20210111Brief.pdf

EDWARD J. JEWELL
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BARNO. 10446
Steet Address for Express Mail:
1 1331 W. Chinden Blvd., Ste. 201-A
BOISE,IDAHO 83714
Attorney for the Commission Staff
BEFORE TIIE IDAHO PUBLIC UTILITIES COMMISSION
BLACK MESA ENERGY, LLC,
Complainant,
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CASE NO. IPC.E.2O.I7
vs.
COMN{ISSION STAFF BRIEF
IDAHO POWER COMPATIY,
Respondent.
The Staffof the Idaho Public Utilities Commission, by and through its attorney of
record, Edward J. Jewell, submit the following brief pursuant to Commission Order No. 34849.
On March 17,2020, Black Mesa Energy,LLC ("Black Mesa") filed a formal complaint
against Idaho Power Company ("[daho Power" or "Company") seeking a Commission
determination that Black Mesa established trro legally enforceable obligations ("LEO" or "LEOs")
with Idaho Power; one for Black Mesa I and one for Black Mesa 2, each a qualiffing facility
("QF") under the Public Utility Regulatory Policies Act of 1978 ("PURPA").
On April 23,2020, the Company filed an Answer and Motion to Dismiss. Idaho Power
asserted it acted within the bounds of federal and state law and the applicable rules, regulations,
tariffs, and schedules pertinent to Idaho's implementation of PURPA. Answer and Motion to
Dismiss at fl 45. Idaho Power asserted that Black Mesa has failed to state a claim upon which
reliefcanbe granted. Id. atl44.
COMMISSION STAFF BRIEF I
On April 28,2020, Black Mesa moved the Commission under Rule 57.03 to extend
Black Mesa's deadline to answer the Company's Motion to Dismiss from May 7,2020 to May 15,
2020.
On May 6,2020,the Commission granted Black Mesa's Motion to Extend Time. Order
No. 34663.
On May 15,2020, Black Mesa filed an Answer to Idaho Power's Motion to Dismiss.
On July 10, 2020, the Commission denied Idaho Power's Motion to Dismiss and
established briefing deadlines for the parties. Order No. 34715.
On July 29,2020, Black Mesa submitted a Motion to Stay Briefing Schedule. Black
Mesa indicated that the parties were engaged in discussions that might resolve the issues and that
Idaho Power concurred in its request to stay the briefing schedule.
On August 5, 2020, the Commission stayed the briefing schedule until further
notification. OrderNo. 34747.
On November 13, 2020, Black Mesa submitted a Motion to Reinstate Briefing
Schedule. Black Mesa indicated that discussions had not resolved the issues and therefore the
parties jointly requested to reinstate the briefing schedule.'
On Novemb er 25, 2020, the Commission issued a Notice of Reinstatement of Briefing
Schedule. Order No. 34849. The Commission approved the parties' requested briefing deadlines
and provided Commission Staffthe opportunity to file abief. Id.
On December 14,2020, Black Mesa submitted its Initial Brief.
Now, Commission Staff submits this brief to advise the Commission on the legal
standard and to identifu decision points for the Commission to analyze when determining whether
Black Mesa met the legal standard to establish LEOs for Black Mesa I and Black Mesa 2.
BACKGROUND ON LEOs
The LEO concept was created by the Federal Energy Regulatory Commission
("FERC") in its rules implementing PURPA. Although the LEO concept was created by FERC,
it is within the authority of the state regulatory authorities, not FERC, to determine when a LEO
is incurred in each state. Idaho Power Co. v. Public Utilities Comm'n, 155 Idaho 780,785, 316
P.3d 1278,1285 (daho 2013) [hereinafter Grouse Creek] (citing Power Resource Group, Inc. v.
Public Utility Comm'n of Texas, 422 F.3d 231, 239 (5th Cir. 2005)). In implementing PURPA,
"states must provide for legally enforceable obligations as distinct from contractual obligations . .
COMMISSION STAFF BRIEF 2
. ." Power Resource Group, Inc., 422 F.3d at 238. States have "broad discretion . . in
implementing FERC's rules and determining the requirements for a [LEO]." Grouse Creek,l55
Idaho at787.
