPA requires electric utilities,tmless otherwise exempted,to purchase elecic
energy from QFs.16 U.S.C.j 824a-3;see also 18 C.F.R.j 292.101 (defining QFs),292.3034*.
In ldaho,the purchase rate for a utility's contract to purchase QF energy under PURPA must be
approved by this Commission.Idaho Power,155 Idaho at 789,316 P.3d at 1287.
Under PURPA,the purchase rate for PURPA contracts shall not exceed the
tincremental''or Slavoided cost''to the utility,defined as the cost of energy which,but for the
purchas from gthe QFI,such utility would generate or ptlrchase from another source.16 U.S.C.
j 824a-3(d);18 C.F.R.j 292.10146)(detining avoided costs).However,FERC rules require
establishment of (istandard rates for ptlrchases om (QFs1 with a design capacity of 100
kilowatts or less,''and allow standard rates for pmchases from gQFs)with a design capacity of
more than 100 kilowatts.''18 C.F.R.j 292.304(c)(1),(2).FERC rules provide that standard
rates lmjay differentiate nmong (QFsj using various teclmologies on the basis of the supply
characteristics of the differenttechnologies.''18 C.F.R.j 292.304(c)(3)(ii).
This Commission has established two methods of calculating avoided cost,depending
on the size of the QF project:(1)the surrogate avoided resource (SAR)methodology,and (2)
the integrated resotlrce plan (1RP)methodology.See Order No.32697 at 7-8.The Commission
uses the SAR methodology to establish standard or spublished''avoided cost rates.1d.
Currently,the eligibilitycap for wind and solar QFs to access published avoided cost rates is set
at 100 kilowatts (kW).QF projects other than wind and solar are subject to a published rate
eligibilitycap of 10 average megawatts (aMW).Order Nos.32262 at 1,32697 at 7-8.
PURPA and FERC'S implementing regulations do not dictate a requisite term length
for contracts under PURPA.See W-/bn Enerv,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.Consequently,state
jtlrisdictions have identified varying minimllm contract terms.Since PURPA was first
implemented in ldaho,this Commission has periodically modified the maximum length for
PURPA contracts.See Order No.29029.In 2015,this Commission reduced the term for
ORDERNO.33785 2
individually-negotiatedPURPA contracts (those not subject to published rates)in Idaho from 20
years to 2 years.Order Nos.33357,33419.The contract term for published rate contracts
remains at 20 years.See Order No.33253 (clarifying that the proceedings concenwd the
contract term for QFs exceedingthe published rate eligibilitycap).
IDAHO POWER'S PETITION
Idaho Power stated it received requests for PURPA contracts from five battery
storage facilities (self-certied as QFs)1 asserting they are entitled to published avoided cost
rates and 20-year terms.Petition at 2.The five facilities are FranklinEnergy Storage One,Two,
Three,and Fotm LLCS and Black Mesa,LLC,2 and the contracts request 148 MW of total
combined energy storage.1d.at 4,7.Idaho Power informed Franklinand Black Mesa that it did
not believe any ofthe storage facilities are eligible for published rates and 20-year contracts.l
ldaho Power acknowledged that GQF status is within the exclusive jtuisdiction gotl
and properly before FERC'';thus for purposes of its Petition,the Company did not challenge the
QF status of Franklin and Black Mesa.1d.at 6.Idaho Power asserted the Commission has
jurisdiction to issue a Declaratory Ordr.1d.at 5.Thus,the Company requested a Declaratory
Order that the Frnnklin and Black Mesa QFs and other batlery storage facilities ttare subject to
the same 100 kW published avoided cost rate eligibility cap applicable to wind and solar
facilities.''ld at 13.The Company also requested a nzling that the proper authorized avoided
cost rate for battery storage facilities ...that exceed 100 kW nameplate capacity,is ga rate based
onq the incremental cost IRP methodology with a maximlzm contract term of two years.''Id at
13-14.
