Loading...
HomeMy WebLinkAbout20200423Answer and Motion to Dismiss.pdfIDAHO POWER COMPANY’S ANSWER AND MOTION TO DISMISS - 1 DONOVAN E. WALKER (ISB No. 5921) Idaho Power Company 1221 West Idaho Street (83702) P.O. Box 70 Boise, Idaho 83707 Telephone: (208) 388-5317 Facsimile: (208) 388-6936 dwalker@idahopower.com Attorney for Idaho Power Company BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION BLACK MESA, LLC Complainant, v. IDAHO POWER COMPANY, Respondent. ) ) ) ) ) ) ) ) ) CASE NO. IPC-E-20-17 IDAHO POWER COMPANY’S ANSWER AND MOTION TO DISMISS COMES NOW, Idaho Power Company (“Idaho Power” or “Company”) and pursuant to Rule 56 and 57 hereby answers the Complaint of Black Mesa, LLC (“Black Mesa”) as follows: I. INTRODUCTION, BACKGROUND, and FACTS Black Mesa initially submitted a Schedule 73 application requesting a PURPA Energy Sales Agreement (“ESA”) for a single, 20 MW proposed battery storage facility on February 13, 2017. See, Attachment 5 to Idaho Power’s Petition, Case No. IPC-E- 17-01. In its request, Black Mesa demanded a 20-year contract at published avoided cost rates. Id. Idaho Power responded to this initial request, within the 10-day response time required by Schedule 73, by informing the project that the Company did RECEIVED 2020 April 23,PM1:52 IDAHO PUBLIC UTILITIES COMMISSION IDAHO POWER COMPANY’S ANSWER AND MOTION TO DISMISS - 2 not agree that it was entitled to a 20-year contract or published avoided cost rates. Attachment 1 to Idaho Power’s Answer and Motion to Dismiss, February 27, 2017, letter from Idaho Power.1 On February 27, 2017, Idaho Power initiated a proceeding at the Commission, asking the Commission to issue a Declaratory Order regarding the proper contract terms, conditions, and avoided cost pricing for five battery storage facilities requesting contracts under PURPA, including Black Mesa’s proposed project as well as four additional proposed battery storage projects from Franklin Battery Storage.2 Case No. IPC-E-17-01. On July 13, 2017, the Commission issued Order No. 33785 granting Idaho Power’s Petition for declaratory relief stating, “We find that, as storage facilities with design capacities that will exceed 100 kW each and with solar as their primary energy source, the projects are eligible for two-year, negotiated (IRP methodology) contracts.” Order No. 33785, p 12-13. Subsequently, the Franklin Energy Storage projects (“Franklin”) petitioned the IPUC for reconsideration alleging that the Commission had improperly considered Franklin’s QF status in its determination.3 On August 29, 2017, the Commission denied Franklin’s Petition for Reconsideration. Order No. 33858. 1 Idaho Power’s February 27, 2017, letter was also provided in Attachment 6 to Idaho Power’s Petition in Case No. IPC-E-17-01. 2 On January 26, 2017, Idaho Power received four separate Schedule 73 applications from proposed battery storage projects requesting published avoided cost rate indicative pricing and 20-year contracts from: Franklin Energy Storage One, LLC (32 MW); Franklin Energy Storage Two, LLC (32 MW); Franklin Energy Storage Three, LLC (32 MW); and Franklin Energy Storage Four, LLC (32 MW). See Attachments 1-4 to the Petition for Declaratory Order, Case No IPC-E-17-01. All proposed Franklin Energy Storage projects were submitted by the same developer. On February 13, 2017, Idaho Power received another Schedule 73 application from a separate proposed battery storage project from another developer: Black Mesa Energy, LLC (20 MW). See Attachment 5 to the Petition for Declaratory Order, Case No IPC-E-17-01. 3 Franklin Energy Storage Projects’ Petition for Reconsideration, Aug. 3, 2017, Case No. IPC-E-17-01. IDAHO POWER COMPANY’S ANSWER AND MOTION TO DISMISS - 3 Franklin then filed a Petition for Declaratory Order and Petition for Enforcement action against the IPUC at the Federal Energy Regulatory Commission (“FERC”) to which FERC declined to act. FERC Docket EL-18-50-000. On May 30, 2018, Franklin filed a Complaint for Violation of the Federal Power Act, PURPA, and FERC Regulations with the United States District Court for the District of Idaho.4 The Federal Court heard argument on the IPUC’s and Idaho Power’s Motions to Dismiss, as well as cross-motions for summary judgment on February 7, 2019. On January 17, 2020, the Federal Court issued its Memorandum Decision and Order, denying the IPUC’s and Idaho Power’s motions to dismiss and for summary judgment, and granting in part