20170515Reply Comments.pdf

s
Benjamin Otto, ISB No. 8292
Idaho Conservation League
710 N 6th St., Boise, ID 83701
[phone],Ext.12
botto@idahoconservation. org
David Bender, WI Bar# 1046102
Admittedpro hac vice
Earthjustice
3916 Nakoma Road
Madison, WI 53711
(415) 977-s727
dbender@earthj ustice. org
IN THE MATTER OF THE PETITION OF
IDAHO POWER COMPANY FOR
A DECLARATORY ORDER REGARDING
PROPER CONTRACT TERMS,
CONDITIONS, AND AVOIDED COST
PRICING FOR BATTERY STORAGE
FACILITIES
ICL/SC Reply Comments' IPC-E-17-01
ii .: ll I i\,/[ i)
CASE NO. IPC-E-I7-OI
Reply Comments of ldaho Conservation
League and Sierra Club
May 15,2017
1
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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Sierra Club and Idaho Conservation League provide these reply comments responding to
arguments raised by Staff and Idaho Power. Sierra Club and Idaho Conservation League stand
by their comments filed on April27,20l7 (hereinafter "SC/ICL Comments"), and do not waive
any argument or issue previously preserved by responding here to only some of the arguments
made by other parties.
I.The Commission Should Not Extend The Two-Year Limit On Predetermined
Avoided Cost Rates To Battery Storage Because The Commission Lacked Authority
to Impose That Condition on Wind and Solar QFs Larger Than 100 kW.
As noted in Sierra Club and Idaho Conservation League's comments filed April27,2017,
the Commission is limited to the authority expressly conveyed on it to implement the Public
Utilities Regulatory Policies Act ("PURPA"). That authority does not include limiting a
Qualifuing Facility's ("QF") right under l8 C.F.R. S 292.304(dx2)(ii) to predetermined avoided
cost rates to only two years. SC/ICL Comments at 4-10.
Staff s comments incorrectly assert that because FERC's rules do not withhold authority
to restrict the length of time over which a QF can obligate itself and receive predetermined
avoided cost rates, this Commission therefore has that authority. Staff Comments at 2 ("PURPA
and FERC's implementing regulations are silent as to contract length; consequently, the issue is
in the discretion of the state commissions. See Afton Energl, Inc. v. Idaho Power,107 Idaho
781, 785-86,693 P.2d427,431-32 (198a); Idaho Power,155 Idaho at782,316 P.3d at 1280.").
Staff s comment conflicts with state and federal law that an agency cannot find authority from a
lack of withholding of authority. PURPA exempts QFs from most state regulation and subjects
QFs to limited state authority to implement FERC's rules. 16 U.S.C. $, 823a-3(e), (f); SC/IPC
Comments at 5-10. Congress' grant of limited authority to implemenl FERC's rules does not
contain additional authority to supplemenl FERC's rules by imposing restrictions or limitations
on the rights afforded by FERC to QFs. Nor does FERC confer that authority to the state, except
in narrow and explicit categories. See e.g., l8 C.F.R. $$ 292.303(d) (authorizing a state to adopt
a different data disclosure rules through a specific public hearing process); 45 Fed. Re5.12,214,
12,218 (Feb. 25, 1980) (specifically noting that292.303(d) authorizes the states to adopt
different reporting standards). In short, there is no grant of authority in PURPA or in FERC's
regulations that authorizes this Commission to limit the rights in l8 C.F.R. 5 292.304(dX2)(iD
andihe Commission cannot derive authority from a vacuum.
As with any administrative agency, this Commission does not obtain authority through
the lack of a statute or rule withholding authority. Cf, La. Pub. Serv. Comm'n v. FCC,476 U.S.
