20170515Reply Comments.pdf

Peter Richardson (ISB # 3195)
515 N. 27th Street
Boise,Idaho 83702
Tel. [phone]
peter@richardsonadams. com
Attorney for Franklin Energy Storage Projectsl
IN THE MATTER OF IDAHO POWER
COMPANY'S PETITION FOR
DECLARATORY ORDER REGARDING
PROPER CONTRACT TERMS,
CONDITIONS, AND AVOIDED COST
PRICING FOR BATTERY STORAGE
FACILITIES
ri:Cr:i\,/L[J
;,:l I1C
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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CASE NO. IPC.E.I7-01
FRANKLIN ENERGY STORAGE
PROJECTS' REPLY COMMENTS
COMES NOW, the Franklin Energy Storage Projects, collectively herein, and pursuant
to ldaho Public Utilities Commission ('Commission") order No. 33765 issued in the above
captioned docket and hereby provides its Reply Comments to those comments filed by the ldatro
Power Company ("Idaho Power" or o'Company") Avista Corporation ("Avista") and the Staff of
the Idaho Public Utilities Commission ("Staff') this docket.2
I.
COMMENTERS MISSTATE FERC'S FINDING AS TO THE
STATUS OF STORAGE FACILITIES
I Franklin Energy Storage One, LLC; Franklin Energy Storage Two, LLC; Franklin Energy
Storage Three, LLC and Franklin Energy Storage Four, LLC (Herein collectively "Franklin
Energy Storage Projects").
2 Pacificorp, dba Rocky Mountain Energy filed no comments.
FRANKLIN REPLY COMMENTS
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Staffstates that:
The issue of how to evaluate a battery storage facilitv under PURPA was addressed by
FERC in an order cited by Franklin, Luz Development and Finance Corporation, 5l
FERC P 61,078 (1990).3
Importantly, in Luz, FERC was not'evaluating battery storage facilities' for the purpose of
determining their eligibility for published rates and twenty-year contract terms under the Idaho
PUC's implementation of PURPA. Rather, FERC was evaluating storage facilities in general to
determine whether they were QFs and it ruled that energy storage facilities are distinct and
separate QFs from their underlying energy inputs.
Staff correctly notes that:
Staff also believes, consistent with FERC's analysis in Luz, that a battery storage facility
can be a QF only if its energy source complies with PURPA and PURPA regulations.a
Franklin appreciates Staff s recognition of the physics associated with all battery storage systems
in that they must utilize an independent energy input in order energize the batteries.
Unfortunately, however, staff s analysis stops just short of recognizing FERC's conclusion as to
the legal status of such a system under PURPA. Missing from Staff s analysis of the Luz decision
is FERC's actual conclusion that energy storage facilities are distinct and separate QFs. FERC
declared:
In sum. enersy storage facilities such as the Luz batterv svstem are a renewable
resource for pumoses of QF certification. However, such facilities are subject to the
requirement that the energy input to the facility is itself biomass, waste, a renewable
resource, a geothermal resource, or any combination thereof or a demonstration that any
fossil fuel fired input constitutes nor more that25 percent of the total energy input to the
facility and such uses are consistent with those enumerated in section 3(17)(B) of the
FPA. Luz has not attempted to show that the proposed facility will meet any of these
requirements as Luz has based its claim to certification on an argument that the fuel
3 StaffComments atp.7.
a StaffComments at p. 8. (Avista makes essentially the same argument in its Comments.)
FRANKLIN REPLY COMMENTS
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standard, as we interpret it, is inapplicable. For these reasons, we will deny the
application.s
A battery storage facility is a distinct QF. Any other reading of FERC's analysis in Luz would
have rendered the entire decision superfluous had it ruled, as Staff and Avista suggest - that an
energy storage facility QF assumes the characteristics of the source of its energy input. Were that
the case, FERC would not have specified requirements as to the "energy input to the facility."
Staff and Avista argue that the very source of the ooenergy input to the facility" is the QF rather
than the energy storage system itself. Under the Avista/Staff analysis, FERC would not have
addressed the nature of the "energy input to the facility" it would have simply said that the energy
input ls the facility. Thus, an energy storage system's legal status as a QF is not the same as the
stand-alone legal status of the energy source(s) used to provide energy input into the battery
system. According to FERC, battery storage QFs do not take on the legal (QF) status of the
characteristics of the energy source used to energize the battery system.