The LEO is a protection afforded to QFs. "An LEO is a significant protection for a eF
that is dealing with an intransigent electric utility. By committing itself to sell its output to an
electric utility, a QF has an altemate non-contractual route to pursue. It does not require signatures
or all of the attendant features of a contract." Grouse Creek, 155 Idaho at 793 (J. JONES,
concurring). A LEO is designed to ensure that the utility cannot refuse to purchase energy or
capacity from a QF simply by refusing to agree to the reasonable terms of a contract. "FERC
specifically adopted the concept of a [LEO] to prevent utilities from circumventing the 'must
purchase' PURPA provision 'merely by refusing to enter into a contract with the QF." Order No.
3286I at 18 quoting Power Resource Group,422F.3d at238 quoting 45 Fed.Reg . 12,214,12,224
(Feb. 25, 1980). FERC has described the LEO concept as
a QF has the option to commit itself to sell all or part of its electric
output to an electric utility. while this may be done through a
contract, if the electric utility refuses to sign a contract, the eF may
seek state regulatory authority assistance to enforce the PURPA-
imposed obligation on the electric utility to purchase from the QF,and a non-contractual, but still legally enforceable, obligation will
be created pursuant to the state's implementation of pURpA.
JD Wind l, LLC et a1.,129 FERC ti 61,148 (Nov. 19,2OO9).1 LEOs, as distinct from contracts,
can arise prior to the execution of a contract. "The Idaho PUC acknowledges that a legally
enforceable obligation may be incurred prior to the formal memorialization of a contract to
writing." Memorandum of Agreement Between the Federal Energy Regulatory Commission and
the Idaho Public Utilities Commission. oolndeed, an LEO may be formed unilaterally, through the
actions of a QF." Grouse creek,l55Idaho at1290 (J. JONES, concurring).
Under the federal regulations in effect at the pertinent times of this dispute,2 the eF
had the opportunity to receive avoided cost rates calculated at the time the LEO is incurred for the
I Staff notes that FERC declaratory orders are not binding on this Commission. The Idaho Supreme Court and theD.C. Court of Appeals have recognized they are "legally ineffectual apart from [their] ability to persuade . . .,, GrouseCreek,l55Idaho at 1286 citing Industial Cogenerators v. F.E.R.C.,47 F.3d 1231 (D.C. Cir. 1995).2 FERC finalized Ofier 872 after Black Mesa filed its formal complaint. Order 872 allows states to choose whether
QFs have the right to fix rates for the duration of the obligation at the time they establish a LEO. Additionally Order872 will make LEO formation dependent on a showing of commercial viability and a financial commitment to
construct the facility. These changes can be implemented prospectively. 173 FERC fl 6l,15g.
COMMISSION STAFF BRIEF 3
duration of the obligation. 18 C.F.R. $ 292.304(d)(2); See also 45 Fed. Reg. 12214,12224 (Mar.
1980). A LEO, as a pre-contractual obligation, determines the avoided cost rates the QF is entitled
to receive for the term of the obligation but does not dictate all the terms to be included in a fuIl
contract. Other terms of the contract can be determined by the parties or the Commission. See
generally 45 Fed. Reg. 12214, L2224 (Mar. 1980); Grouse Creek,155 Idaho at787; Idaho Power
Schedule 73-5, l(d).
PROCEDURAL BACKGROUND
ln February 20L7, Black Mesa submitted an application to Idaho Power pursuant to
Idaho Power's Schedule 73-{ogeneration and Small Power Production Schedule - Idaho
("schedule 73"). Black Mesa also self-certified itself as a QF with FERC. At that time, the project
was a single QF. In response, Idaho Power petitioned for declaratory order with the Commission
requesting the Commission determine the proper contract terms, conditions, and avoided cost rates
for contracts requested by battery storage facilities including Black Mesa. This petition began
IPC-E-17-01. In IPC-E-17-01, the Commission held that it would look to the primary energy
source of an energy storage QF when determining how to classiff a QF with energy storage. Order
No. 33785 at ll-12. Because the QFs at issue there, Black Mesa and Franklin Energy Storage l-
4, proposed to use solar as the primary energy input, and because the Commission determined that
the energy generation output profiles for the QFs reflected the use of solar generation, the
Commission determined those QFs were eligible for the same treatment that solar QFs receive in
Idaho. Id. Specifically, those QFs would be subject to a 100 kW project eligibility cap for
published avoided cost rates and2}-year contracts. Since Black Mesa and Franklin 1-4 were larger
than the 100 kW project eligibility cap, the Commission determined they were entitled to 2-year
contacts with avoided cost rates calculated by the incremental cost lntegrated Resource Plan
method ("IRP Method").
