20191127Reply Brief.pdf

Preston N. Carter (lSB No. 8462)
Givens Pursley LLP
601 W. Bannock St.
Boise, ID 83702
Telephone: [phone]
Facsimile: (208) 388-l 300
Attorneys for lduho Clean Energt Association
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
II:C E IVED
- -;:', ,' :lSiOli
IN THE MATTER OF THE PETITION
OF IDAHO POWER COMPANY TO
STUDY COSTS, BENEFITS, AND
COMPENSA'TION OF NET EXCESS
ENERGY SUPPLIED BY CUSTOMER
ON-SITE GENERATION
Case No. IPC-E-18-15
IoeHo Cr-reN ENERcY AssoctATloN,
INc.'s RESPoNSE BRrEF RECARDING
TREATMENT oF ExrsTtNc CusroMERs
Pursuant to Order No. 34460, the ldaho Clean Energy Association, Inc. C'ICEA)
submits the following response brief regarding treatment ofexisting customers under the
Settlement Agreement filed with the Commission on October 11, 2019.
Ixrnooucrrox
As the Commission is well aware, the question of how to treat customers tlat participated
under the Net Metering Program is not an easy one. The opening briefs submitted by ICEA,
Commission Staff, Idaho Power Company ("Idaho Power" or "Company"), Idaho Conservation
League and Vote Solar ("ICLAr'ote Solar"), the City of Boise ("City"), and the Idaho Irrigation
Pumpers Association, Inc. C'IIPA") clarify and refine the question before the Commission. The
opening briefs seem to coalesce around the following two points: 1) While the Commission
cannot lawfully distinguish between customers simply because some customers are "old," and
some customers are "new," the Commission has broad discretion to distinguish between
ICEA's RESpoNSE BRtUF RECARDING TRE^,]MENT oF Exls'r'rNC Cus ToMERS - I O R IGINAL
Drestoncarter@ gi venspuf sley. com
14906270 3.docx l 1523-31
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customers that are situated differently from one another; and 2) it is fair, just, and reasonable to
afford some consideration to customers that participated in the Net Metering Program, whether
that be allowing customers to continue under that Program indefinitely; allowing customers 10
continue under the Program for twenty years; allowing customers to continue under the Program
for eight years; or transitioning all customers to the Net I-lourly Billing Program over a period of
eight years.
Under these facts, and in light ofthe parties' briefing, ICEA submits that it is fair, just,
and reasonable-and non-discriminatory-to implement the Net Hourly Billing Program on a
prospective basis, and to allow customers that participated in the Net Metering Program to
continue on that program indefinitely. In the alternative, ICEA submits that allowing customers
to continue on the Net Metering Program for a period of twenty years is reasonable in light ofthe
large financial expenditures that customers have made under the Net Metering Program.
ARGUMENT
l. The Commission may distinguish between customers that participated in the Net
Metering Program and those that participate in the Net Hourly Billing Program.
ICEA agrees with Commission Staff, ICL and Vote Solar, and the City of Boise that,
under the facts of this case, the Commission may (and should) lawfully distinguish between
customers that participated in the Net Metering Program and those that participate in the Net
Hourly Billing Program. See Commission Staff Opening Br. at2-7; ICL/Vote Solar Opening Br.
at 3- 17; City of Boise Opening Br. at 6-8.
ICEA also submits, as explained in its opening brief, that the Commission may lawfully
implement the policy changes reflected in the Net Ilourly Billing Program on a prospective
basis. ICEA Opening Br. at 6-12.
Idaho Power takes the position that "it is not aware ofany valid distinction" that can
ICEA,S RESPoNSE BRIEF REGARI)ING TREATMENT OF EXISTINC CI]SToMERS - 2
law:fully distinguish between customers under the Net Metering Program and the Net Hourly
Billing Program. Idaho Power Opening Br. at l1.r ICEA submits that the Company omits key
portions ofthe Idaho Supreme Court caselaw on this point. For example, the Company states,
where new customers cannot be distinguished from existing
customers based on valid factors such as the quantity of electricity
they use, the pattem. nature and timing oftheir usage, the conditions
of service, or the cost of service, it would be a violation ol ldaho
Code $ 61-135 to subject new customers to different rates than the
rates paid by existing customers.