Idaho Power noted that Elthe generation source that energizes a11 of the Proposed
Battery Storage Facilities is solar generation,''and sthe output profle submitted for each of the .
..Facilities matches the shape and timing of the generation profile of a solar generator.''I at 7
(citing Attachments 1-5).According to the Company,the potential benefits of an economically
1 Petition at 4.Franklin and Black Mesa submitted a FERC Form 556 for each of the proposed projects,self-
certifyingthat the projects are QFs under 18 C.F.R.j 292.2074a).See Attachments 1-5 to Petition.
2 The Black Mesa QF is owned by Redwood Energy,LLC,which submitted comments on behalfof Black Mesa as
its corporate owner.However,QtBlack Mesa Energy,LLC''submitted its Schedule 73 PURPA contract request form
to Idaho Power on its own behalf.Attachment 5 to Petition,at 4.
ORDERNO.33785
viable utility-scaleenergy storage facilit/cannot be recognized if QFs lare configured in such a
malmer as to come under published rates,''or structtlred to tpassg )through as many kW hours as
possible...to maximize revenue,''as proposed by Frnnklinand Black Mesa.I6L at 8.
The Company believes that Frnnklin and Black Mesa are using their QFs to
ccirctmwent the Commission's rules and requirements in its implementation of PURPA for the
state of ldaho.''1d.The Company asserted the Frnnklin and Black Mesa QFs are ttnothing more
than a pass throughof the solar generation gthat will energize their batteries),in what appears to
be a blatant attempt to malpulate the 100 kW published rate eligibility cap and two-year
contract limitationfor solar generators.''Id at 9.The Company argued it is appropriate and
necessary for the Commission to grant its requested declaratory relief lextendlinglthe 100 kW
published rate eligibility cap to battery storage projects ...to protect customers f'rom this
manipulation of the rules.''f#.at 13.
COMMENTS
a4.Franklin Fzlez'g.p
Frnnklin opposed Idaho Power's Petition.Fraldin asserted there is no qegal
controversy''because the Commission's Orders and policy nzlings are &'clear (andj unequivocal''
in supporting Franklin's entitlement to published avoided cost rates for up to 20 years.Frnnklin
Comments at 1-2,11-12.Frnnklinquoted Commission Order No.32697,which provides,ilWe
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lhA!Fipd and solar is appmpriqt to continue to encotlrage renewable development while
maintaining ratepayer indifference.''1ti at 7 (quoting Order No.32697 at 14 (emphasis by
Frnnklinl).Also,Franklin quoted the Commission's decision to 'smaintain the eligibilitycap at
10 aMW for QF projects other than wind and solar (ipluding.but noj limisd $)biomass,small
hydro,cogeneration,geothermal,and waste-to-energyl.''Id at 10 (quoting Order No.32697 at 9
(emphasis by Franklinl).
Franklin argued that,because Commission Order No.32697 is clear,there tare no
adverse legal interestss''and Idaho Power's request must be constnzed as a request to reconsider
or revise Order No.32697.1d.at 2,4.For such relief,Frnnklin contended,it and any potentially
affected parties must receive notice and the opportunityto present evidence and cross-exnmine
3 Thc Company states that the potential benefits of economically viable,utilitpscale energy storage facilities include
S'providging)ancillary grid services such as reserve capacity,surge capacity,load-balancing,or voltage support;
flrming ()variable generation',or time-shiing generation to match load.''Petition at 8.
ORDERNO.33785 4
witnesses.Id at 3-4.Franklin also argued that the Commission's decision in such a proceeding
must be prospective only,and thus not apply to its legally enforceable contracts with Idaho
Power for the four proposed battery storage QFs.I at 4-5.