Franklin’s motion for summary judgment5 stating as follows: 3. Plaintiffs’ [Franklin’s] Motion for Summary Judgment (Dkt. 24) is GRANTED IN PART: a. The Court finds that the Defendant IPUC Commissioners violated the Public Utility Regulatory Policies Act of 1978, 16 U.S.C. §§ 2601 et seq., when they issued final order numbers 33785 on July 13, 2017 and 33858 on August 29, 2017. Such orders established an implementation plan that impermissibly classified the QF status of Plaintiffs’ energy storage facilities that are certified under such Act as energy storage facilities. Classifying such facilities as “solar QFs” is outside the Commissioners’ authority as state regulators and therefore in violation of federal law. b. Defendants are permanently enjoined from enforcing or applying either of such IPUC final orders to Plaintiffs’ facilities as if such facilities are classified as something other than energy storage QFs, to include but not be limited to classifying Plaintiffs’ facilities as if they are “solar QFs” under the IPUC’s prior implementation plan. Defendants are further permanently enjoined from considering the energy source input into Plaintiffs’ energy storage QFs for the purpose of classifying the QFs in any way other than as energy storage QFs. 4 Case No. 1:18-cv-00236-REB. 5 Case No. 1:18-cv-00236-REB, Document 62. IDAHO POWER COMPANY’S ANSWER AND MOTION TO DISMISS - 4 Memorandum Decision and Order, p 36-37, Case No. 1:18-cv-00236-REB, Document 62, Jan. 17, 2020. However, the Federal Court also stated that it will not Order the IPUC to place any specific terms upon any power supply contract Idaho Power must enter with energy storage QFs6 stating: 4. Plaintiffs’ Motion for Summary Judgment (Dkt. 24) is otherwise DENIED. The Court specifically declines to order Defendants [IPUC] to require utilities under their jurisdiction to afford energy storage QFs all rights and privileges afforded to “other QFs” under the IPUC’s PURPA implementation plan. Id., at p 37. Following the District Court’s January 17, 2020, Order, on January 21, 2020, Idaho Power received two Schedule 73 applications that were e-mailed over the Holiday weekend for two, 20 MW each, battery storage QFs from Black Mesa Energy 1 and Black Mesa Energy 2. Attachment 2 to Idaho Power’s Answer and Motion to Dismiss. These applications state, “Black Mesa Energy LLC, reiterates its previous request for an Energy Sales Agreement pursuant to Schedule 73 as requested on 2/10/2017 … The project is an energy storage QF and qualifies for the “Other projects” avoided costs as found in 1:18-cv-00236-REB (Franklin Energy Storage v. Idaho PUC & Idaho Power).” Id. Idaho Power responded to Black Mesa on February 3, 2020, within the required 10 business days of Schedule 73, informing Black Mesa that Idaho Power dis not agree that Black Mesa’s projects were entitled to published rates and 20-year contracts as well as informing Black Mesa of Idaho Power’s January 27, 2020, Petition requesting that the IPUC initiate a proceeding to determine the proper avoided cost rates as well as 6 Case No. 1:18-cv-00236-REB, Document 62, at p 35. IDAHO POWER COMPANY’S ANSWER AND MOTION TO DISMISS - 5 contract terms and conditions applicable to, and to be included in the PURPA contracts requested by energy storage QFs. Attachment 1 to Idaho Power’s Answer and Motion to Dismiss, February 3, 2020, letter from Idaho Power. Immediately following the Federal District Court’s Friday, January 17, 2020, Order, Idaho Power filed a Petition with the Commission on the next business day, Tuesday, January 21, 2020. Case No. IPC-E-20-02. In light of the Federal Court’s Order as well as Black Mesa’s ensuing request for PURPA contracts, Idaho Power requested that the IPUC initiate a proceeding to determine the proper avoided cost rates as well as contract terms and conditions applicable to, and to be included in the PURPA contracts requested by energy storage QFs. Idaho Power’s Petition, Case No. IPC-E-20-02. The Commission subsequently issued Order No. 34552 providing Notice of Idaho Power’s Petition and establishing a February 28, 2020, deadline for interested persons to intervene as parties to the proceeding. There were no Petitions to Intervene filed, and this matter is currently pending at the Commission. Black Mesa’s Complaint alleges entitlement to published avoided cost rates and 20-year contracts as “other” QFs. The Commission has previously ruled that Black Mesa was not entitled