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Home My WebLink About20170515Reply Comments.pdfs Benjamin Otto, ISB No. 8292 Idaho Conservation League 710 N 6th St., Boise, ID 83701 (208) 345-6933,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 ,,:l: l!-illrl.t BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION ) ) ) ) ) ) ) ) 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 2 355,374, 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 brian@mezzdev.com 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 7