In addition,Franklinchallenged-and asked the Commission to disregard -a ntlmber
of factual assertions in Idaho Power's Petition.Franklin contended that,contrary to the
Company's claims,the Franklin QFs (1)Scontemplated''energy sottrces in addition to solar;(2)
have offered to be dispatchable;and (3)will have the ability -to varying degrees''-to provide
ancillary grid services,frming of variable generation,and time-shifling generation to match
load.1d.at 14.Further,Frnnklin disputed that its QFs will merely spass tllrough''solar power,
arguing that they wouldinstead Esutilize renewable energy as input into the battery storage system
.,.gthat wouldthen be1 used to provide a non-intermittent,dispatchable product.''Id.at 15.
Finally,Franklin asserted that it has complied with a11 the requirements of the
Company's Tariff Schedule 73,which outlines PURPA contracting procedures,and that as such
it has established LEOs and is entitled to published rates and zo-year contracts.fJ.at 17.
B.Redwood EnergyforBlack Mesa
Redwood Energy,LLC,which owns the Black Mesa QF,submitted brief comments
on Black Mesa's behalf,asserting that it qualifies for published rates because it is a QF Ewithl
output of less than 10 (aMWI but is not a wind or solar QF that would be restricted to 100 kW.''
Redwood Comments.Redwood contended that the Black Mesa QF lhas fundamentally different
characteristics than a wind or solar project withoutenergy storage.''Id According to Redwood,
battery storage dmakes output both more predictable and more coincident with system load,thus
gresulting inj a higher Net Qualifying Capacity.''f#.Redwood asserted that Gtlelnergy storage
will reduce ldaho Power's requirements for Resolzrce Flexibility,thus avoiding a cost that would
be bome but for''the Black Mesa QF project.Id Redwood further asserted,St-fhis is a
dispatchable system that will offer ancillary grid services such as voltage support,load shifting,
reserve capacity,load-balancing,(andq firming of variable generation or time-shiftingto match
load.''Id.
C.x'/c#
Staff believes there is a legal dispute that can be properly addressed by a Declaratory
Order,namely the terms of PURPA contzacts between Idaho Power and the battery storage QFs.
ORDERNO.33785
Staff maintained that Frnnklin's and Black Mesa's position that they are clearly
entitled to published avoided cost rates under the language of Order Nos.32262 and 32176 is an
doverly simplistic analysis.''Staff Comments at 7.Staff asserted that ithe energy source of a
battery system is not an electro-chemical reaction.''1d at 8.Rather,$ta batery storage facility
can be a QF only if its energy source complies *111 PURPA and PURPA regulationsj''consistent
with FERC'S analysis in f uz Development and Finance Corporation,51 FERC P 61,078 (1990),
a FERC order cited in Franklin's comments.1d.
Staff thus reasoned Glit is appropriate to look to the Franklin and Black Mesa QFs'
energy sotzrces in determining their eligibility for published rates.''I Staff highlighted that
Franklin's and Black Mesa's requests for PURPA contracts identified solar as the energy source,
although they have Sicontemplated''other sources.Id.at 8-9 (citing Frnnklin Comments at 14
and arguing that smere contemplation of an alternate sotlrce is insufscientto obligate a utility to
pmchase power from a battery storage QF with rates and contract terms based on that
hypothetical source'').Staffthus argued that Franklinand Black Mesa are subject to the 100 kW
published avoided cost rate eligibilitycap.Id.at 9.Staff asserted that Frnnklinand Black Mesa
-as currently configtlred -exceed that cap,and are thus eligible for two-year tenns and
negotiatedavoided cost rates under the IRP methodology.1d.
Staff argued that Franklin and Black Mesa were interpreting isolated parts of
Commission orders,but ignoring the intent of the orders gleaned by reading them in their
entirety and in context.Staff Comments at 9-10,quoting Hayes v.City ofplummer,159 ldaho
168,170,357 P.3d 1276,1278 (2015)(other citation omitted)(statutory ltprovisions should not
be read in isolation,but must be intermeted in the context ofthe entire docllmenf).