to published rates and 20-year contracts as an “other” QF, because it was entitled to the same avoided cost and contract terms as its solar generation source. Order Nos. 33785, 33858. Because Black Mesa’s proposed project exceeded the 100 kW published rate eligibility cap, it was eligible for two-year contracts with rates determined pursuant to the Incremental Cost Integrated Resource Plan methodology. Id. While the Federal District Court found this determination by the IDAHO POWER COMPANY’S ANSWER AND MOTION TO DISMISS - 6 Commission to impermissibly classify the proposed battery storage projects as solar QFs, the Court also stated, “The Court specifically declines to order Defendants [the IPUC] to require utilities under their jurisdiction to afford energy storage QFs all rights and privileges afforded to “other QFs” under the IPUC’s PURPA implementation plan.” Memorandum Decision and Order, p 37, Case No. 1:18-cv-00236-REB, Document 62, Jan. 17, 2020, U.S. Dist. Idaho. (emphasis added). The setting of avoided cost rates and the contractual terms and conditions of purchase are the exclusive jurisdiction and responsibility of the IPUC. Id., at p 35-36. Black Mesa is not entitled to the relief requested in its Complaint. The Commission has an open proceeding to determine the proper avoided cost rate and contract term eligibility for proposed energy storage facilities. Black Mesa’s Complaint should therefore be dismissed. II. ANSWER Idaho Power hereby answers Black Mesa’s Complaint as follows: Idaho Power denies any allegation not specifically admitted and reserves the right to supplement and/or amend this Answer if Black Mesa amends its Complaint, or if additional defenses are ascertained during the course of discovery or otherwise. 1. To the extent that Paragraph 1 summarizes Black Mesa’s Complaint, the Complaint speaks for itself and does not require a specific response by Idaho Power. Idaho Power denies that Black Mesa has formed or established a legally enforceable obligation as identified in Paragraph 1 and the Complaint. 2. Paragraph 2 identifies contact information for legal counsel for Black Mesa and requires no specific response by Idaho Power. IDAHO POWER COMPANY’S ANSWER AND MOTION TO DISMISS - 7 3. Idaho Power has insufficient information or knowledge regarding the truth of the allegations in paragraph 3 of the Complaint, which relate to the identity of Black Mesa and its proposed projects. 4. Idaho Power admits that it is an Idaho corporation with its principal place of business at 1221 West Idaho Street, Boise, Idaho 83702. Idaho Power also admits that it is a public utility subject to the jurisdiction of this Commission, the Public Utility Commission of Oregon, and the Federal Energy Regulatory Commission (“FERC”). 5. The allegations in paragraph 5 are legal conclusions and require no response. 6. The allegations in paragraph 6 are legal conclusions and require no response. 7. The allegations in paragraph 7 are legal conclusions and require no response. 8. The allegations in paragraph 5 are legal conclusions and require no response. To the extent the allegations in paragraph 5 purport to quote a FERC order, such FERC order speaks for itself, and the Commission can determine the proper weight, authority, and application of precedent to its own decisions. 9. Idaho Power has insufficient information or knowledge regarding the truth of the allegations in paragraph 9 of the Complaint, which relate to the configuration of Black Mesa’s proposed projects, other than what Black Mesa has submitted to the Company. 10. Idaho Power has insufficient information or knowledge regarding the truth of the allegations in paragraph 10 of the Complaint, which relate to the QF certifications IDAHO POWER COMPANY’S ANSWER AND MOTION TO DISMISS - 8 of Black Mesa’s proposed projects. Idaho Power admits that Black Mesa has provided as Exhibits to its Complaint FERC Form 556 self-certifications that speak for themselves. 11. Idaho Power admits that it received a Schedule 73 request for a contract from Black Mesa on or about February 13, 2017. This request was previously provided to the Commission as Attachment 5 to Idaho Power’s Petition in Case No. IPC-E-17-01, and said request speaks for itself. Idaho Power denies the remaining claims and characterizations contained in paragraph 11. 