20191127Reply Brief.pdf

JAYME B, SULLIVAN
BOISE CITY ATTORNEY
Attorney for Boise City
IN THE MATTER OF THE PETITION OF
IDAHO POWER COMPANY TO STUDY
COSTS, BENEFITS, AND COMPENSATION
OF NET EXCESS ENERGY SUPPLIED BY
CUSTOMER ON.SITE GENERATION
BEFORE THE
IDAHO PUBLIC UTILITIES COMN{ISSION
Case No. IPC-E-18-15
BOISE CITY'S REPLY BRIEF
REGARDINC EXISTING ON.
SITE GENERATION
CUSTOMERS
COMES NOW, the city of Boise City, herein refened to as "Boise City'', by and through
its attomey of record, and pursuant to Rules 202 Nd 203 of the Rules of Procedure of the Idaho
Public Utility Commission (IDAPA 31.01.01.202;31.01.01.203) and, pursuant to that Notice of
Motion to Approve Settlement Agreement, Notice of Briefing, and Notice of Schedule, Order No.
34460, filed on October 1'7,2019, hereby submits this reply brief relating to existing on-site
generation customers. In the interest ofbrevity, Boise City's reply briefonly rebuts the arguments
put forward by Idaho Power Company's Opening Brief.
BOISE CITY'S REPLY BRIEF REGARDING EXISTING
ON-SITE GENERATION CUSTOMERS - Page I
RICEIVED
;ii i;'-? 2i PH 3' 2B
,: ,11;.t,.1!:1St0N
ABIGAIL R. GERMAINE
Deputy City Attomey
BOISE CIry ATTORNEY'S OFFICE
150 N. Capitol Blvd.
P.O. Box 500
Boise, ID 83701-0500
Telephone: [phone]
Facsimile: [phone]
Idaho State Bar No.: 9231
Email : [e-mail]
I. INTRODUCTION
Existing on-site generation customers should be permitted to remain on the current net
energy metering program ("NEM Program") because they will be distinctly situated liom future
net hourly billing customers ("Net Hourly Billing Program"). This Commission has the legal
authority to implement different rates and programs for differently situated customers when such
rates and changes are reasonable and just. This position is supported by the opening briefs and
comments by Boise City, Commission Staff, Idaho Clean Energy Association ("ICEA"), Idaho
Conservation League ("ICL") and Vote Solar. The only party to argue to the contrary is Idaho
Power Company (the "Company''). The Company attempts to assert three main theories to suppo(
its conclusion that existing customers are not entitled to rernain on the current NEM Program.
First, the Company asserts that allowing existing on-site generation customers to remain
on the current NEM Program is creating a distinction based solely on the date the individual
became a customer which is prohibited under Idaho case law or by the Commission and that no
other distinctions between existing and future customem exists. Idaho Power Company's Opening
Br., November 13,2019, at 2. Second, the Company argues that all existing customers were on
notice that rates and tariffs are subject to change. Company t Br. at l1-19. Third, the Company
provides a lengthy case analysis in what seems to be an attempt at suggesting that even when an
individual is guaranteed a rate of retum on an investment, the Commission may change the
individual's compensation.
As Boise City will demo strate below, the Company's arguments are misguided and
irrelevant to the questions before the Commission; questions which contain both legal and factual
issues, as well as valid policy determinations. Because the Company has failed to show that these
BOISE CITY'S REPLY BRIEF REGARDING EXISTING
ON-SITE GENERATION CUSTOMERS Page 2
customers are not distinctly different and because treating these existing customers differently
would be just and reasonable, the Commission should enter an order allowing existing customers
to remain on the NEM Program.
II. ARGUMENT
A.Existing NEI\I Program Customers are Distinctly Different from Future Net Hourly
Billing Customers in Numerous Ways Other Than Their Chronolory of Becoming
Customers.