Staff asserted,CA battery storage QF that would not exist except for its energy source
should not be able to evade an eligibility cap that would otherwise be applied to its energy
source.''StaffComments at 1 1.l-lere,Franklinand Black Mesa -battery storage QFs currently
intending to use solar as their energy source -should not be exempt from this Commission's
eligibility cap which was intended to prevent disaggregation of large solar projects.''1d.Staff
argued Franklin's and Black Mesa's interpretation that they are eligible for published rates tmder
Order No.32262 is contrary to the Commission's intent -ignored by Frnnklinand Black Mesa,
but expressed throughoutOrder No.32262 -to prevent disaggregation.Id at 9-1 1.
ORDERNO.33785 6
Finally,Staff disputed Frnnklin's contention that it established a LEO.ld at 9.The
Idaho Supreme Court affirmed this Commission's determination that a LEO ttrequires a showing
that there would have been a contract but for the actions of the utility.''Idaho Power,155 Idaho
at 787.Given the tmdisputed facts that Franklin and Black Mesa proposed to configure their
QFs with solar energy sources,Staff determined there was no indication that ldaho Power
impeded formation of PURPA contracts.Staff Comments at 9.
Given the broader implications of issues raised in the case,Staff recommended that
the Commission initiate a general investigation into the appropriate contract terms for battery
storage QFs.StaffComments at 1 1.
D.Avista
Avista Corporation supported Idaho Power's Petition.Avista asserted that battery
storage facilities should be classified,and treated,in the snme mnnner as the facilities that
provide the primary energy sottrce for such battery storage facilities.''Avista Comments at 5,3-
4 (discussing f uz,51 FERC P 61,078).ln other words,battery storage facilities using wind or
solar facilities as their primary energy source should be treated as wind or solar QFs.Id.Avista
proposed that if the Commission rejects the proposal to treat battery storage facilities in the same
manner as their primary energy source,then the Commission should dtinitiate a generic
proceeding to determine the appropriate treatment of such facilities.''Id at 5.Finally,Avista
recommended that the Commission put a tmoratorium on energy storage QFs with nameplate
capacities above 100 kW to protect utility customers dtuing (a generic)proceeding.''Avista
Comments at 5-6.
E.Sierra Club and ICL
Sierra Club and lCL opposed ldaho Power's Petition,arguing that the Company is
asking to modify prior Commission Order Nos.32262 and 33357,and that a petition for
declaratory order is therefore not the appropriate process.Sierra C1ub/ICL Comments at 1-2.
Sierra Club and ICL asserted that the Commission's Csinherent,derivative''authority under tlze
Idaho Uniform Judgments Act tKmust yield to''the statutory process for Gtrescinding,altering or
amending prior orders''under Idaho Code j 61-624,because otherwise the procedures set forth
in Idaho Code j 61-624 Clbecome superfluous.''Sierra C1ub/ICL Comments at 3.
The bulk of Sierra Club and ICL'S comments challenged the validityof Order No.
33357,the final Order from consolidated proceedings on petitions by Idaho electric utilitiesto
ORDER NO.33785 7
shorten PURPA contract lengths for projects withIr-based avoided cost rates.Sien'a Club/lCL
Comments at 4-19.Sierra Club and ICL raised several arguments why Order No.33357 is
invalid,and concluded that lGthe Commission cannot extend lan Order thatj exceeded the
Commission's jurisdiction.''Id at 19.Sierra Club and lCL recommended that the Commission
trevisit Order No.33357 for wind and solar projects.''Id
Sierra Club and 1CL asserted,to the extent the Commission considers whether to limit
the length of contracts for battery storage facilities,it must hold a hearing and make findings
that the contract term allows reasonable opportunity for QFs to attract financing for viable
projects.''Id.at 2.