Although, a distinct class of QFs, battery storage facilities must still utilize a PURPA
authorized energy source as its input, but the battery storage facility is, itself, a distinct type of QF
entitled to all of the benefits conferred on such status by PURPA. It follows from FERC's ruling
in Luz that a battery storage QF that is energized by solar power is not a solar QF, likewise a battery
storage QF that is energized by a combination of waste energy and wind energy is not a waste
energy QF nor is it a wind energy QF nor is it a waste/wind energy QF - it is simply a battery
storage QF. Idaho Power, Staff and Avista all agree that FERC has exclusive jurisdiction to
determine QF status. Unfortunately, all three conveniently ignore the distinct legal status FERC
s Luz atp. l0
FRANKLIN REPLY COMMENTS
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has declared as to energy storage QFs. This Commission should not be misled by the utilities'
attempt to conflate a battery storage QF that is energized by solar power with a solar QF.
For purposes of illustration, assume a pumped storage project that utilizes water pumped
from a lower reservoir to a higher elevation reservoir for later release through a generator. FERC
instructs, through its Luz decision, that the pumped storage facility is a member of a distinct class
of energy storage QFs -- but only if the "energy input to the facility is itself biomass, waste, a
renewable resource, a geothermal resource, or any combination thereof."6 Assume also that the
energy input into this storage system are solar panels. Under the Luz reasoning, the facility is
easily classified as an energy storage QF. However, under the Idaho Power/Staff/Avista rationale
the facility would be classified as a solar QF (and hence only entitled to a two-year power purchase
agreement).
Next assume the energy to pump the water to the higher reservoir were provided from a
combination of solar panels and biogas fired pumps. If the energy to pump the water to a higher
reservoir is a combination of solar panels and biogas, it would make no difference under FERC's
analysis -- the project would still be an energy storage QF. But in this situation, with biogas and
solar energy inputs to the pumped storage energy facility, the Staff/Idaho Power/Avista approach
would put the Commission in an impossible quandary. Which kilowatt hours generated by such
a facility would be entitled to a twenty-year power purchase agreement and which kilowatt hours
generated by the facility would be entitled to only a two-year power purchase agreement? Without
classifuing the entire facility as an energy storage QF, there would be no way to answer this
question.
o Id.
FRANKLIN REPLY COMMENTS
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This simple and highly plausible example highlights the problem with the Idaho
Power/Staff/Avista approach. [t illustrates why FERC's ruling in Luz is not only the controlling
law, but also good common sense. lndeed, the pumped storage illustration is not hypothetical at
all. It is exactly what the Franklin Energy Storage Facilities have proposed. The FERC Form 556
for each of the Franklin Energy Storage Facilities states:
The energy storage system that comprises the energy storage Qualifying Facility is
designed to, and will, received 100% of its energy input from a combination of renewable
energy sources such as wind, solar, biogas, biomas, etc. The current initial design utilizes
solar photovoltaic (PV) modules. ..7
It is true that the "initial design utilizes solar." However. at what point are the projects entitled to
entitlement to "other QF" rates under the Avista/Idaho Power/Staff analysis? According to the
Avista/Idaho Power/Staff argument these energy storage QFs are merely solar projects,
apparently because the initial design is solar. When other energy inputs are added will their
analysis (and hence the QF status of these projects magically change)? [f so, at what point will
the addition of other energy inputs trigger that change? Is it ten percent? Forty percent? Fifty
percent or some other percentage? Would only one percent solar input disqualiff the projects
from entitlement to'oother QF" status? These questions and examples serve to illustrate the real-
world impracticability of the ldaho Power/Staff/Avista approach and underscore why the FERC
Luz decision is so elegantly simply and reasonable.
Staff, Idaho Power and Avista all have confused the question of whether a battery storage
facility assumes the QF characteristics of the underlying energy source. As noted above, such is
not the case as the battery storage energy system is, according to FERC, in a distinct class of QFs
7 FERC Form 556 atpage 9, each at FERC Docket Nos. QFl7-581, QF17-582, QFlT-582 and
QFlT-s84.