The Commission specifically acknowledged the concept that existing on-site generation
customers may deserve different treatment based on their distinct characteristics. In the Matler of
the Application of Idaho Power Co. Jbr Authority to Establish New Schedules for Residential and
Small Gen. Serv. Customers with On-Site Generation, Case No. IPC-E-17-13, Order No. 34046.
In Order No. 34046, the Commission specifically stated, "we find it reasonable to consider
arguments related to protecting investments already made, or other transitional periods, and other
pertinent and legally sufficient distinctions, by customers with on-site generation systems." Order
No. 34046 at23-24.
The Company, however, asserts that existing customers are not distinctly different from
future Net Hourly Billing Program customers in any way other than the time they joined the
system. Company's Br. at II. The Company argues that "where new customers cannot be
distinguished liom existing customers based on valid factors such as quality ofelectricity theyuse,
the pattem, nature and timing oftheir usage, the conditions of service, or cost ofservice, it would
be a violation of Idaho Code $ 61- 135 to subject new customers to different rates than the rates
paid by existing customers." Id. at 9. However, this Commission and the Idaho Supreme Court
have held that the factors listed by the Company are not exhaustive. Grindstone Butte Mutual
BOISE CITY'S REPLY BRIEF REGARDING EXISTING
ON-SITE GENERATION CUSTOMERS Page 3
Canal Co. v. Idaho Pub. Util. Comm'n,102 Idaho 175, 180 ( 1981). In Grindstone Butte, the Covrl
stated in reference to the factors listed above, "[w]e do not find one criterion to be necessarily
more essential than another. Nor do we find the criteria as listed above as being exclusive." /d.
The Commission is not limited to the factors illustrated in determining whether customers are
distinctly different. Whether the specific factors listed by the Court are exhibited by these existing
and future customers is irrelevant and to whether the Commission may draw a distinction among
customers.
The Company argues that because it believes existing customer are not distinctly different,
providing thern distinct treatment is not required. The Company relies on ldaho State
Homebuilders v. ll/ash. ll'ater Pov'er, to support its argument that current residential on-site
generation customers cannot be charged a differantrate. Idaho State Homebuilders v. Wash. lI/ater
Power, 107 Idaho 415 (1984). The Company cites Homebuilders for the proposition that the
Commission cannot distinguish customers, or charge distinct rates of consumption, based solely
on their distinction of "old" and "new" or "existing" and "future." However, allowing existing
customers to remain on the current NEM Program is not analogous to the facts of Homebuilders.
First, these customers are not being charged a different rate of consumption. Their rate of
consumption will be the same, not lower, than non-participant residential customers. In
Homebuilders, the issue was charging a rate for customers utilizing space heating prior to a certain
date and charging a different rate for customers utilizing space heating after that date. Id. at 418.
Here, the distinction is not requesting a lesser rate of consumption for existing customers, but
instead is requesting these customers rernain in a distinct program.
BOISE CITY'S REPI-Y BRIEF REGARDING EXISTING
ON-SITE GENERATION CUSTOMERS Page 4
Second, these existing on-site generation customers are doing the opposite of what the
Court found existing customers to be doing in Homebuilders.ln Homebuilders, the Court found
that existing customers, like new customers, were contributing to the need for additional capacity
and therefore the burden to pay for this additional capacity should not be bom solely by new
customers. Id. at 421 . Here, existing on-site generation customers are reducing the need for new
system capacity. By allowing customers to remain on the existing NEM Program, they are not
avoiding their fair share of a specific cost they are causing or contributing to, instead they are
contributing to the reduction for such a need.
Furthermore, Boise City would submit that existing customers and new customers do in
fact exhibit some ofthe factors recognized by the Idaho Suprone Court and listed by the Company.
The pattem, nature, and timing of use between existing customers and new on-site generation
customers will be different. As described by ICEA's President, Mr. Kevin King, in the afiidavit
submitted by ICEA, existing customers designed their systems based on monthly consumption,
while new customers will likely design and operate their systems based on hourly consumption.