REPLY COMMENTS
a4.Idaho Power
On reply,Idaho Power stated that the proposed battery storage facilities have not
established a LEO.Idaho Power Reply at 7-9.The Company detailed commllnications between
Idaho Power and the battery storage QFs demonstrating the Company's efforts and actions prior
to filing its Petition here,and attached supporting records.1d.(Attachments 1-2).
ldaho Power furtherasserted a generic case was not needed.Idaho Power Reply at 5-
6.However,the Company indicated it is not necessarily opposed to such proceedings.''1d.
B.Franklin and Black Mesa
ln its reply,Franklin asserted that Staff is simply ignoring the clear and unequivocal
ruling by this Commission that all QFs other than solar and wind are entitled to twentpyear
contracts.''Frnnklin Reply at 8.Frnnklinnoted that,Sin f uz,FERC was not (evaluating battery
storage facilities'for the purpose of determining their eligibilityfor published rates and twenty-
year contract termsv''Franklin's Reply at 2 (emphasis by Franklin).Franklin llighlightedthat
FERC'S conclusion in f uz was that lenergy storage facilities such as the proposed Luz battery
system are a renewable source for purposes of QF certitkation.''Id (quoting f uz at 10).
Franllin argued that Idaho Power,Staff and Avista (convenientlyignore the distinct legal status
FERC has declared as to energy storage QFs.''Id at 3-4.
Franklintook no position on Staffs recommendation to open a generic case,except to
assert that llsuch new generic dockets will only have prospective effect.''FranklinReply at 1 1.
ORDERNO.33785 8
C.S/cJ./'
Staff disagreed with Sienu Club and ICL'S argument that the petition be constnzed as
a request to modify the Commission's Orders.StaffReply at 3.Staff noted that the Company's
request is consistent with Order No.32262,and consistent with f uz.Id -fhus there is no
reason -as Sierra Club and ICL contend -for Idaho Power to seek modification of Order No.
32262.'7 1d.Staff further noted that the Company's Petition seeks to apply Order No.33357
withoutmodification.Id at 4.
Staffdisputed the argument by Sierra Club and ICL challenging the validity of Order
No.33357.Staff argued that their challenges exceed the scope of Idaho Power's Petition,and
are barred by Idaho Code j 61-625,which precludes collateral attack on a final order of the
Commission.StaffReply at 4-5.
As to Avista'srecommended moratorium on energy storage QFs larger than 100 kW,
Staff recommended instead that the Commission allowsuch QFs to enter PURPA contracts,but
that the Commission temporarily set a 100 kW threshold for batlery storage facilities to be
eligible for published avoided cost rates,pending the outcome of a generic proceeding.Staff
Reply at 2.Staff stated this ttwould ensure that Idaho Power complies with its obligation to
purchase tmder PURPA while also protecting ratepayers by ensuring acclzrate avoided cost
rates.''1d.at 2-3.
D.Sierra Club andICL
In their reply,Sierra Club and 1CL argued that Stafferred in asserting that the issue of
contract length is in the discretion of state commissions based on FERC'S silence about contract
length in its implementing regulations.Sierra C1ub/1CL Reply at 2-4.Sierra Club and 1CL also
again addressed,as they did in their opening comments,the issue of contract length as it relates
to QFs'financialviability.f#.at 4-6.
COMMISSIONFINDINGSAND DECISION
This Commission has jlzrisdiction over Idaho Power,an electric utility,pttrsuant to
the authorityand power granted it under Title61 ofthe Idaho Code and PURPA.Idaho Code jj
61-129,61-501;16 U.S.C.j 824a-349.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 ptzrchase of energy om QFs,and implement FERC nlles.See supra
Background.
ORDERNO.33785
Also,the Commission has jurisdiction to issue declaratory orders tmder Title 61 of
the Idaho Code and the Idaho Uniform Declaratory Judgments Act of 1933,Idaho Code jj 10-
1201 et seq.See Utah Power dr Light v.Idaho Pub.Util.Comm 'n,112 ldaho 10,12,730 P.2d
930,932 (1986)(PUC had jmisdictionto 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 declaratoryjudgment must clarify and settle the legal relations at issue,and
afford leave from uncertaintyand controversy which gave rise to the proceeding.''Harris v.