ICL/SC Reply Comments
rPC-E-17-01
May 15,2017
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355,374, 106 S.Ct. 1890, 1901-02,90 L.Ed.zd 369 (1986) ("an agency literally has no power to
act ... unless and until Congress confers power upon it"); Texas v. U.5.,809 F.3d 134, 186 (5th
Cir. 2015) (as revised) (rejecting an argument that "congressional silence has conferred on [the
agency] the power to act. To the contrary, any such inaction cannot create such power." (citation
omitted)); Natural Res. Def. Councilv. E.P.A.,749F.3d 1055, 1064 (D.C. Cir.2014) (the court
does not presume a delegation of power absent an express withholding of that power); Bayou
Lawn & Landscape Servs. v. Sec'y of Labor,713 F.3d 1080, 1085 (l1th Cir. 2013) (rejecting
congressional silence as a grant of authority to an agency); Am. Bar Ass'n v. FTC, 430 F.3d 457,
468 (D.C.Cir.2005) ("Plainly, if we were 'to presume a delegation of power' from the absence of
'an express withholding of such power, agencies would enjoy virtually limitless hegemony....' "
(emphasis original) (quoting Ry. Labor Execs. Assh v. Nat'l Mediation Bd., 29 F.3d 655,671
(D.C.Cir.l99gD; Sierua Club v. EPA,311 F.3d 853, 861 (7th Cir. 2002) ("Courts 'will not
presume a delegation of power based solely on the fact that there is not an express withholding
of such power.' " (quoting Am. Petroleum Inst. v. EPA, 52F.3d,1113, 1120 (D.C.Cir.1995));
Halverson v. Slater, 129 F .3d 180, 187 (D.C.Cir.1997) (rejecting arguing that agency authority
for a rule can be derived from silence); Ry. Labor Executives'Ass'nv. Nat'l Mediation 8d.,29
F.3d 655, 670-71(D.C. Cir.1994) (rejecting argument that an agency's authority can be implied
or presumed from an absence of explicit withholding of power as improperly giving agencies
"virtually limitless hegemony, a result plainly out of keeping with Chevron and quite likely with
the Constitution as well."); see also SC/ICL Comments at 4-10 (citing Idaho cases limiting state
agency authority to that specifically provided).
Moreover, the two cases cited in Staff s comment fail to support the proposition that the
Commission has authority to add substantive provisions to those established by FERC-
ICL/SC Reply Comments
IPC-E-17-01
May 15,2017
aJ
specifically, the authority to limit a QF's right to obligate itself and receive a predetermined
avoided cost rate under l8 C.F.R. 5 292.304(dX2XiD to only two years at issue here. Rather, the
Supreme Court inAfton merely confirmed that sections292.303(a),292.304(d) and (eXiii)
provide explicit authority for the Commission to order ldaho Power to contract with a QF for the
full thirty-five year period the QF proposed. Afton Energt,l0T Idaho 781, 785-86 and nn. 3, 5-
7, 693 P.2d at 431-32. The court said nothing about additional implied authority based on the
lack of a rule withholding such authority. Moreover, the discussion in Afton actually suggests
that PURPA grants each QF the right to fixed, long term, contracts with predetermined avoided
costratespursuantto l8C.F.R.$292.304(dX2). l0TIdaho at43l n.7. TheCommission'stwo
year limit on QF's rights under l8 C.F.R. 5 292.304(dx2xii) is therefore inconsistent withAfion.
Furthermore,the ldaho Power decision cited in Staff s comment similarly provides no
support for Staff s contention that by omitting a time period in 18 C.F.R. S 292.304(dX2XiD
FERC authorized the Commission authority to impose its own limit. The portion of ldaho
Power cited by Staff s comments simply repeats the Supreme Court's holding in FERC v.
Mississippi, 456 U.S. 742 (1982), that the state can satisfu its obligation to implement FERC
rules by choosing the procedural mechanism (i.e., through rules, orders, adjudication, or other
actions). 155 Idaho 780,782,316P.2d 1278,1280 (citing FERC,456 U.S. at75l). Choosing a
method of implementingFERC's rules does not provide authority to impose additional rules or
limit rights that FERC granted without limitation.
Because the Commission lacks authority to limit a QF's right to long-term predetermined
avoided cost rates, is should not extend any such limits to battery storage facilities.
II.The Record Does Not Support the Necessary Finding That QFs Larger Than 100
kW Are Financially Viable With Only A Two Year Contract.
ICL/SC Reply Comments
IPC-E-17-01
May 15,2017
4
The Commission has no authority to limit a QF's rights under 18 C.F.R. $
292.304(d)(2xii). But, even assuming the Commission could impose such a limit, it still could
not exercise that authority in a way that frustrates the intent behind PURPA or FERC's rules.