12. Idaho Power admits that it received a Schedule 73 request for a contract from Black Mesa on or about February 13, 2017. This request was previously provided to the Commission as Attachment 5 to Idaho Power’s Petition in Case No. IPC-E-17-01, and said application speaks for itself. Idaho Power denies Black Mesa’s allegations that it is entitled to non-levelized, non-fueled, published avoided cost rates for “Other” facilities. Idaho Power denies the remaining claims and characterizations contained in paragraph 12. 13. Idaho Power denies the allegations in paragraph 13 of the Complaint. The graph contained in paragraph 13 is not the graph of the proposed projects’ generation profiles that were submitted to Idaho Power with Black Mesa’s requests. See Black Mesa’s Schedule 73 requests, Attachment 2 to Idaho Power’s Answer and Motion to Dismiss. 14. Idaho Power denies the allegations in paragraph 14 of the Complaint. Schedule 73 speaks for itself. Idaho Power responded to Black Mesa’s 2017 and 2020 requests within the required time and pursuant to Schedule 73. IDAHO POWER COMPANY’S ANSWER AND MOTION TO DISMISS - 9 15. Idaho Power admits that it received the e-mail identified in Exhibit 2 of the Complaint, and that it sent the e-mail identified in Exhibit 3 of the Complaint. The communications provided in Exhibit 2 and 3 to the Complaint speak for themselves. Idaho Power denies the remaining allegations and characterizations in paragraph 15. 16. Idaho Power admits that it responded to Black Mesa, within the required time and pursuant to Schedule 73, that it had filed a case with the Commission to determine the proper avoided cost rate and contract terms for Black Mesa’s proposed projects. The communications provided in Exhibit 4 to the Complaint speak for themselves. Idaho Power denies the remaining allegations and characterizations in paragraph 16. 17. The allegations of paragraph 17 appear to summarize and quote Commission Order Nos. 33785 and 33858. The Commission’s Order Nos. 33785 and 33858 speak for themselves. Idaho Power admits that the Commission previously determined that Black Mesa’s proposed energy storage project was not entitled to published rates and a 20-year contract. Idaho Power denies the remaining allegations and characterizations in paragraph 17. 18. Idaho Power admits that Franklin Energy Storage brought an action against the Commission in Federal District Court, Case No. 1:18-cv-00236-REB, and on January 17, 2020, the Federal Court issued its Memorandum Decision and Order, denying the IPUC’s and Idaho Power’s motions to dismiss and for summary judgment, and granting in part Franklin’s motion for summary judgment. Memorandum Decision and Order, Case No. 1:18-cv-00236-REB, Document 62, Jan. 17, 2020. In denying in part Franklin’s motion for summary judgment, the Court stated, “The Court specifically IDAHO POWER COMPANY’S ANSWER AND MOTION TO DISMISS - 10 declines to order Defendants [Commission] to require utilities under their jurisdiction to afford energy storage QFs all rights and privileges afforded to “other QFs” under the IPUC’s PURPA implementation plan.” Id., at 37. The Court’s Decision and Order speaks for itself. Idaho Power denies the remaining allegations and characterizations in paragraph 18. 19. Idaho Power has insufficient information or knowledge to admit or deny the truth as to the allegations of Black Mesa’s continued development, or not, as referenced in paragraph 19. A Feasibility Study is merely the first step in a three-step study process required to identify any required facilities or upgrades required in the requested interconnection of a generator to the Company’s system which could ultimately lead to a generator interconnection agreement that would provide for the interconnection and operation of the generation on Idaho Power’s system. 20. Idaho Power admits that it received Schedule 73 requests for contracts from Black Mesa on or about January 21, 2020. Idaho Power has provided herewith as Attachment 2 to Idaho Power’s Answer and Motion to Dismiss a copy of what Idaho Power received from Black Mesa. Idaho Power denies the allegations that Black Mesa is entitled to published avoided cost rates and 20-year contracts as “Other” facilities. The documents speak for themselves. Idaho Power denies the remaining allegations and characterizations in paragraph 20. 