Cassia Ctl/znl.p,106 ldaho 513,517,681 P.2d 988 (1984)(citing Sweeney v.Am.Nat 1 Bk.,62
ldaho 544,1 15 P.2d 109 (1941)).For a declaratory judgmentto be rendered,there must be ian
actual or justiciable controversy''that is 'sreal and substantials''and ldefinite and concrete,
touching the legal relations of parties having adverse legal interests.''Id.at 516 (quoting Aetna
Ll/lns.Co.v.Haworth,300 U.S.227,240-41 (1937)).
Under the applicable statutes and case precedent,and in light of the circllmstances
here,we have jurisdiction to issue a declaratory order.Idaho Power disagrees with Frnnklinmld
Black Mesa as to which avoided cost rate and eligibility cap should apply to the two battery
storage developers for purposes of fonning PURPA contracts.Both sides contend their
respective interpretations of applicable law should govern their contracts.We thus find the
Company,Frnnklin and Black Mesa have adverse legal interests about which there is an actual
or justiciable controversy''that is real and substantial,''and tdefinite and concrete,''that we
have jtlrisdictionto clarify and resolve.See Harris,106 ldaho at 516 (quoting Aetna Lfe .Jz7-$'.,
300 U.S.at 240-41).We reject Sienu Club's and ICL'S argument that the Company is actually
seeking modificationof the Commission's prior Orders.Sierra C1ub/lCL Comments at 1-2.We
further find Sierra Club/ICL's challenge to the validity of Order No.33357 to be an
impermissible collateral attack,pursuant to Idaho Code j 61-625.
We are unaware of any reference in PURPA or FERC'S implementing regulations
that identities battery storage as a renewable resolzrce eligible for QF status and the benefits
provided by the Act.lndeed,FERC acknowledged that itlnleither the stamte nor the final nlle
refers specifically to energy storage systems.''f uz at 61,171.Consequently,our ruling on the
narrow declaratory issue before us should not be read to presume that this Commission deems
battery storage to be a legitimate qualifying facility eligible for the benefits of PURPA and
ORDERNO.33785 10
subject to the Act's implementing regulations lmder FERC.The battery storage facilities'QF
status is a matter withinFERC'S jurisdiction and is not at issue in this case.
Although FERC goes on in f uz to sllmmmilyinclude battery storage as a renewable
resource for purposes of QF certification,it does so with specific parameters.FERC
distinguishes battery storage from energy sources that generate electric energy and provide the
battery with its resource.FERC states that $.
..in order for a storage facility to be a QF the
primary energy sotlrce for generation of this energy must be one of those contemplated by the
statute for conventional small power production facilities..1d.section 3(17)(A)of the
FPA detines a small power production facility as one which produces electric energy solely by
the use,as a primary energy solzrce,of biomass,waste,renewable resouzces,geothermal
resources or any combination thereof.'''1d.,citing 16 U.S.C.j 796(17)(A)(i)(1988).primm'y
energy sotlrce is defined as the fuel or fuels used for the generation of electric energy....''Id ,
citing 16 U.S.C.j 796(17)(B)(i)(1988).
Luz atlempted to convince FERC that a battery storage facility independently meets
the definition of a primary energy sotlrce because it generates energy when an electro-chemical
reaction discharges the stored power from 'the battery.1d.at 61,169.Luz furtherargued that the
time shifting capability of energy storage Elcan only make sense and be implemented if energy
storage facilities like the proposed battery system are allowed to operate as QFs and to use
electric energy withoutan inquiry as to the source of energy used to generate that electricity.''