SC/IPC Comments at l0-19. PURPA and FERC's implementing rules seek to encourage QF
development. Id.; see also Independent Energt Producers Assoc. y. Cal. Pub. Utilities Comm'n.,
36 F.3d 848, 850 19th Cir. 1994) (the intent behind PURPA includes removing financial barriers
to alternative energy producers imposed by state and federal authorities). One way that FERC
does so is by providing QFs a right to a the long-term, predetermined, avoided cost rate that a QF
can'olock-in" at the beginning of its obligation in order to attractthe necessary financing to make
projects viable. SC/IPC Comments at l0-19; Windham Solar LLC and Allco Finance Ltd.,I57
FERC 61,134 fl 8 Q'{ov. 22,2016) ("Given the 'need for certainty with regard to retum on
investment' coupled with Congress' directive that the Commission 'encourage' QFs, a legally
enforceable obligation should be long enough to allow QFs reasonable opportunities to attract
capital from potential investors."). Any restrictions imposed by the Commission that frustrate
that right, by preventing a QF from obtaining reasonable financing, is unlawful. Crosby v. Nat'l
Foreign Trade Council,530 U.S. 363,373 (2000) (a state law is preempted if it "stands as an
obstacle to the accomplishment and execution of the full purposes and objectives of Congress"
(quoting Hines v. Davidowitz,3l2 U.S. 52, 6ffi7 (1941).
Here, there is no record to support a finding that atwo-year limit on battery storage QFs
would allow QFs to be financed and viable. In fact, the record shows the opposite: after
imposing the two-year limit, no QFs subject to that limit were developed. SC/ICL Comments at
16-17. In contrast, in other states where commissions rejected attempts to severely limit QF
contract terms, wind and solar QFs continue to be viable. SC/ICL Comments at 17-19.
ICL/SC Reply Comments
rPC-E-17-01
May 15,2017
5
Therefore, even if the Commission had authority to impose time limits on a QF's right under l8
C.F.R. 5 292.304(d)(2)(ii)-which it does not-applying the Commission's prior two-year limit
to storage would still be unlawful because it frustrates the intent and purpose behind PURPA by
imposing a constraint that makes otherwise viable QF projects unviable.
The Commission cannot extend the reach of the prior, unlawful, two-year limit to the
battery QFs in this case without a record that a two year contract limit does not frustrate
Congress and FERC's policy of promoting QFs through long term, predetermined, avoided cost
rates. At a minimum, that would require a full evidentiary hearing, which would almost certainly
confirm that a two year contract limit actually stands as an obstacle to accomplishing Congress
and FERC's goal of promoting QF development. The Commission should not extend the two-
year contract limit to battery storage projects.
Respectfully submitted on May 15,2017.
/s/ David C. Bender
David Bender
Earthjustice
3916 Nakoma Road
Madison, WI 5371I
dbender@ earttrj ustice. org
/s/ Benjamin Otto
Benjamin J Otto
Idaho Conservation League
710 N 6th St.
Boise,ID 83701
botto@ idahoconservation. or g
ICL/SC Reply Comments
IPC-E-17-01
May 15,2017
6
CERTIFICATE OF SERVICE
I hereby certiff that on this 15tr day of May 2Ol7,I delivered true and correct copies of
the enclosed IDAHO CONSERVATION LEAGUE AND SIERRA CLUB REPLY
COMMENTS in this Docket No. IPC-E-I7-01 to the following persons via the service method
indicated.
HAND DELIVERY
Diane Hanian (Original andT copies)
Commission Secretary
Idaho Public Utilities Commission
47 2 W est Washington Street
Boise,Idaho 83702
Diane. hanian@puc. idaho.gay
EMAIL DELIVERY
Camille Christen
Daphne Huang
Idaho Public Utilities Commission
47 2 W est Washington Street
Boise,Idaho 83702
Camille. christen@puc. idaho. gov
Daphne.huang(@puc.idaho. gov
Donovan Walker
Idaho Power Company
1221 West Idaho Street
Boise,Idaho 83702
dwalker@ idahopower.com
dockets@ idahopower. com
Peter Richardson
Richardson Adams
515 N. 27ft Street
Boise,Idaho 83702
peter@richardsonadams. com
Brian Lynch
Black Mesa Energy, LLC
PO Box 3271
Palo Verdes, CA 90274
[e-mail]
ICL/SC Reply Comments
IPC-E-17-01
Michael G. Andrea
Senior Counsel
Avista Corporation
l4l I East Mission Street, MCS-33
Spokane, Washingto n 99202
Michael. andrea@avistacorp. com
May 15,2017
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