Aff. of Kevin King in Supp. of ICEA's Br. Regarding Treatment oJ Existing Customers ("King
Aff. ") l) 14. These differences in customers' systems will affect the customers' nature, pattem, and
time of use by designing and operating their systems to correlate with those different pattems and
times of the day. ld.. lfrl I 4- 17.
B.Whether Existing Customers Were on Notice of the Fact That Their Rates for
Consumption Could Change is lrrelevant to the Question of Whether These
Customers Should be Required to Take Service Under the New Program.
The Company argues that existing on-site generation customers should not be allowed to
remain on the current NEM Program because they were on notice that rates could change. The
BOISE CITY'S REPLY BRIEF RECARDING EXISTING
ON-SITE GENERATION CUSTOMERS - Page 5
Company cites to numerous venues including Commission orders, to support this supposition.
Company Opening Br., at l4- 19. The Company also lists multiple notices they claim were provided
to customers by the Company. 1d. However, most of these notices have only recently been
produced by Idaho Power (for example the Solar Checklist referenced was created in 2017) and
others referenced provide no date at all on when they were added to Idaho Power's website or
when they were sent to customers by Idaho Power. .ld. at 17. As is illustrated by the large volume
ofpublic comments already filed on the Commission's website, despite Idaho Power's attempts to
noti$, these customers, these customers obviously were not fully aware of what t)?es of progam
changes would be implemented and when. Idaho Public Utilities Commission, Case No. IPC-E-
18-15 (last visited November 25, 2019),
https://puc.idaho.gov/fi leroom/casesisummary/IPCE I 8 I 5.html.
Although it could be said that these existing customers have knowledge that their rates for
consumption are not fixed, on-site generation customers had no knowledge as to the changes that
would be implemented by this new Net Hourly Billing Program. For example, although existing
on-site generation customers were aware that rates for consumption may change, nothing indicated
that the rate of consumption and the rate for exported energy would be decoupled. Likewise,
existing customers had no indication that the billing period ofnet monthly would be changed to
net hourly, affecting the efficiency of their systems and making their investment less secure. As
stated by the Commission Staff, "anticipating changes in retail rates differs from reasonably
predicting the wholesale restructuring of the Company's on-site generation offering." Br. of the
Commission Staf.f, at 7 .
BOISE CITY'S REPLY BRIEF- REGARDING EXISTING
ON-SITE GENERATION CUSTOMERS Page 6
Evcn though the Commission and the Company may have made existing customers aware
that their tariff rate, just as all customers, could change this does not mean that the Commission
should not choose to make a policy call that protects these customers. The Commission has the
authority based on the facts ofthis case and the goveming law to allow existing on-site generation
customers to remain on the existing NEM Program despite the fact that these customers may have
known their rates of consumption could change.
C, The Commission's Responsibility to Set Just and Reasonable Rates is the Very
Reason Existing On-site Generation Customers Should be Permitted to Remain on
the NEM Program.
Idaho Power provides a long case analysis of the facts and circumstances in City of
Pocatello v. Murray,2l Idaho 180 (1912). It appears this is an attempt to make an analogy of Mr.
James Murray's, a water utility infrastructure provider, circumstances and existing on-site
generation customers in this case. This analogy is misplaced. If anything, the Murray case
illustrates principles that support Boise City's request to have existing customers remain on the
current NEM Program. ln Murray, Mr. Murray was guaranteed a large rate of retum for his
personal investment in a water delivery system for the general public's use and wel fare. 1d. at 818.
The Court held that Mr. Murray's rate of retum had drastically increased over the years due to a
larger rate base and increased investment, which may have caused it to rise to an unreasonable
rate. Id. ln determining that Mr. Munay was no longer entitled to such a large rate of return, the
Court acknowledged Mr. Murray's investment and ability to charge a reasonable maximum rate
and to "collect such rates as will guarantee him a reasonable profit and income on his investment."
Id.