FRANKLIN REPLY COMMENTS
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separate from the underlying energy inputs - as long as the underlying energy inputs are sourced
from the laundry list of permissible resource types. It is significant that no party questions the
validity of the QF status of the Franklin Energy Storage Projects and that all commenters agree
that any question as to QF status is solely within the jurisdictional reach of FERC. Therefore the
question of the QF status of the Franklin facilities is simply not for this Commission to answer.
il.
THE DISAGGREGATION
ARGUMENT IS A MERE STRAW MAN FALLACY
UNRELATED TO THE QUESTION BEFORE THE COMMISSION
Idaho Power and Staff extensively argue points they made previously in the multiple
dockets in which this Commission considered and resolved issues surrounding the concept it
labeled "disaggregation." Both also comment extensively detailing the criteria by which energy
storage facilities should be evaluated in order to conclude that the Franklin Energy Storage
Facilities have been inappropriately disaggregated. Such arguments were dismissed by the
Commission when it specifically rejected the invitation made by Stafl (and others) to establish
criteria by which to make its disaggregation findings.8
A. IDAHO POWER RELIES ON NON.EXISTENT RULES
Idaho Power alleges that the Franklin Energy Projects are attempting to circumvent
Commission rules:
The Proposed Battery Storage Facilities' Schedule 73 applications appear to be vehicles
used to circumvent the Commission's rules and requirements in its implementation of
PURPA for the State of Idaho.e
8 Order No.32262 at p. 8.
e Petition at P. 8.
FRANKLIN REPLY COMMENTS
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The Proposed Battery Storage Facilities' Schedule 73 applications are specifically
designed in such a way as to circumvent the Commission's rules and requirements in its
implementation of PURPA for the State of Idaho.r0
As examples of such alleged 'rule and regulation' violations Idaho Power notes.
The four proposed Franklin Energy Storage facilities are all located adjacent to, and
the same vicinity as the previously proposed four 20 MW each, Jackpot Solar
facilities.
a Their own application materials identifu the interconnection facilities for the nearby
Jackpot Solar facilities.
o The four proposed projects have the same developer.
o The four proposed projects have the same legal counsel.
o Another developer (Black Mesa) submitted similar documents.
o The developers were involved in other projects.
All of these points are completely irrelevant to the question of whether the Franklin Projects are
solar or wind QFs or "Other Project" QFs as contemplated in the Commission's orders. More to
the point, the assertion that any of these activities remotely violates a rule or regulation
promulgated by this Commission is absurd. lndeed, it is telling that Idaho Power has not cited to
any rule or regulation that the Franklin Energy Storage Projects have allegedly violated or have
attempted to violate.
This Commission specifically chose not to establish "criteria" (such as those referenced
by Idaho Power) for determining eligibility for twenty-year published rates. There are, simply,
no rules for making that determination other than the single qualifying rule that solar and wind
QFs are not entitled to twenty-year contracts and all "Other Projects" are entitled to twenty-year
contracts. Idaho Power's list of criteria as justification for rejecting the entitlement of these
lo Comments at P. 7
FRANKLIN REPLY COMMENTS
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a
projects to twenty-year contracts was specifically and unequivocally rejected by the Commission
in favor of the simple bright light test that provides that only solar and wind QFs are not entitled
to twenty-year contracts. In Order No.3226211 this Commission specifically rejected all of the
recommendations put forth by the Commission Staff, Rocky Mountain Power, the Idaho
Conservation League and the Renewable Northwest Project that it establish "Criteria to Allow
Small Projects to Obtain a Published Rate."l2 In that order, the Commission rejected all of the
arguments Idaho Power now offers in support of its assertion that the Franklin Projects are
"vehicles used to circumvent the Commission's rules and requirements in its implementation of
PURPA." Idaho Power is unable to cite to any of the alleged "rules and requirements" it claims
the Franklin projects are 'circumventing,' because no such rules exist. Such phantom'orules and
requirements" were specifically rejected by this Commission in favor of the simple bright line
test for entitlement to twenty-year contracts - which is whether the projects are solar QFs or
wind QFs.