I IIPA states its beliefthat the 8-year transition period lor all customers is reasonable, but it does
not analyze existing caselaw. IIPA Opening Br. a1 2. ICEA therefore does not separately address
IIPA's comments.
ICEA's RESpoNSE BRlEr. RECARTING TREATMENI oF ExrsrlNc Cus.roMr-tRS - 3
Company Opening Brief at 9. The Idaho Supreme Court has identified these factors (quantity,
pattern, nature. and timing, conditions ofservice, and cost of service) as legitimate bases for
distinguishing between customers. Idaho State Homebuilders v. Wash. Water Power,l07 Idaho
415,420 (1984). Ho*'ever, the Court has explicitly indicated that this list is non-exclusive; that
none of the cnteia in Homebuilders is more essenlial than the other; and that the Commission
may lawfully distinguish between customers on other bases as dictated by the particular facts of
the case before it. Grindstone Butte Mut. Canal Co. v. ldaho Pub. Utilities Comm'n, 102 Idaho
175, 180 ( 1981). The Commission may, therefore, look to factors other than those identified by
Idaho Power.
It should also be noted that even the non-exclusive factors identified by the Company
may well distinguish customers under the Net Metering Program from customers under the Net
Hourly Billing Program. The Net Hourly Billing Program, for example, provides strong
incentives for customers to match the timing of their consumption with the timing of their
generation. Affidavit of Kevin King !120. The Net Hourly Billing Program also provides strong
incentives to consume more energy behind the meter rather than to export energy. If customers
respond to these incentives-and there is no reason to believe that they won't-the pattem,
nature, and timing of consumption and production of Net Hourly Billing Program customers may
vary significantly from that of Net Metering Customers. This is ultimately a moot point. To
address the question currently before it, the Commission does not need to guess about the
quantity of electricity that customers under the Net Hourly Billing Program will use, or the
pattem, nature and timing ofuse, conditions ofservice, and other information. Other factors
distinguish between customers under the Net Metering Program and the Net Hourly Billing
Program. as ICEA set forth in its Opening Brief. ICEA Opening Br. at l-6.
Second, the Court has held that the Commission is free to prospectively apply changes in
policy. Building Contractors Ass'n of SW ldaho v. ldaho Public Utilities Commission, 151 Idaho
l0 (2011). As explained in ICEA's Opening Brief, the change from the Net Metering Program
constitutes a change in policy that can la*fully be applied prospectively under Building
Contractors Association.ICEA Opening Br. at7-9.ldaho Power does not cite or discuss
Building Contractors Ass'n, much less acknowledge its implication for customers that
participated in the Net Metering Program.
In addition, Idaho Power states that it "is not aware ofany valid distinctions that can be
made between current customers with on-site generation, and those who may participate in the
future, that would wanant giving cunent customers more lavorable rates." ldaho Power Opening
Br. at I 1. Importantly, the Company does not dezy that there may be valid distinctions between
the two groups; the Company merely purporls to be aware of one. Id Regardless, there is a valid
basis for distinguishing between the two groups----customers who participate in the Net Hourly
Billing Program have the opportunity to make choices regarding system configuration, system
size, storage, and other components ofonsite generation systems to best benelit the customer
ICEA,S RISPoNSE BRIEF REGAITD]NC TREAI.MI:NT oI. ExISTINC CUs I.oMERs - 4
under the Net Hourly Billing Program or to allow the cuslomer to remain on Schedule 6 or 8.
Given the economics and feasibility of retrofitting existing systems, those choices available to
future customers are different than the choices now available to customers who had onsite
generation systems designed and installed under the existing Net Metering Program. King
Affidavit at flflI3-29; ICEA Opening Br. at 9-l l.