In IPC-E-17-01, the Commission found that Black Mesa and Franklin had not
established LEOs.
The facts and evidence in this case reveal that the parties were in
active negotiations which resulted in Idaho Power's Petition for a
declaratory ruling. We decline to interpret a reasonable dispute
between the parties regarding contract terms and conditions as
intransigence or a failure to negotiate on the part of the utility.
Therefore, we find that no action (or inaction) of the utility has
triggered the creation of a legally enforceable obligation.
COMMISSION STAFF BRIEF 4
Order No. 33785 at 12 (emphasis in original).
Franklin appealed the Commission's decision in IPC-E-17-01. Franklin petitioned
FERC to pursue an enforcement action against the Commission for failure to implement FERC's
regulations pursuant to 16 U.S.C. $ 82aa-3(hX2XB). FERC declined to do so, which allowed
Franklin to bring an action against the Commission in federal district court alleging that the
Commission was failing to implement FERC's regulations lawfully. 162 FERC fl 61,110 (Feb.
15, 2018). ln Franklin Energt Storage One, et al. v. Kjellander et. a1.,2020 WL 265278, the
United States District Court for the District of Idaho held that the Commission could not classiff
energy storage QFs based on their primary energy input. Thus, the Commission was enjoined
from classiffing the Franklin QFs as solar QFs. The court declined the plaintiffs' request that the
court order the Commission to classi$, energy storage QFs as "other" QFs. "The Court specifically
declines to order Defendants 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 at *18. The court stated,
Under PURPA, a QF may bring judicial actions before FERC and
in federal court against state regulatory commissions to require the
implementation of PURPA's rules but not their application. 16
U.S.C. g 82aa-3(f), (h)(2XB). Thus, this Court will stop shorr of
granting the full relief Plaintiffs seek. lnstead, those additional
issues may be taken up in further proceedings, subject to the rulings
and constraints of this decision, if Plaintiffs choose to pursue such
further proceedings.
Id. The Commission's determination that Black Mesa and Franklin had not established LEOs was
not argued on appeal and therefore was not addressed by the court.
The court issued its decision on Friday January 17, 2020. On Saturday January 18,
2020,Black Mesa "reiterated" its previous request for an ESA with ldaho Power and resubmitted
a Schedule 73 application for the Black Mesa QF (now Black Mesa l) and submitted a Schedule
73 application with Idaho Power for Black Mesa 2. On Tuesday January 21,2020, (Monday was
a holiday), Idaho Power initiated IPC-E-20-02by filing a "petition to establish avoided cost rates
applicable to PURPA energy storage qualifying facilities." On March 17,2020, Black Mesa filed
the formal complaint that initiated this docket. On Octob er 2,2020, the Commission issued a final
order in IPC-E-20-02 that established an energy storage QF category and determined that energy
storage QFs are subject to a 100 kW project eligibility cap for 2}-year contracts and published
COMMISSION STAFF BRTEF 5
avoided cost rates. Order No. 34794. Energy storage QFs above the project eligibility cap are
entitled to Z-year contacts calculated by the IRP Method. /d.
THE FORMAL COMPLAINT
Black Mesa describes its QFs as two 20 MW-AC facilities that will be operated to
generate less than 10 aMW monthly. Formal Complaint at 3. Black Mesa states that they will use
a common interconnection to Idaho Power's grid, but their electric generating equipment will be
separated by at least a mile. Formal Complaint at3-4. In its FERC Form 556 for each QF, Black
Mesa indicates that the QF is an "Other renewable resource" not a wind or solar QF and then
further describes its QFs as an "energy storage system Qualiffing Facility." 3 Black Mesa has been
non-committal in its description of the renewable resoruces that will charge its energy storage QF.