B. STAFF ASKS THE COMMISSTON TO IGNORE ITS OWN ORDERS
Staff unequivocally and significantly concedes that, "the Franklin and Black Mesa QFs
are not solar QFs."l3 Based on that conclusion, and the clear and unequivocal ruling by this
Commission that all QFs other than solar and wind are entitled to twenty-year contracts, Staff s
concession supports Franklin's position that these, admiuedly non-solar and non-wind QFs are
entitled to the 10 aMW cap for published avoided cost rates and twenty-year contracts.
However, staff argues that a direct and plain reading of the Commission's ruling that. . .:
tt GNR-E-l l-01, June 8,201I
12 Id. atpp. 6 - 8.
13 StaffComments at p. 8.
FRANKLTN REPLY COMMENTS
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We maintain the eligibility cap at l0 aMW for QF projects other and wind or solar
(including but not limited to biomass, small hydro, cogeneration, geothermal and waste-
to-energy).
... is "simplistic."la Although Staff may be using the term "simplistic" in a pejorative sense, the
Commission's ruling is, in fact, simple. It is easy to understand and free of nuance - "QF
projects other than wind or solar" are entitled to the 10 aMW eligibility cap and twenty-year
power purchase agreements. To quote an adage, "simple pictures are best." Staff urges the
Commission to go beyond a "simplistic" reading of its straightforward order and to engage in
some creative "statutory interpretation" in order to "derive the intent of the legislative body that
adopted the act."ls Staff references two Idaho Supreme Court decisions to support its argument
that the simple, declarative statement that QFs other than wind and solar are eligible for the l0
aMW cap and twenty-year contracts needs embellishment and interpretation.16
It is true that the "objective of statutory interpretation is to 'derive the intent of the
legislative body that adopted the act'... and 'provisions should not be read in isolation, but must
be interpreted in the context of the entire document."lT Staff then interprets the Commission's
decision by concluding:
[B]attery 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 projectsls. Accordingly, Staff believes Franklin and Black
Mesa, as configured at the time of Idaho Power's petition, are not eligible for published
avoided cost rates and 20-year contracts.le
la StaffComments at p. 9.
15 StaffComments at p. 10.
t6 Id. Citingto Hayes v. City of Plummer, l5g Idaho 168, 170 (2015) and Farber v. Idaho State
Ins. Fund,147 ldaho307 (2009).
t7 Id.
r8 Note that Staff has already conceded that these are not solar QFs.le StaffComments at p. 11.
FRANKLIN REPLY COMMENTS
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Staff has divined the Commission's intent through the use of its statutory interpretation analysis
in order to go beyond plain language of its orders. [n essence, Staff bases its argument that the
Commission's 'simplistic' order must be subject to Staff s interpretation. It is the foundation of
the Staff s recommendation that the simple, explicit, declarative ruling that only applies to wind
and solar QFs also encompasses non-wind and non-solar QFs such as energy storage QFs.
However, Staff s selective quotation from the two Supreme Court cases is deceptive at best.
Both cases, and the black letter law of statutory interpretation, provide that when applying a
statute or rule, "Words should be given their 'plain, usual, and ordinary meanings' and only if
the language is 'ambiguous may this court 'consider rules of statutory construction."2O Where a
statute is clear and unambiguous courts will give effect to its plain meaning. Indeed:
The cardinal rule of statutory interpretation and construction; the statute must be given its
plain and obvious meaning. . , As a result, inquiry into legislative intent may begin only
where the statute is ambiguous on its face.2l
When statutory language is "plain and unambiguous," . . . a court's "sole duty is to give
ffict to its plain and obvious meaning"22
Significantly, Staff does not assert that the Commission's ruling is ambiguous. [t is not. To the
contrary, the Commission's ruling is 'simple' as well as direct, unequivocal and lacking in
nuance. StafPs statutory interpretation exercise should therefore be rejected as it is unsupported
by the very legal authority upon which it relies and violates the "cardinal rule of statutory
interpretation." Franklin is therefore entitled to rely on the integrity, validity and plain meaning
of the Commission's word (ruling) in organizing its affairs in complying with this Commission's
20 Hayes v. city of Plummer, supra at 170 - l7l.
2t Streeter v. Sullivan,509 So. 2d268,271 (Fla.1987). Emphasis provided.22Davisv. Four Seasons Hotel Ltd.,8l0 F. Supp. 2dll45,ll52 (Haw.20l1). Emphasis
provided.