21. Idaho Power admits that it responded to Black Mesa’s January 21, 2020, requests within the required time and pursuant to Schedule 73. Idaho Power admits that it informed Black Mesa that it did not agree Black Mesa was entitled to published rates and 20-year contracts, and that Idaho Power had filed a case with the IDAHO POWER COMPANY’S ANSWER AND MOTION TO DISMISS - 11 Commission to determine the proper avoided cost rates and contract terms for energy storage projects, and further served Black Mesa with said Commission filing on January 21, 2020. Idaho Power’s February 3, 2020, response to Black Mesa is provided herewith in Attachment 1 to Idaho Power’s Answer and Motion to Dismiss. Idaho Power denies the remaining allegations and characterizations in paragraph 21. 22. Idaho Power admits that Black Mesa unilaterally drafted its own contractual documents and sent copies that it had signed itself to Idaho Power on or about January 24, 2020, for four proposed energy storage projects. Idaho Power has provided herewith in Attachment 3 to Idaho Power’s Answer and Motion to Dismiss copies of said purported contractual documents for Black Mesa Energy 1, Black Mesa Energy 2, Frederick Energy 1, and Frederick Energy 2.7 Idaho Power denies any claim or allegation that such unilateral actions create a legally enforceable obligation as claimed by Black Mesa. Idaho Power denies the remaining allegations and characterizations in paragraph 22. 23. Idaho Power denies the claim that Black Mesa is entitled to published avoided cost rates and 20-year contracts. Idaho Power denies the allegations in paragraph 23 of the Complaint. 24. Idaho Power admits that it sent to Black Mesa a letter dated February 3, 2020, responding to Black Mesa’s Schedule 73 applications and claims of legally enforceable obligations. Idaho has provided in Attachment 1 to its Answer and Motion to Dismiss a copy of said February 3, 2020, letter. The letter speaks for itself. Idaho Power denies the remaining allegations and characterizations in paragraph 24. 7 Because of the large volume, Idaho Power has only attached in Attachment 3 the first purported contractual document submitted for Black Mesa 1, but received essentially the same purported contractual document for all 4 proposed projects. IDAHO POWER COMPANY’S ANSWER AND MOTION TO DISMISS - 12 25. Idaho Power denies that Black Mesa has created a legally enforceable obligation for any of its proposed projects. Idaho Power has insufficient information or knowledge as to the capability of Black Mesa to develop, construct, interconnect, and do any other required activities to bring a proposed project online as it alleges in paragraph 25, and therefore denies the allegations. 26. In response to paragraph 26 which re-alleges all preceding paragraphs, please see Idaho Power’s answers and responses to all preceding paragraphs. 27. Idaho Power has insufficient knowledge or information to admit or deny whether Black Mesa “has attempted in good faith to engage in negotiations …” Idaho Power acknowledges that Black Mesa has requested a PURPA contract from Idaho Power. Idaho Power denies that Black Mesa is entitled to published avoided cost rates or 20-year contracts for its proposed projects. 28. Idaho Power denies the allegations in paragraph 28. Idaho Power is not refusing to purchase from Black Mesa at the avoided cost rate and contract term and conditions required and approved by the Commission, and has asked the Commission to set and approve the same. Idaho Power denies that Black Mesa is entitled to published avoided cost rates or 20-year contracts for its proposed projects. 29. Idaho Power denies that Black Mesa is entitled to published avoided cost rates or 20-year contracts for its proposed projects and thus denies the allegations in paragraph 29. 30. Idaho Power denies the allegations in paragraph 30. Black Mesa has purported to commit itself only to the rates, terms, and conditions that Black Mesa IDAHO POWER COMPANY’S ANSWER AND MOTION TO DISMISS - 13 believes it is entitled to. Idaho Power denies that Black Mesa is entitled to published avoided cost rates or 20-year contracts for its proposed projects. 31. Idaho Power denies the allegations in paragraph 31. Idaho Power is not refusing to purchase from Black Mesa at the avoided cost rate and contract term and conditions required and approved by the Commission, and has asked the Commission to set and approve the same. Idaho Power denies that Black Mesa is entitled to published avoided cost rates or 20-year contracts for its proposed projects. 32. Idaho Power denies the allegations in paragraph 32. 