Finally, this case is about much more than "more favorable rates." Idaho Power Opening
Br. at 11. It is about an entirely new program. The Commission is free to implement the new Net
Hourly Billing Program on a prospective basis, while allowing those that participated in the Net
Metering Program to continue under the contours ofthat program.
2. That customers had notice of potential rate changes does not justiS imposing an
entirely new program on them.
The Company spends nine pages arguing that customers have had ample notice that rates
under the Net Metering Program are subject to change. Idaho Power Opening Br. at 20. That is
true. However, that customers were on notice that rates may change does not support the position
that the Net Hourly Billing Program should be imposed upon customers that participated in the
Net Metering Program.
First, and most importantly, the fact that rates may change does not dictate frow rates
should change. The Commission would, rightly, never accept an argument that electric rates
should double because customers know that electric rates can change at any time. So it is here.
An argument that rates con change does not support an argument that rales should change in any
particular way. The Commission is currently faced with the question of how programmatic
changes should be implemented. More specifically, the Commission is currently faced with the
question ofwhether it should impose drastic programmatic changes retroactively or, instead,
prospectively. The Commission maintains control over how the Net Hourly Billing Program
ICEA,S IGSPoNSE BRIEF RHCARDING TRF:AI.MENT oF ExISTING CUSTOMERS . 5
should be implemented. ICEA respectfully submits that it should be implemented prospectively,
or w-ith a twenty-year period during which customers that participated in the Net Metering
Program can continue under that Program.
Second, each ofthe notices identified by Idaho Power involve rdles. Idaho Power
Opening Br. at l1-20.2 None ofthe notices indicate that exports would be measured on an hourly
basis rather than a monthly one. Monthly netting has been a feature of the Net Metering Program
since it was established in the 1980s. Not a single customer of Mr. King's has ever requested or
made decisions upon hourly data. King Aff. fl14. As such, customers and installers have
(understandably) used monthly data to make decisions regarding onsite generation systems.
ICEA Opening Brief at 2. The change from monthly netting to hourly netting is not merely a
change in ratesl it changes a fundamental component of the program that dictated customer
decision-making. It requires use ofa whole other set ofdata. The notices that Idaho Power
identifies indicate that rates can change, but do not provide notice olthe dramatic, programmatic
changes reflected in the change from the Net Metering Program to the Net Monthly Billing
Program.
Third, through the kwh-credit system, the Net Metering System makes a customer
indifferent as to whether electricity is consumed or exported; the customer's rates for
consumption and rates for export are the same. While Idaho Power has notified customers that
rates can change, customers could easily interpret this statement as irrelevant because exports are
compensated on a kilowatt-hour basis. Perhaps a very well-informed, very well-engaged, quasi-
prophetic consumer could have predicted that, some day, 1) the kwh-credit would be converted
2 The disclosure required under the Residential Solar Energy System Disclosure Act which ICEA supported in the
legislature- -does include the concept that credit or compensation for excess power generated by a system could be
reduced or eliminated. That Act went into effect October l, 2019. The required notice was therefore not provided to
the vast majority of customers that participated in the Net Metering Program.
ICEA,S RESPoNSE BRIET RECARDING TREA].MENT oF ExISTING CUSToMIRS. 6
to a monetary credit; 2) the monetary credit for exports would be decoupled from the rate for
consumption; and 3) the monetar:y credit for exports would be reduced to halfthe rate for
consumption. But that level of understanding of ratemaking concepts, and that ability to predict
the future, is not realistic and should not be imputed to consumers. Indeed, as recently as last
year, the Commission itselfcould not predict whether onsite generation provided value that
exceeded its costs.3 ICEA submits that it is fair to impute to consumers the knowledge t}tat rates
can change. But it is not fair or reasonable to impute to consumers the knowledge that the Net
Metering Program would change to a Net Hourly Billing Program like that proposed in the
settlement agreement.
