20170803Petition for Reconsideration.pdf

Peter Richardson (ISB # 3195)
515 N. 27th Street
Boise, Idaho 83702
Tel. [phone]
peter@richardsonadams. com
Attorney for the Franklin Energy Storage Projectsr
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
i:Ir]fl\;'EIJ
:,1'11 -3 PI1 L: 20
IN THE MATTER OF IDAHO POWER
COMPANY'S PETTTION FOR
DECLARATORY ORDER REGARDING
PROPER CONTRACT TERMS,
CONDITIONS, AND AVOIDED COST
PRICING FOR BATTERY STORAGE
FACILITIES
CASE NO. IPC-E-I7-OI
FRANKLIN ENERGY STORAGE
PROJECTS' PETITION FOR
RECONSIDERATION
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COMES NOW, the Franklin Energy Storage Projects ("Franklin"), and pursuant to
Rules 33 and 331 of the Idaho Public Utilities Commission's ("Idaho Commission") Rules of
Procedure and pursuant to Idaho Code $ 6l-626 and hereby respectfully lodges its Petition for
Reconsideration of Order No. 33785 ("Final Oder") issued on July 13,2017 in the above
captioned matter. For the reasons set forth in detail below, Franklin requests reconsideration of
Order No. 33785 because those parts of Order No. 33785 discussed below are mistaken,
unreasonable, unlawful, erroneous and not in conformity with the law. Commission Rule of
Procedure 331 requires that Franklin state the nature and extent of evidence or argument it will
present or offer if reconsideration is granted. Franklin does not believe that additional evidence
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" or "Franklin").
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is necessary for the Idaho Commission to reconsider its order. Therefore, because the issues
raised herein are legal in nature, Franklin does not seek reconsideration by evidentiary hearing
but is, however, prepared to present argument as the Idaho Commission may deem appropriate
I
THE COMMISSION'S ORDER
BACKGRoLTND
Idaho Power initiated this docket via a Petition for Declaratory Ruling ("Petition") asking
the Idaho Commission to declare that energy storage QFs that use solar renewable energy as
their energy input source are, in fact, solar QFs for purposes of entitlement to contract terms and
conditions pursuant to the Idaho Commission's implementation of PURPA:
Idaho Power respectfully requests that the Commission issue a declaratory order, without
prejudice to Idaho Power's position on the validity of the underlying self-certifications,
finding that, under the facts presented, the Proposed Battery Storage Facilities are subject
to the same 100 kW published avoided cost rate eligibility cap applicable to wind and
solar facilities.2
Under the Idaho Commission's implementation scheme for PURPA projects, wind and solar
Qualifying Facilities are restricted to published avoided rate contracts ofjust two-years. All
other QF resource types are eligible, under the Idaho Commission's implementation scheme, to
sell their output to Idaho Power pursuant to published avoided rates and twenty-year contracts.
The Idaho Commission's ruling prohibiting access to twenty-year contracts is explicitly
restricted to solar and wind QFs while all other QF types are eligible to execute twenty-year
contracts. According to the Idaho Commission:
After careful consideration, the Commission ultimately determined that it was
appropriate to maintain the 100 kW eligibility cap for published avoided cost rates for
wind and solar QFs.
2ldaho Power Petitionfor Declaratory Order at p. 13. (Herein "ldaho Power's Petition.")
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Order No. 32697 at p. 3. Emphasis provided.
This commission is confident that, with other changes to the avoided cost methodologies
incorporated in the Order, changing eligibility from l0 aMW for resources other than
wind and solar is unnecessary at this time. We find that a l0 aMW eligibility cap for
to other than wind and solar
appropriate to continue to encourage renewable development while maintaining ratepayer
indifference. Maintaining a 10 aMW eligibility cap is also consistent with our long
history of encouraging PURPA projects and renewable energy generation in ldaho.
Id. atp.l4. Emphasis provided
We maintain the eligibility cap at l0 aMW for QF projects other than wind and solar
(including but not limited to biomass, small hydro, cogeneration, geothermal, and waste-
to-energy).