In its Schedule 73 application, Black Mesa states, "The energy provided to Idaho Power will be
100% from the battery storage system. The system will be charged from a renewable energy
source such as wind, solar, biomass, etc. Initial designs consist of a PV solar facility to charge the
system." Formal Complaint, Exh.l, Exh. 5. Similarly, in the FERC Form 556 that Black Mesa
attached to its formal complaint for its 2020 Schedule 73 application, Black Mesa states,
The project consists of an energy storage system Qualiffing Facility
providing scheduled and dispatchable electricity in forward-looking
time blocks. The energy storage system that comprises the energy
storage Qualiffing Facility is designed to, and will, receive 100% of
its energy input from a combination of renewable energy sources
such as wind, solar, biogas, biomass, etc. The current initial design
utilizes solar photovoltaic (PV) modules mounted to single-axis
trackers to provide the electric energy input to the Qualiffing
Facility's battery storage system. The PV modules are planned to
be connected in series/parallel combinations to solar inverters, rated
approximately 2.5 MWac each, (subject to change). The proposed
electric energy storage Qualiffing Facility will consist of an electro-
chemical battery and will have a maximum power ou@ut capacity
of 20 MWac for a sustained time period of 5 - 60 minutes. The
Facility will consist of an alternating current (AC) to direct current
(DC) contol system. The Qualifuing Facility will be utilized to
provide the purchasing utility with pre-scheduled and dispatchable
AC energy within pre-determined time blocks. The sole source of
3 Black Mesa indicates that FERC "accepted the Form 556s." Formal Complaint at 4. But FERC Form 556s are self-
certifications that are not reviewed by FERC when submitted. Form 556 itself it states, "Note: a notice of self-
certification does not establish a proceeding, and the Commission does not review a notice of self-certification to
verifu compliance." Formal Complaint, Exh. I at 7. A QF can elect to pay a fee and have FERC cedfu the QF if it
desires pursuant to 18 C.F.R. S 292.207(b).
COMMISSION STAFF BRIEF 6
electric power and energy provided to the purchasing utility will be
the electro-chemical reaction giving rise to the discharge of electric
power and energy by the battery. In turn, the sole direct source of
energy input provided to the battery Facility will be, as described
above, renewable sources.
Formal Complaint, Exh. 5, p.16.
Black Mesa asserts that Black Mesa 1 and Black Mesa 2 are each entitled to 2}-year
contracts at the published avoided cost rates for "other" QFs in effect on the date it filed its
complaint. Formal Complaint at 14. Specifically, Black Mesa elected the non-levelized, non-
fueled published avoided cost rates for "other" QFs. Id. Black Mesa further alleges that it is
entitled to the
non-rate terms and non-term-length contract provisions in the PPA
unilaterally executed by Black Mesa for the Black Mesa [eFs],
submitted to Idaho Power on or about January 24,2020; or, should
Idaho Power object to any such contract provisions, such other
contract provisions as the Commission determines, within the
bounds of its lawful discretion, to be just and reasonable.
Id. at 15.
under the commission's J,':".#t';l, ,r*ro, because there is no signed
contract, the relevant question is whether Black Mesa submitted a meritorious complaint. A
meritorious complaint, as defined by Idaho case law, is one that suffrciently alleges that the eF is
mature and demonstrates that the QF would have a contract but for the actions of the utility.
[B]efore a developer can lock in a certain rate, there must be either
a signed contract to sell at that rate or a meritorious complaint
alleging that the project is mature and that the developer has
attempted and failed to negotiate a contract with the utility; that is,
there would be a contract but for the conduct of the utility.
Rosebud Enterprises, Inc. v. Idaho Public Utilities Comm'n, l3l Idaho 1 (lgg7); see also A.W.
Brown Co.,Inc. v.Idaho Power Co.,l2l Idaho 812, 815 (1992) (stating, "[B]efore a eF can lock-
in a certain rate, there must be a signed contract to sell at that rate or a meritorious complaint
alleging that the project was mature and that the developer had attempted, and failed, to negotiate
a contract with the utility."); see also Grouse Creek,l55 Idaho at l2g1.