BOISE CITY'S REPLY BRIEF REGARDING EXISTING
ON-SITE GENERATION CUSTOMERS Page 7
Here, Boise City, and customers with existing on-site generation, are asking for far less
than what the Court in Murray acknowledged was reasonable. Unlike Mr. Murray's large rate of
retum, existing customers are not asking for financial income or profit from their investments, but
instead are asking to not be harmed by their decision to invest in a renewable resource and add to
the Company's generation capacity. The Company frames these existing customers' investments
as a matter of serving the public for private gain. Company's Opening Br. at 13. This is an
inaccurate characterization. Here, existing customers are not making a rate ofretum on their capital
investments, to the contrary these customers are being paid no premium for their decision to invest
in a renewable resource benefitting the public at large, reducing the Company's need for new
system capacity, and helping reduce the Company's reliance on fossil fuels. Murray in fact
generally supports the position that existing customers should receive just compensation for the
resource they are putting onto the Company's grid and should not be harmed by being forced to
take service under the new program requirements of the Net Hourly Billing Program.
D. Limiting Existing Customers to an Eight (8) Year Transition Period Minimally
Reduces the Already De Minimis Effect on Non-participant Customers.
The Company states in its brief that it supports an 8-year transition period for existing
customers and states that this will protect the customers investment while minimizing the cost shift
to other customers. Company's Opening Br., al2O-21. Nevertheless, the Company has failed to
identifo or quantifu what this alleged cost shift amounts to and how it compares to other cost shifts
or subsidies that the Company does not seek to remedy or discontinue. Commission Staff,
however, actually attempts to analyze what this alleged cost shift could consist of. Commission
Staff states,
BOISE CITY'S REPLY BRIEF REGARDING EXISTING
ON-SITE GENERATION CUSTOMERS - Page 8
[d]ata fiom Idaho Power's 2017 Net Metering Report suggests that the then-current
cost shift from participants to non-participants was .O23Yo of residential class
revenues, which is almost imperceptible in individual customers rates and is
dwarfed by other, much larger rate-making inequities.
Br. of the Commission Staff at 8. In support of this finding Commission Staff points out that,
"ldaho Power's Fixed Cost Recovery report, filed September 30,2019, shows that residential
customers are paying approximately $19.3 million annually above their cost-of-service, which
means they are providing a sigrrificant subsidy to other customers classes" notjust existing on-site
generation customers as the Company makes it seem. Br. of the Commission Staff at 8, fn3.
The Company also states it would be an administrative burden to allow these existing
customers to remain on the NEM Program, but again, has failed to quantify that amount or even
to identifu what the administrative undertaking is. Company's Opening Br. a|22.
On the other hand, requiring these existing customers to take service under the new Net
Hourly Billing Program has identifiable and quantifiable harmful effects to these customers. ICL
and Vote Solar conducted a simple payback analysis to help demonstrate the harmful result that
moving existing customers to the new program could have:
In fact more than 30 percent of customers analyzed would have their
investments rendered uneconomic as a result ofthe transition to Net
Billing. That ratio applied to current customer levels means that
roughly 1,300 families and small businesses would have their
investments put underwater if forced onto the Settlement
Agreement's Net Billing Program.
Br. o! the ldaho Conser-vation League and Vote Solar on Treatment of Existing Customers,
November 13, 2019 at I l. ICL and Vote Solar go on to point oul, [i]n addition roughly 31% of
residential customers ail 24%;o of small commercial customers, over 1,300 families and small
businesses, will see bills increase more than l00yo...." rcL/Vote Solar Br. at 14. Not only are these
BOISE CITY'S REPLY BRTEF REGARDING EXISTING
ON-SITE GENERATION CUSTOMERS Page 9
customers not receiving a retum on their personal capital investment, unlike the Company's
analogy to Mr. Murray in the Murray case, who also provided a resource to the public and the
customer base as a whole, but now these customers may struggle to make these investments even
viable.
Boise City asserts that these existing customers should be allowed to remain on the current
NEM Program indefinitely. However, should a timeframe be considered, Vote Solar and ICL
astutely point out that among the handful of states that changed from traditional net metering to
altemate compensation programs, all have protected customers with existing generation, most of
which have provided at least a 20-year grace period. ICL/Vote Solar Br., al6 -7 .