Id at 61,170.FERC rejected this position.dcontrary to Luz's assertion,the primmy energy
sotlrce of the battery system is not the electro-chemical reaction.Rather,it is the electric energy
which is utilized to initiate that reaction,for without that energy,the storage facility could not
store or produce the electric energy which is to be delivered at some later time.Since this energy
is the primary energy source of the facility,it is necessary to look to the source of this energy as
the ultimate primary energy solzrce of the facility.''Id at 61,171.
FERC confirmed that energy storage facilities are not renewable resources/small
power production facilities per se.ftf Electric input is required to produce electric output from
a storage facility.1d.at 61,172.For this reason,in order to qualify as a PURPA resource,the
primary energy source behind the battery storage must be considered.We must,then,look to
Frnnklin's and Black Mesa's primary energy solzrces in order to determine their eligibilityunder
PURPA.The primary energy source for Frnnklin and Black Mesa is solar generation.
ORDERNO.33785
Moreover,the energy generation output profiles
reflection of the solar generation that operates
storage facilities,Petition at 7,Attachments 1-5.
for the battery storage facilities are a direct
as the primary energy sotlrce for the battery
Accordingly,we find it appropriate to base Franklin's and Black Mesa's eligibility
under PURPA on its primary energy source -solar.Solar resources larger than 100 kW are
entitled to negotiate two-year PURPA contracts through the use of Idaho's 1RP methodology.
Frnnklin's arplment that this Commission's prior decisions clearly and unequivocally allow it
entitlement to published rates ignores FERC'S pronotmcement that energy storage facilities are
notperse renewable resources/small power production facilities under PURPA.
Frnnklin further maintains that it has established a legally enforceable obligation
(LEO)requiring Idaho Power to ptlrchase its energy.Frnnklin Comments at 17.However,
Franklin has failed to prove that ldaho Power impeded Franklin's ability to enter into PURPA
contracts.See Idaho Power,155 Idaho at 787.To the contrary,ldaho Power notified the battery
storage facilities that the utility did not believe the projects were entitled to zo-year,published
rate contzacts and requested the projects Ssupplement yottr Applications with additional
information that verifes eligibility for the requested rates and terms,or modify your
Applications to request rates and terms that your proposed projects may qualify for.''Petition,
Attachment 6.
<TERC has given each state the authorityto decide when a LEO arises in that state.''
Idaho Power,155 Idaho at 787,quoting Power Resource Group,Inc.v.Public Utility Comm 'n
of Texas,422 F.3d 231,239 (5th Cir.2005).The facts and evidence in this case reveal that the
parties were in active negotiations which resulted in Idaho Power's Petition for a declaratory
ruling.We decline to interpret a reasonable dispute between the parties regarding contract terms
and conditions as intransigence or a failure to negotiate on the pal4 of the utility.Therefore,we
find that no action (or inactiop)of the utility has t'riggered the creation of a legally enforceable
obligation.
Finally,based on the above findings regarding the characteristics of battery storage
and the compulsory consideration of its underlyingprimary energy source,we tind a generic
investigation urmecessary.We grant Idaho Power's Petition for a declaratory nlling to address
and resolve the legal dispute between Idaho Power and FrnnklinEnergy/Black Mesa arising out
of contract negotiations between the two parties.We fnd that,as storage facilities with design
ORDERNO.33785 12
capacities that will exceed 100 kW each and with solar as their primary energy source,the
projects are eligible for two-year,negotiated (111P methodology)contracts.
O R D E R
IT IS HEREBY ORDERED that ldaho Power's Petition for declaratory relief is
granted as set forth above.
THIS IS A FINAL ORDER.Any person interested in this Order may petition for
reconsideration withintwenty-one(21)days of the service date of this Order.Within seven (7)
days after any person has petitioned for reconsideration,any other person may cross-petition for
reconsideration.See Idaho Code j 61-626.
ilities commission at Boise,Idaho this /yDONEbyOrderoftheIdahoPublicUt
day of July 2017.
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ERIC ANDERSON,COMMISSIONER
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Diane M.Hanian
Commission Secretary
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ORDER NO.33785 13