When artalyzingwhether the QF would have a contract but for the actions ofthe utility,
the Commission and the Idaho Supreme Court have examined whether the QF unconditionally
COMMISSION STAFF BRIEF 7
obligated itself to sell to the utility. Staff believes it is also appropriate to analyze whether Idaho
power complied with Schedule 73 when determining whether the QF would have a contract but
for the actions of the utility. Similarly, Schedule 73 provides guideposts for determining whether
the project is mature by requiring a Commission determination that the QF can deliver energy
within 365 days.
A. Did Black Mesa Unconditionalty Obligate Itself to Perform?
Under Idaho's implementation of PURPA, a LEO requires reciprocal obligations. The
utility is obligated to purchase the energy and capacity from the QF because of the must-purchase
obligation of puRpA. 1g c.F.R. g 2g2.303(a). The QF too must demonstrate that it has incurred
an obligation. "Under either a contract or LEO there are reciprocal obligations: a QF
unconditionally commits itself to sell power to the utility and the utility commits to buy that power
from the eF." Order No. 32861 at 18, IPC-E-I1-15. The QF "must show that but for the actions
of the utility it was otherwise entitled to a contract [or LEO]. ln most cases this will entail making
a comprehensive binding offer[.]" A.W. Brown Co, Inc. v. Idaho Power Co.,12l Idaho 812,817,
828 p.2d 841,846 (lgg2). Similarly, in Rosebud Enterprises, the Court held that the QF had not
established a LEo because ooRosebud made its willingness to commit to 'a definite agreement'
expressly conditioned on its obtaining concessions from vendors, financiers, and suppliers." l3l
Idaho 1,6,g51p.2d521,526(lgg7). "A[LEO]isabindingcommitmenttodeliverpowertothe
utility. A LEO does not exist when the QF has not unconditionally obligated itself to provide
power 'and remains free to walk away from the transaction without liability."' Order No. 32861
at 20. .,While a QF is entitled to a PURPA contract or a legally enforceable obligation, its offer to
sell power to a utility must be firm, binding, and unconditional." Order No. 33419 at 16, IPC-E-
15-01,AVU-E-I5-01,PAC-E-15-01, citingorderNo.32974;seealsowhitehallwindv.Montana
Public Service Commission,34T P.3d1277 (Mont 2015).
Black Mesa's effort to meet this requirement was to unilaterally execute ESAs with
Idaho power by taking what it described as common contract terms found in similar ESAs, putting
inproject-specific information, and sending it to Idaho Power forcountersignature. When sending
the ESA to tdaho Power for counter signature, Black Mesa stated, "While our commitment,
evidenced by the enclosed contracts, is binding and enforceable, we are willing to discuss possible
amendments to these obligations to accommodate Idaho Power's load following and ancillary
service needs." Exh. 6, at 1. In response, Idaho Power stated "your attempt to unilaterally sign
COMMISSION STAFF BRIEF 8
contracts containing rates, tenns, and conditions, none of which Idaho power has seen before, and
send it in purporting to create a LEO is improper and does not comply with IpUC procedures and
tariffs nor with Idaho law." Idaho Power Answer and Motion to Dismiss, Exh. I (Email dated
February 3,2020).
Staff reviewed the ESAs sent by Black Mesa to Idaho Power. Nearly all the terms are
identical to published rate contracts recently approved by the Commission. Staff identified the
omission of liquid security deposit provisions that are included in similar contracts and the
insertion of terms describing the QF as an "Other" resource that are not included in similar
contracts. staffdetermined that the avoided cost rates included in the ESAs were the sAR Method
rates in effect in January 2020 to which Black Mesa claims it is entitled. At an annual level, the
rates were correct. However, Staffnotes that Black Mesa did not apply high load and light load
adjustments that are included in SAR Method rates and Black Mesa applied a season alization
factor of 74o/o rather than the Commission approved 73.5%. Additionally, Black Mesa applied an
Annual Factor that steps down its projected output over the years. Staff believes this is to
acknowledge battery degradation that results from the battery aging and being cycled. While this
may be a reasonable term, especially considering the QF has the opportgnity to adjust its forecasted
output monthly, it has not been approved by the Commission. If the Commission determines Black
Mesa established a LEO and is entitled to an ESA, Staffbelieves the Commission should consider
a similar term. A LEo does not require a fully executed contract but the terms of the submitted
ESA are useful inanalyzingwhether Black Mesa unconditionally obligated itself to sell energy to
the utility.