The Company also suggests that existing customers, should they be allowed to remain on
the current NEM Program, must be prohibited from expanding or relocating these systans. Boise
City proposes that this criterion, not a time period, be used to determine how long an existing
customer may remain on the current NEM Program. Under this framework, a customer would be
permitted to remain on the existing NEM Program until such time as they materially expand or
relocate their systems. This is consistent with allowing these customers to utilize the full life of
their systems. Allowing a customer to mtu\imize the full life of their systerns, while limiting them
from expanding or enlarging the system without compllng with the new program strikes the
balance of economic efficiency and faimess.
III. CONCLUSION
Boise City respectfully requests that this Commission issue an order allowing existing on-
site generation customers to remain under the current NEM Program. Existing on-site generation
customers should be allowed to continue under the NEM Program because they will be distinctly
BOISE CITY'S REPLY BRIEF REGARDING EXISTING
ON-SITE GENERATION CUSTOMERS - Page l0
situated from future Net Hourly Billing customers and this Commission has the legal authority to
implement different reasonable and just rates and programs for differently situation customers.
DATED this 27 dayofNovember20lg.
A . Germatne
Deputy City Attomey
BOISE CITY'S REPLY BRIEF REGARDING EXISTING
ON-SITE GENERATION CUSTOMERS - Page I I
CERTIFICATE OF SERVICE
I hereby certify that I have on this 27 day of November 20'19, servcd the foregoing
documents on all parties ofcounsel as fbllows:
Edward Jewell
Deputy Attomey General
Idaho Public Utilities Commission
1i331 W. Chinden BIvd., Building 8
Suite 201-A
Boise, ID 83714
ed'"v ard. i c iv cl l(a, n uc. i dah o . {ro v
Lisa Nordstrom
Regulatory Dockets
Idaho Power Company
PO Box 70
Boise, ID 83707
lnordstrom(itidahopower. com
docketsCn',itlalro DOWCr.COlll
Benjamin J. Otto
Idaho Conservation League
710 N. 6th Street
Boise, ID 83702
botto(alidahoconservation.ors
tr U.S. MailE Personal Delivery0 Facsimiletr Electronic MeansO Other:
A U.S. MailO Personal DeliveryO FacsimileE Electronic Meanstr Other:
tr U.S. Mailtr Personal Deliverytr FacsimileE Electronic Meanstr C)ther:
tr U.S. MailO Personal Deliverytr FacsimileE Electronic Meanstr Other:
tr U.S. MailO Personal DeliveryO FacsimileE Electronic MeansO other:
BOISE CITY'S REPLY BRIEF REGARDING EXISTING
ON-SITE GENERATION CUSTOMERS - Page 12
Diane Hanian
Commission Secretary
Idaho Public Utilities Commission
11331 W. Chinden BIvd., Building 8
Suite 201-A
Boise, ID 83714
d i an e. ho I t(z_1rrru c. i d aho. go v
Timothy E. Tatum
Connie Aschenbrenner
Idaho Power Company
PO Box 70
Boise, ID 83707
ttaturn@tid ahopowcr. com
[e-mail]
Idaho Irrigation Pumpers Assn.
c/o Eric L. Olsen
ECHO HAWK & OLSEN PLLC
PO Box 6l l9
Pocatello, ID 83205
clo(4ech1ha,'vk.corn
Idaho Irrigation Pumpers Assn.
c/o Anthony Yankel
12700 Lake Ave,, Unit 2505
Lakewood, OH,{4107
tonr-faryankel.net
Briana Kober
Vote Solar
358 S. 700 8., Suite 8206
Salt Lake city, UT 84102
briana '" otesolar.