Order No. 321 76 at p.9. Emphasis provided
Thus, in order to maintain its PURPA implementation scheme and at the same time grant
Idaho Power's Petition, the Idaho Commission would have to make a finding, either explicitly or
implicitly, that energy storage QF facilities that use solar power as a primary energy input are, in
fact, Solar QFs and not energy storage QFs. Its final Order in this matter the Idaho Commission
does exactly that. It concluded that:
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 . . . Franklin's argument that this
Commission's prior decisions clearly and unequivocally allow it entitlement to published
rates ignores FERC's pronouncement that energy storage facilities are not per se
renewable resources/small power production facilities under PURPA.3
However, as shown below, the Idaho Commission has no authority to make such a ruling as it is
preempted by PURPA from making any determinations as to the QF status of an energy storage
3 Order No. 33785 at p. 12
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facility. In addition to being precluded from making any determination as to QF status, the Idaho
Commission's ostensible implementation of FERC's orders regarding the QF status of energy
storage facilities is fatally flawed and it highlights the impracticability of allowing individual
state commissions to re-write federal law at the request of the utilities they are charged with
regulating.
II.
THE COMMISSION ILLEGALLY
RULED AS TO THE QF STATUS OF ENERGY STORAGE FACILITIES
The Idaho Commission appropriately conceded that "battery storage facilities' QF status
is a matter within FERC's jurisdiction"4 Idaho Power makes the same concession, "QF status is
within the exclusive jurisdiction and properly before FERC, not this Commission, for
determination"s While conceding FERC jurisdiction over QF status determinations, the
Commission did not cite to nor reference legal authority to that effect. The Ninth Circuit Court
of Appeals, however, has instructed:
The Commission's [FERC] regulations carry out the statutory regime reposing in the
Commission [FERC] exclusive authority to make QF status determinations. . . .
Nowhere do these regulations contemplate a role for the state in setting QF standards or
determining QF status.6
ald.atp. ll.
s Idaho Power Petitionfor Declaratory Order at p. 6.
6 Independent Energt Producers Ass'nv. Califurnia Pub. Utils. Comm'n36F.3d 848,853
(ree4)
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Despite conceding to FERC its primacy as to the determination of QF status, the Idaho
Commission's Order actually goes down that road when it makes its finding that the Franklin
Energy Storage QFs are not energy storage QFs:
Consequently, our ruling on the narrow declaratory issue before us should not be read to
presume that this Commission deems battery storage facilities to be a legitimate
qualifying facility eligible for the benefits of PURPA and subject to the Act's
implementing regulations under FERC.7
The Commission's refusal to 'opresume" that energy storage facilities are "a legitimate qualifying
facility" directly challenges FERC's role as the only entity that is legally authorized to make
such findings (or in the vernacular of the Idaho PUC, such 'presumptions').
The Idaho Commission is explicitly preempted from making any findings (or
presumptions) as to the QF status of the Franklin Energy Storage Facilities as that determination
is exclusively FERC's to make. Again, according to the Ninth Circuit Court of Appeals:
What the state may not do, however, is to intrude into the Commission's [FERC's]
exclusive jurisdiction to make QF status determinations by denying to certified QFs the
full avoided cost rates to which they are entitled.8
As noted above, according to the Idaho Commission's own PURPA implementation scheme, all
QFs other than wind and solar QFs are entitled to twenty-year contracts and published avoided
cost rates. What the Idaho Commission has done in its final Order is simply to deny, "to
certified QFs the full avoided cost rates to which they are entitled." The Idaho Commission
must take at face value the certified energy storage QF status of the Franklin energy storage
facilities. It therefore may not deny these QFs their entitlement to full avoided cost rates that it
7 Order No.33785 atpp. 10- 11.
8 Independent Energt Producers, supra at p. 859.
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has specifically made available to all QFs other than wind and solar QFs. It simply has no legal
basis to do otherwise.