B. Did Idaho power compry with the Terms of schedure 73?
Idaho Power's responsibilities when negotiating with a QF are spelled out in Schedule
73. Schedule 73 sets forth the conditions and contracting procedures for a eF to obtain a pURpA
ESA with the Company in its Idaho service territory. In approving Schedule T3,theCommission
stated, "The intent of creating rules and timelines to guide the negotiations process for pURpA
projects, as discussed in great depth through the workshops, is to create more certainty for both
parties, to ensure that both parties are bargaining in good faith, and to prevent avoided cost rates
from becoming stale." Order No. 33197 at 5, IPC-E -14-24, citing Order No. 3304g at 5-6,AVU-
E-14-03. Schedule 73 was approved by the Commission following the latest LEO litigation and
its relevance to the LEo analysis has not been squarely addressed.
COMMISSION STAFF BRIEF 9
Under Schedule 73,theQF must submit an application for indicative pricrng containing
specific information laid out in the tariff. Sche&ile 73-4,1(a). If the company determines that
the QF has not provided sufficient information, the company shall notiff the QF within 10
business days of determined deficiencies. Schedule 73-5, 1(b). For QFs eligible for published
rates, as Black Mesa asserts it is, the Company must provide an indicative pricing proposal within
l0 business days of satisfactory receipt of information, or within 20 days for QFs above the project
eligibility cap. Schedule 73-5, 1(c). The indicative pricing proposal does not become binding
until either a full contract is executed or the Commission issues a final non-appealable
determination by the Commission that a LEO has arisen and that the QF can deliver its output
within 365 days of such determination. ScheduleT3-5,l(dxii)' The commission, in approving
Schedule 73 stated, ..Such pricing is not final or binding on either party and is intended to provide
indicative pricing early in the process to enable the QF developer to make preliminary
determinations regarding its proposed project.o' order No. 33197 at 2.
Schedule 73 requires "satisfactory receipt" of information prior to Idaho Power
providing an indicative pricing proposal. Schedule 73, l(c)' If, after receiving the indicative
pricing proposal, the QF desires the Company to draft an ESA, Schedule 73,I(e) requires the QF
to provide the Company with additional information including evidence of site control for the
entire conffacting term, anticipated timelines for completion of key milestones including: licenses,
funding, engineering and drawings, significant equipment purchases, construction agleements, and
signing of third-party transmission agreements, where applicable'
Once the eF submits this second round of information, the Company again has 10
business days to notifu the eF in writing if it has determined there is a deficiency. Schedule 73-6,
l(0. Following satisfactory receipt of the information, the Company has 15 business days to
provide the QF a draft ESA with a "comprehensive set of proposed terms and conditions'"
Schedule 73-6,l(g). Once again, this draft is not a binding proposal and is to serve as the basis of
subsequent negotiations. Id. The QF has 90 calendar days to review the draft ESA and either
indicate in writing that it is ready to execute an ESA or provide the Company with written
comments and proposals based on the draft ESA. Schedule 73-6, 1(h)' The QF's written intent to
accept or written comments and proposals are a prerequisite for the Company to negotiate or draft
a final ESA. Id.
COMMISSION STAFF BRIEF 10
During the ESA negotiations, Idaho Power must not "unreasonably delay negotiations,,
and shall "respond in good faith to any additions, deletions, or modification to the draft ESA.,,
Schedule 73-7 l(i. Idaho Power may request to visit the site of the proposed eF and shall update
its pricing proposals "at appropriate intervals to accommodate any changes to the Company,s
avoided cost calculations, the proposed [QF] or proposed terms of the draft ESA[,]', and include
revised terms, standards, or requirements, and may request"arry additional information from the
[QF] necessary to finalize the terms of the ESA and to satisfy the Company,s due diligence with
respect to the [QF]." 1d.