Certainly, customers were on notice that rates may change. It is important, however, to
recognize the limitations on such notice. Customers had to make decisions based on soze
criteria. They did so based on the components of the Net Metering Program. ICEA respeclfully
submits that it is reasonable to allow those customers to conlinue under the Net Metering
Program. That customers were provided notice that rates may change does not, and should not,
justi$, imposition of an entirely new program upon them.
Finally, Idaho Power cites a case in which the Idaho Supreme Court held that rates for
water provided by a utility service provider could change, and more specifically that the utility
service provider was not guaranteed a 5%o rate of retum indefinitely as the service provider's rate
base expanded. Idaho Power's Opening Br. at 12-13 (citing Ciry of Pocatello v. Murray,2l
Idaho 180 (1912)). That is not analogous to the situation presented here. Neither ICEA nor any
other party argues that customers are entitled to a guaranteed rate of return on their investment-
3 See Case No. IPC-E-17-13, Order No.34046 at l9 ("The benefits that on-sitc generation provide to the Company's
infrastructure and resource allocation, once quantified, may well prove to outpace any alleged costs, increases in
fixed-cost responsibility or decreases in net excess energy compensation credit.").
ICEA,S R[SPoNSE BRIEF RECARI)INC TREATMENT oT EXISTING CUSIoMERS - 7
much less a 5o/) rate ofreturn, which would be well above the expected rate ofretum for a
typioal onsite generation system (although well below the rate ofreturn a utility typically
receives on its generation assets). Nor does ICEA or any other party argue that an onsite
generation customer is entitled to maintain a guaranteed rate ofretum as their system expands
over time. Indeed, ICL/Vote Solar and ICEA specifically state that customers under the Net
Metering Program should not be allowed to continue under that program ifthey materially
expand their systems. ICEA Opening Br. at l4 ("Prohibit participants in the Net Metering
Program from materially increasing system size, defined as an increase ofup to the greater of
l0% of system size or l kW."); ICL/Vote Solar Br. at l0 ("Prohibit material increases to system
size."). All ICEA requesls is that the Commission not impose the Nel Hourly Billing Program
relroactively to customers who participated in the Net Metering Program.
3. It is fair, just, and reasonable to allow customers to continue under the Net
Metering Program indefinitely, or for a period of twenty years.
In its opening brief, ICEA sets forth the argument that it is fair, just, and reasonable to
allow customers to continue under the Net Metering Program indefinitely, or at the very least, for
a period of twenty years. ICL and Vote Solar persuasively set forth examples ofother states, and
technical analysis demonstrating the severe detrimental impacts to existing customers, balanced
against nominal impacts to other customers. ICL/Vote Solar Opening Br. at l0-15. ICEA does
not see the need to repeat those arguments here. ICEA respectfully requests that the Commission
allow customers to continue under the Net Metering Program as proposed in the opening briefs
of ICEA, ICLIVote Solar, and the City of Boise.
ICEA'S RESPONSE BRIEF REGARDINC 'I'REATMEN'] O} EXISTING CUSlOMI-]RS - 8
Dated: Novembcr 27 .2019.
GIVENS PURSLEY LLP
,/___r-
Preston N. Carter
Givens Pursley LLP
Attorneys.for ldaho Clean Energt Association
ICEA's RHSpoNSE BRIIF RrcARt)tNG TREATMENT or, ExrSING CTJSToMERS - 9
CERTIFICATE OF SERVICE
I certify that on November 27, 2019, a true and conect copy of the foregoing comments
were served upon all parties ofrecord in this proceeding via the manner indicated below:
Commission Staff
Diane Hanian, Commission Secretary
ldaho Public Utilities Commission
ll33l W. Chinden Blvd., Bldg. 8, Ste. 201-A
Boise, ID 83714
Hand Delivery & Electronic Mail
[e-mail]
Edward Jewell, Deputy Attomey General
Idaho Public Utilities Commission
11331 W. Chinden Blvd., Bldg. 8, Ste. 201-A
Boise, ID 83714
[e-mail]
Electronic Mail
Via Electronic Mail
Lisa D. Nordstrom
Regulatory Dockets
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, ID 83707
lnordstrom@idahoDower. com
dockets@i dahooower.com
Benjamin J. Otto
Idaho Conversation League
710 North 6th Street
Boise, Idaho 83702
botto@idahoco nservaLiQn.olg
Idaho Inigation Pumpers Association, Inc.