It is undisputed that the Franklin projects are certified energy storage small power
production facilities.e It is also undisputed that the Idaho Commission affords all QFs (except
for solar QFs and Wind QFs) the right to insist on twenty-year contracts at fixed avoided cost
rates - which is what the Franklin energy storage QFs have requested. In order for the Idaho
Commission to deny the Franklin energy storage QFs their right to twenty-year fixed rate
contracts the Idaho Commission had to "intrude" on FERC's "exclusive jurisdiction to make QF
status determinations." According to the Idaho Commission, an energy storage QF is not an
energy storage QF. Rather, according to the Idaho Commission, an energy storage facility's
primary source of energy is the QF and not the storage facility itself:
Moreover, the energy generation output profiles for the battery storage facilities are a
direct reflection of the solar generation that operates as the primary energy source for the
battery storage facilities. [citation omitted] . . . Accordingly, we find it appropriate to
base Franklin's and Black Mesa's eligibility under PURPA on its primary energy source -
- solar.lo
The Franklin energy storage QFs, however, are self-certified energy storage QFs. They are not
self-certified solar QFs. Line 6a from FERC Form 556 for each of the Franklin energy storage
QFs provides:
The energy storage (battery) system will take its input from 100% renewable energy
sources such as wind, solar, biogas, biomass, etc. The system is designed with flexibility
to most efficiently utilize the resources available at the site, at the present time as well as
in the future.ll
e See FERC Docket Nos. QFl T-581- 584.
ro Order No. 33785 at p. 12.tt See Line 6a (explained at p. 19) FERC Form 556 in FERC Docket Nos. QF-17-851 - 854.
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Because the ldaho Commission has no jurisdiction to adjudicate the Franklin energy storage
facilities' "eligibility under PURPA," the Commission's decision is unlawful as it is not in
conformity with federal law granting to FERC the exclusive jurisdiction to determine a QF's
"eligibility under PURPA."
In sum, having determined, illegally, that the Franklin energy storage QFs are not eligible
energy storage PURPA resources, the Idaho Commission then made the determination (also
illegally) that they are actually solar QFs. According to the Idaho Commission, because solar
QFs are not entitled to established Idaho Commission rates and contract terms that are available
for non-solar and non-wind QFs, Idaho Power's Petition for Declaratory Rule must be granted.
However, the ldaho Commission has no authority to make such determinations - it therefore
should deny Idaho Power's Petition in its order on reconsideration.
III
THE IDAHO COMMISSION'S ANALYSIS, [N ADDITION
TO BEING ILLEGAL, IS SERIOUSLY FLAWED
Not deterred by federal preemption of its refusal to'presume'that energy storage QFs are
legitimate QFs in their own right, but only QFs based on the source of the energy input to a
storage facility, the Idaho Commission attempted to reconcile its analysis with FERC precedent
dealing with storage facility QFs:
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 Power's IRP
methodology. Franklin's argument that this Commission's prior decisions clearly and
unequivocally allow it entitlement to published rates ignores FERC's pronouncement that
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energy storage facilities are not per se renewable resources/small power production
facilities under PURPA. r2
Of course, it is axiomatic that there is no such thing as "per se renewable resources/small power
production facilities under PURPA." By definition, all QFs must, to varying degrees, meet
specific standards in order to achieve QF status. Those standards include specific requirments as
to fuel efficiency restrictions, fossil fuel use restrictions, ownership limitations, and size
limitations. No resource is privileged enough to claim to be a per se QF under PURPA and the
Franklin energy storage facilities made no such claim - which highlights significant confusion in
the Idaho Commission's order.
Perhaps the Idaho Commission's confusion stems from its fundamental misreading of
FERC's Luz decision.13 In LuzFERC determined that an energy storage QF must, like all other
small power production QFs, comply with the fuel use standards under PURPA.14 Because the
Luz energy storage project was being energized with undifferentiated electricity purchased from
the 'grid' it was unable to show that its use of fossil fuels was in compliance with FERC fossil
fuel use restrictions. Hence FERC declared that although energy storage facilities are distinct
QFs they:
Are subject to the same fuel use limitations as all other small power production facilities.
Fossil fuel used to produce electric energy which is utilized to initiate the storage process,
whether it comes from a utility grid or on-site generating facilities must be counted in
determining the total energy input of such a facility. Since the Applicant has not
demonstrated that the utilization of electrical input from the grid in this instance will not
result in a violation of the fossil fuel input limitation, we must deny the application.ls
12 Order No. 33785 at p. I 1.
t3 Luz Development and Finance Corporation 5l FERC fl61,078.la Fossil fuel use is limited for small power production facilities to only those minimum amounts
required for "ignition, startup, testing, flame stabilization and control uses.. ." Id. atp.6.
ts Id.