FRANKLIN REPLY COMMENTS
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PURPA rule regarding non-wind and non-solar QF entitlement to published avoided cost rates
and twenty-year power purchase agreements. Were the Commission to retroactively change its
bright line test, the Franklin Energy Storage Projects will have been denied their due process
rights.
As noted above, in prior dockets Staff has urged this Commission to establish detailed
criteria rather than a bright line test to determine whether a QF project was engaged in
'disaggregation.' Staff failed. lnstead of criteria, the Commission chose to establish a bright line
test that only restricted solar and wind QFs to 100 kW for entitlement to published rates and two-
year contracts. The Commission also specifically declared that "all other" QFs will remain
entitled to published rates up to l0 aMW and will also be entitled to twenty-year contracts. By
urging the Commission to engage in 'statutory interpretation' of its bright line test ruling, staff is
actually relitigating those issues on which it lost. It is certainly free to do so in a future docket
established for that purpose. It may not, however, do so retroactively in order to prevent the
Franklin projects from relying on the integrity of established rulings from this Commission. In
fact, both Staff and Avista ask the Commission to initiate a new docket for the purpose of
establishing new rules that will be applicable to energy storage facilities. Franklin has no
position as to such a recommendation -- with the caveat that such new generic dockets will only
have prospective effect - the Franklin Projects having already established their full and
unequivocal commitment to be legally obligated to perform under the terms of tdaho Power's
Schedule 73.
FRANKLIN REPLY COMMENTSll
m.
CONCLUSION
Idaho Power's Petition for a Declaratory Ruling should be summarily dismissed by the
Commission. That Idaho Power disagrees with a prior commission order establishing a bright
line test by which all QFs other than solar and wind remain entitled to published avoided cost
rates and twenty-year contracts does not create a "legal dispute." There is no dispute as to the
meaning of the Commission's orders on entitlement to published avoided cost rates and twenty-
year contracts. If the Commission's orders were ambiguous one might legitimately argue that a
legal dispute could arise as to their meaning. However, that is not the case. The language in the
Commission's orders is clear and unequivocal. It is too late for Idaho Power or the Staff to
request reconsideration of those orders. The Commission should reject Idaho Power's backdoor
effort at reconsideration under the guise of a petition for a declaratory ruling.
WHEREFORE, the Franklin Energy Storage Projects respectfully request this
Commission issue its order denying Idaho Power's Petition for Declaratory Order.
RESPECTFULLY SUBMITTED of May 2017
J.ISB #319s
Attorney for Franklin Energy Storage Projects
FRANKLIN REPLY COMMENTS
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CERTIFICATE OF SERVICE
I hereby certify that on this 15rt day of May 2017,I delivered true and correct copies of
the enclosed FRANKLIN ENERGY STORAGE PROJECTS' REPLY COMMENTS in this
Docket No. IPC-E-17-01to the following persons via the service method indicated ("E"
electronic; "H" hand delivery; "lJ'S" United States Mail, postage prepaid).
Diane Hanian (E, H)
Commission Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83702
Diane. hanian@puc. idaho. gov
Camille Christen (E, H)
Daphne Huang
Idaho Public Utilities Commission
47 2 W est Washington Street
Boise,Idaho 83702
Camille. christen@puc. idaho. gov
Daphne. huan g@nuc. idaho. gov
Donovan Walker (8, H)
Idaho Power Company
l22l West ldaho Street
Boise, Idaho 83702
dwalker@idahopo wer. com
Brian Lynch (E, US)
Black Mesa Energy, LLC
PO Box 3271
Palo Verdes, CA 90274
[e-mail]
dockets@ idahopower. com
David Bender (8, US)
Earth Justice
3916 Nakoma Road
Madison, WI 5371I
Ben Otto (E, US)
Idaho Conservation League
710 N. 6s Street
Boise,Idaho 83701
botto @idahoconservation. org
Michael G. Andrea (E, US)
Senior Counsel
Avista Corporation
1411 East Mission Street, MCS-33
Spokane, Washington 99202
Michael. andrea@ avi stacorp. com
J. Richardson ISB # 3195
Attorney for Franklin Energy Storage Projects
FRANKLIN REPLY COMMENTS
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