33. Idaho Power denies that it refused to respond to Black Mesa’s requests. The remaining allegations in paragraph 33 are legal conclusions and require no response. 34. Idaho Power denies the allegation in paragraph 34. Idaho Power denies that Black Mesa is entitled to published avoided cost rates or 20-year contracts for its proposed projects. 35. In response to paragraph 35 which re-alleges all preceding paragraphs, please see Idaho Power’s answers and responses to all preceding paragraphs. 36. Idaho Power has insufficient knowledge or information to admit or deny whether Black Mesa “has attempted in good faith to engage in negotiations …” Idaho Power acknowledges that Black Mesa has requested a PURPA contract from Idaho Power. Idaho Power denies that Black Mesa is entitled to published avoided cost rates or 20-year contracts for its proposed projects. 37. Idaho Power denies the allegations in paragraph 37. Idaho Power is not refusing to purchase from Black Mesa at the avoided cost rate and contract term and IDAHO POWER COMPANY’S ANSWER AND MOTION TO DISMISS - 14 conditions required and approved by the Commission, and has asked the Commission to set and approve the same. Idaho Power denies that Black Mesa is entitled to published avoided cost rates or 20-year contracts for its proposed projects. 38. Idaho Power denies that Black Mesa is entitled to published avoided cost rates or 20-year contracts for its proposed projects and thus denies the allegations in paragraph 38. 39. Idaho Power denies the allegations in paragraph 39. Black Mesa has purported to commit itself only to the rates, terms, and conditions that Black Mesa believes it is entitled to. Idaho Power denies that Black Mesa is entitled to published avoided cost rates or 20-year contracts for its proposed projects. 40. Idaho Power denies the allegations in paragraph 40. Idaho Power is not refusing to purchase from Black Mesa at the avoided cost rate and contract term and conditions required and approved by the Commission, and has asked the Commission to set and approve the same. Idaho Power denies that Black Mesa is entitled to published avoided cost rates or 20-year contracts for its proposed projects. 41. Idaho Power denies the allegations in paragraph 41. 42. Idaho Power denies that it refused to respond to Black Mesa’s requests. The remaining allegations in paragraph 42 are legal conclusions and require no response. 43. Idaho Power denies the allegation in paragraph 43. Idaho Power denies that Black Mesa is entitled to published avoided cost rates or 20-year contracts for its proposed projects. IDAHO POWER COMPANY’S ANSWER AND MOTION TO DISMISS - 15 III. AFFIRMATIVE DEFENSES 44. Black Mesa’s Complaint, and all allegations and requests for relief therein, fails to state a claim upon which relief can be granted. 45. Idaho Power acted at all times and in all respects, with regard to Black Mesa and its requests, in conformance and compliance with state and federal law and the required and applicable rules, regulations, tariffs, and schedules for the state of Idaho’s implementation of PURPA. 46. Idaho Power hereby reserves the right to assert any and all additional defenses, ascertained during the course of discovery or otherwise, by amendment to this answer as the Commission’s rules, procedures, and/or Orders may allow and/or withdraw or amend the above affirmative defenses. WHEREFORE, having fully answered, Idaho Power respectfully requests: 1. That the Commission issue its Order denying the relief sought by Black Mesa in its Prayer for Relief; 2. That Black Mesa’s Complaint be dismissed with prejudice and that it go hence without cost or delay; and 3. For such other relief as the Commission deems just and reasonable. Respectfully submitted this 23rd day of April 2020. DONOVAN E. WALKER Attorney for Idaho Power Company IDAHO POWER COMPANY’S ANSWER AND MOTION TO DISMISS - 16 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on this 23rd day of April 2020, I served a true and correct copy of IDAHO POWER COMPANY’S ANSWER AND MOTION TO DISMISS upon the following named parties by the method indicated below, and addressed to the following: Black Mesa Energy, LLC Peter J. Richardson Gregory M. Adams RICHARDSON ADAMS, PLLC 515 n. 27th Street Boise, Idaho 83702 Hand Delivered U.S. Mail Overnight Mail FAX X Email peter@richardsonadams.com Idaho Public Utilities Commission Staff Edward Jewell Deputy Attorney General X Email Edward.jewell@puc.idaho.gov ________________________________ Christy Davenport, Legal Secretary