Based on the record, Idaho Power never provided Black Mesa with indicative pricing.
ln response to Black Mesa's 2017 Schedule 73 application, Idaho power filed a petition for
declaratory order. Following Black Mesa's 2020 Schedule 73 application (and the district court
order in Franklin), the Company submitted a petition to establish an energy storage eF category.
Idaho Power also identified two alleged deficiencies in Black Mesa's 2020 Schedule 73
applications. First, Idaho Power stated,
ln accordance with Schedule 73 Section 1.b., the Applications aredeficient regarding Section l.a.iv., which requires the Schedule ofestimated tQF] electric output, in an 9,760-ho* electronic
spreadsheet format. The schedule of estimated deliveries provided
with your Applications appear to have the same output shaie as thatofa solar project.
Idaho Power Answer and Motion to Dismiss, Att. 1, E-Mail dated Febru ary 3, 2020. Second,
Idaho Power also found Black Mesa's projected contribution to the grid in July to be improbable
and therefore a deficiency.
The form 556 documents provided with your Applications state,'The project consists of an energy storage system-[eF] providing
scheduled and dispatchable electricity in for*ara-iooking tim"e
blocks. . . The proposed electric energy storage [eF] will "oiri.t of
an electro-chemical battery and will have a **i-u- power output
capacity of 20 MWac for a sustained time period of 5 - 60 minutes.,However, based on the generation profile ,.rb-itt"d *itt yo*Applications, the battery storage project will be capable ofproducing on average 9l-95% of its nameplate capacity each hourover a continuous 7-hour period in July. In addition, there are
several days identified in July that the battery storage project will becapable of providing its full output (20 MWac) over continuous 9_
hour periods. Please provide an hourly generation profile consistent
COMMISSION STAFF BRIEF ll
with the capability of your proposed battery storage facility that
representsthegenerationoutputyouintendtodeliver.
.Id. (emphasis added).
Idaho power's reference to a stated output duration of 5 - 60 minutes appears to be
taken from Black Mesa's statements for Black Mesa 2 in the FERC Form 556 included for that
project. In the Schedule 73 application for Black Mesa l, Black Mesa states, "The proposed
electric energy storage [QF] will consist of an electro-chemical battery and will have a maximum
power output capacity of 20 MWac for a sustained time period of 5 - 240 minutes." Idaho Power
Answer and Motion to Dismiss, Att.2 (E-Mail from Brian Lynch dated January 18,2020 3:26
pM). Similarly, in its FERC Form 556 included with its Schedule 73 application for Black Mesa
1, Black Mesa states, "The project will provide scheduled, dispatchable power output in forward
looking time intervals ranging from 5 - 240 minutes pendinq final system design' ' ' '" Id'
(emphasis added). In the Schedule 73 application for Black Mesa 2, Black Mesa makes an
identical Schedule 73 statement regarding the duration of its output capacity, of 5 - 240 minutes'
Idaho power Answer and Motion to Dismiss, Att.2 (E-Mail from Brian Lynch dated January 18,
Z02O l:41pM). However, in the FERC Form 556 included for Black Mesa 2, it states, as quoted
by Idaho Power, "The proposed electric energy storage [QF] will consist of an electro-chemical
battery and will have a maximum power output capacrty of 20 MWac for a sustained time period
of 5 - 60 minutes." Id. (emphasis added).
In response to Idaho Power's assertion of deficiencies, Black Mesa responded on either
February 4 or February 5,2020.4 Black Mesa asserts that its response "put the 'ball back into
Idaho power,s court' to either recognize that the deficiency had been addressed or to again allege
another (or continuing) deficiency in the Black Mesa Schedule 73 Application. This it did not do'"
Black Mesa Motion for Summary htdgmentat22'
In summary, the Company did not provide an indicative pricing proposal. Instead,
Idaho power alleged deficiencies and petitioned the Commission to prospectively establish an
energy storage category of QFs within Idaho's implementation of PURPA' Black Mesa responded
4 E-Mail from Idaho power to Brian Lynch dated February ls,z}zo,acknowledges a February 5,2020letter sent by
Black Mesa to Idaho power. Idaho Power Answer and Motion to Dismiss at Att. 1. The Declaration of Brian Lynch
references a February +, ZOZO response to Idaho Power's statements of deficiencies. The actual response does not
appear to be on the record at this time.