c/o Anthony Yankel
12700 Lake Avenue, Unit 2505
Lakewood. Ohio 44107
[e-mail]
ICEA,S RESPoNSE BRTEF REOARDING TREAT MF,NT OF EXISTING CIJSTOMERS - IO
Timothy E. Tatum
Connie Aschenbrenner
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, ID 83707
[e-mail]
[e-mail]
Idaho Irrigation Pumpers Association, Inc.
c/o Eric L. Olsen
Echo Hawk & Olsen, PLLC
505 Pershing Avenue, Suite 100
P.O. Box 6119
Pocatello, Idaho 8305
[e-mail]
Idahydro
c/o C. Tom Arkoosh
Arkoosh Law Offices
802 W. Bannock Street, Suite LP 103
P.O. Box 2900
Boise, ID 83701
[e-mail]
[e-mail]
Ted Weslon
Rocky Mountain Power
1407 West North Temple, Suite 330
salt Lake City, UT 841l6
ted.weston6oacifi corp.com
Briana Kober
Vote Solar
358 S. 700 8., Suite 8206
Salt Lake City, UT 84102
briana votesolar.or
Al I-una
Alunai2earthiustice.ore
Abigail R. Germaine
Boise City Attomey's Office
105 N. Capitol Blvd.
P.O. Box 500
Boise. ID 83701-0500
asermaine@ci tyolboise.org
Zack Waterman
Mike Heckler
Idaho Siena Club
503 W. Franklin Street
Boise, ID 83702
zack.waterman ierraclub.org
Michael.p.heckler(Dgmail.com
NW Energy Coalition
c/o Benjamin J. Otto
Idaho Conservation League
710 N. 6s Street
Boise, ID 83702
botto@idah oconscrvation.org
Micron Technology, lnc.
c/o Austin Rueschhofl
Thorvald A. Nelson
Holland & Hart, LLP
555 Seventeenth Street, Suite 3200
Denver, CO 80202
darueschhoff@.hol I andhart.com
Yvonne R. Hogle
Rocky Mountain Power
I 407 West North Templc, Suite 330
Salt Lake City, UT 841 16
r-vonne.hogle pacificorp.com
David Bcnder
Earthjustice
3916 Nakoma Road
Madison. WI 53 7l I
[e-mail]
Nick Thorpe
nthoroefa)earth iustice.org
Idaho Sierra Club
c/o Kelsey Jae Nunez
Kelsey Jae Nunez LLC
920 N. Clover Drive
Boise, ID 83703
kel kc1 com
F. Diego Rivas
NW Energy Coalition
1101 8th Avenue
Helena" MT 59601
die wene .or
Industrial Customers of Idaho Power
c/o Peter J. Richardson
Richardson, Adams, PLLC
515 N. 27rh Street
P.O. Box 7218
Boise, Idaho 83702
chardsonadams.com
tnelson@hol landhart.com
ICEA's RESmNSE BRr[F REGART)tNc TREATMEN I oF ExrsnNG CusroMERS - I I
Jim Swier
Micron Technology, Inc.
8000 S. Federal Way
Boise, ID 83707
[e-mail]
Industrial Customers of Idaho Power
Dr. Don Reading
6070 Hill Road
Boise, Idaho 83703
[e-mail]
Russell Schiermeier
29393 Davis Road
Bruneau, Idaho 83604
bur"hay(dglqalLsalq
f-__-/
Preston N. Carter
ICEA,S RESPONSE BRIEF RECARDINC TREAT.MENl OI. ExISTING CI.]SToMERS - I2