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The Idaho Commission appropriately observed that, according to FERC's Luz decision that:
FERC confirmed that energy storage facilities are not renewable resources/small power
production facilities per se. Id. Electric input is required to produce electric output from
a storage facility.16 For this reason, in order to qualify as a PURPA resource, the
primary energy source behind the battery storage must be considered.
Significantly, FERC did not rule that electric input to an energy storage QF is prohibited. Nor
did it rule that such electric input casts a cloud as to the distinct QF status of such a facility.
Rather, FERC looks to the primary energy source behind the energy storage system to determine
if the energy storage system meets the fuel use criteria of a Qualifying Facility. Critically
overlooked by the Idaho Commission is the fact that FERC does NOT consider the "primary
energy source behind the battery" to be the QF. FERC only looks at the primary energy source
behind the energy storagte system to confirm that the energy storage system is, itself, a QF. This
is because FERC unequivocally and explicitly ruled that energy storage facilities are, despite the
Idaho Commission's conclusion, QFs in their own right:
In sum, enerqy storage facilities such as the proposed Luz battery svstem are a renewable
resource for purposes of OF 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.lT
Here, of course, the Franklin energy storage facilities are also a renewable resource for purposes
of QF certification. The significant difference between the Franklin energy storage facilities and
the energy storage facilities at issue in Luz is that the Franklin energy storage facilities have, in
fact, demonstrated their compliance with FERC's energy input requirements by using no 'grid'
l6 Of course, FERC made no such finding regarding energy storage facilities, not all of which
require electrical input.
t7 Luz supra at p. 10.
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power and no fossil fuel input. However, because the Idaho Commission is bound by the
certified status of the Franklin energy storage QFs, it is beyond the jurisdictional reach of the
Idaho Commission to even make such an inquiry. As the Ninth Circuit Court of Appeals
instructed:
The state's authority to implement section 210 [PURPA] is admittedly broad, but nothing
in the language of this section indicates that such authority includes the authority to make
QF determinations.l8
Idaho Power's Petition for Declaratory Order asked the Idaho Commission to do just that. And
the Idaho Commission obliged Idaho Power by illegally finding that energy storage facilities that
use solar power to charge the underlying storage devices are not energy storage QFs, but are
instead solar QFs. This distinction is, of course, convenient to Idaho Power in that such a
determination allows Idaho Power to avoid its Idaho Commission imposed obligation to non-
solar and non-wind QFs to offer twenty-year contracts at fixed rates.
IV
PRAYER FOR RELIEF
For the reasons stated above, and pursuant to the Idaho Commission's statutory
obligation to correct legal and factual errors in its final orders, the Franklin Energy Storage
Projects respectfully request the Commission issue its order on reconsideration reversing its final
order in this matter and denying Idaho Power's petition for declaratory relief.
WHEREFORE, the Franklin Energy Storage Projects respectfully request this
Commission issue its order on reconsideration as prayed for above.
tB Independent Energt Producers Ass'n, supra at p. 856.
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t(,
RESPECTFULLY SUBMITTED this \) of Aupust 2017.
J ISB # 3195
Attorney for Franklin Energy Storage Projects
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that I have this 3'd day of August 2017, served the foregoing Petition for
Reconsideration in Docket No. IPC-E- I 7-01 upon all parties of record in this proceeding by
emailing a copy thereof and delivering a copy thereof in person:
Donovan Walker
Idaho Power Company
1221 West Idaho Street
Boise,Idaho
dwalker@ idahopower. com
dqckets (@ idaho po wer. co m
Commission Secretary
Idaho Public Utilities Commission
47 2 W est Washington Street
Boise, Idaho
D ianc.ho lt@,p uc. idaho-gav
By emailing a copy thereof:
Brian Lynch
Black Mesa Energy LLC
[e-mail]
David Bender
Earthjustice
dbender@art[i ustice. org
Ben Otto
Idaho Conservation League
botto ation.org
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Daphne Haung
Idaho Public Utilities Commission
47 2 W est Washington Street
Boise, Idaho
daphne.hauns@ puc. idaho. eov