O U.S. Mailtr Personal Deliverytr FacsimileE Electronic MeansO Other:
tr U.S. Mail
O Personal Deliverytr Facsimiletr Electronic Meanstr Other:
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David Bender
Al Luna
Nick Thorpe
Earthjustice
3916 Nakoma Road
Madison, WI 5371 1
dbcnder(rTearth iustice.org
BOISE CITY'S REPLY BRIEF REGARDING EXISTING
ON-SrTE GENERATION CUSTOMERS Page l3
Idahydro
c/o C. Tom Arkoosh
ARKOOSH LAW OFFICES
802 W. Bannock St., Suite LP 103
PO Box 2900
Boise, ID 83701
[e-mail]
eri n. cecil(r7 arkoosh.com
Ted Weston
Yvonne R. Hogle
Rocky Mountain Power
1407 West North Tonple, Suite 330
Salt Lake City, UT 841l6
ted. weston(Epaci ficorp.com
wonne.ho lll e(r0 pacificorp. con'r
O U.S. MailO Personal Deliverytr FacsimileE] Electronic Meanstr Other:
aluna(a;carth lustrcc.org
nthonrc(ircafih l ustlcc.org
Idaho Sierra Club
c/o Kelsey Jae Nunez
KELSEY JAE NLTNEZLLC
920 N. Clover Dr.
Boise, ID 83703
kel scy(r2k el se vi acn unez. com
tr U.S. Mailtr Personal Deliverytr FacsimileEl Electronic Meanstr Other:
Zack Waterman
Mike Heckler
Idaho Sierra Club
503 W. Franklin St.
Boise, ID 83702
zack.r.l aterman(r sierraclub.org
tr U.S. MailO Personal Deliverytr FacsimileE Electronic Meanstr Other:
rni chael.p.heckl er(rir gmai Lconr
Preston N. Carter
GIVENS PURSLEY LLP
Attomeys for Idaho Clean Energy Assn.
601 W. Bannock St.
Boise, ID 83702
tr U.S. Mailtr Personal DeliveryO FacsimileE Electronic Meanstr Other:
Dresto ncartcrfrlr si vcrls nurslev.con.r
Northwest Energy Coalition
c/o F. Diego Rivas
I l0l 8th Ave.
Helena, MT 59601
tr U.S. Mailtr Personal DeliveryO Facsimiletr Electronic Meanstr other:dieso(riinrvcner gv.org
tr U.S. Mailtr Personal Deliverytr FacsimileE Electronic Meanstr Other:
tr U.S. Mailtr Personal DeliveryO FacsimileE Electronic MeansO Other:
BOISE CITY'S REPLY BRIEF REGARDING EXISTING
ON-SITE GENERATION CUSTOMERS Page l4
Northwest Energy Coalition
c/o Benjamin J. Otto
Idaho Conservation League
710 N. 6th Street
Boise, ID 83702
botto(r,ridahoconservation.orq
Jim Swier
Micron Technology, Inc.
8000 South Federal Way
Boise, ID 83707
isrryter@lr:rqar.qatn
tr U.S. Mailtr Personal DeliveryO FacsimileE Electronic Meanstr Other:
Peter J. Richardson
Industrial Customers of Idaho Power
RICHARDSON ADAMS, PLLC
515 N.27th Street
PO BOX 7218
Boise, ID 83702
pcter(a,richardson ad attts.corn
O U.S. Mailtr Personal Deliverytr FacsimileE Electronic Meanstr other:
Dr. Don Reading
6070 Hill Road
Boise, ID 83703
drcadine(ri:rnindsprinq.corn
tr U.S. Mailtr Personal Deliverytr FacsimileE] Electronic Meanstr Other:
Russell Schiermeier
29393 Davis Road
Bruneau, lD 83604
buvhav(altrrnail.corn
tr U.S. MailO Personal DeliveryO FacsimileE Electronic Meanstr Other:
. Cermaine
D City Attomey
BOISE CITY'S REPLY BRIEF REGARDING EXISTING
ON-SITE GENERATION CUSTOMERS Page l5
Austin Rueschloff
Thorvald A. Nelson
HOLLAND & HART, LLP
555 Seventeenth Street, Suite 3200
Denver, CO 80202
darueschho fllialhollandhart.com
tnelson(4hol landhart. com