COMMISSION STAFF BRIEF t2
to the deficiencies (the contents of the response not appearing on the record at this time), but didn't
subsequently receive confirmation from the Company that the deficiencies were addressed.
C. Is the Project Mature?
The analysis of whether the project is mature overlaps with the analysis of whether the
QF would have a contract but for the actions of the utility because the QF must be mature in order
to demonstrate that it is ready, willing, and able to deliver energy or capacity to the utility. In
Empire Lumber Co. v. Washington Water Power Co.,the Court stated,
We deem it clear that the intent of PURPA is not to require an
electric utility company to enter into a contract to purchase electrical
power from an entity which in essence only desires to obtain an
option to sell some amount of electrical power to be generated at
some plant of unknown size or capacity.
114 Idaho l9l,193-94,755 P.2d 1229,1231-32 (1987). ln Empire Lumber, the Court upheld a
Commission determination that the QF had not established a LEO because salient facts were still
unsettled such as the capacity and location of the proposed facility at the time the QF filed its
complaint with the Commission. ln A.W. Brown, the Court repeated the statement that PURPA
requires more detail from a QF and also found that the QF was not adequately developed to create
a LEO. A.W. Brown, 121 Idaho 812,817,828 P.2d 841,846 (1992). Schedule 73 requires the
Commission to determine that the QF can deliver its output within 365 days of a Commission
determination that the QF established a LEO. Schedule 73-5, 1(d).
From January 18,2020, when Black Mesa filed its Schedule 73 application with Idaho
Power, the nameplate capacity and location of Black Mesa I and Black Mesa 2 have been
consistent. However, Black Mesa has made numerous statements in its Schedule 73 applications
and FERC Form 556's that characteristics of its facilities are "pending final system design" or
reference the "current initial design." Black Mesa Formal Complaint, Exh. 5, p.1, 3, 16.
Additionally, in the ESAs submitted by Black Mesa to Idaho Power, Black Mesa lists its First
Energy Date as May 1, 2023 and its Operation Date as June I,2023. Its Schedule 73 applications
likewise indicate the projects will come online in June 2023. However, Black Mesa alleges in its
complaint that it would be able to produce energy within 365 days and reiterated such in the
Declaration of Brian Lynch. Declaration of Brian Lynch at fl 28. The Declaration of Brian Lynch
describes the development activities that Black Mesa has continued to pursue including site
control, interconnection, procurement, and permitting. Id. atl23 -27.
COMMISSION STAFF BRIEF 13
CONCLUSION
The Commission must determine whether Black Mesa I and Black Mesa 2 were mature
as of March 17,2020, when Black Mesa submitted its formal complaint. Case law states that the
QF must allege that it is mature and Schedule 73 states that the Commission must determine that
the QF can provide energy within 365 days of a final non-appealable Commission determination
that the QF has established a LEO. The Commission must also determine whether Black Mesa
would have a signed contract but for the actions of the utility. In determining whether Black Mesa
would have a contract but for the actions of the utility, the Commission must determine whether
Black Mesa unconditionally obligated itself to sell energy to Idaho Power, or whether it remained
free to walk away. Additionally, Idaho Power's compliance or non-compliance with Schedule 73
is instructive in determining whether Black Mesa would have a contract but for the actions of the
utility.
Respectfully submitted this 1lth day of January 2021.
P r(
Edward J
Deputy Attorney General
COMMISSION STAFF BRIEF t4
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS I ITH DAY OF JANUARY 2021,
SERVED THE FOREGOING COMMTSSTONSTAFFBRTEF, IN CASE NO. IPC-E-20-17,
BY E-MAILING A COPY THEREOF, TO THE FOLLOWING:
DONOVAN E WALKER
REGULATORY DOCKETS
IDAHO POWER COMPANY
PO BOX 70
BOrSE tD 83707-0070
E-MAIL: [e-mail]
PETER J RICHARDSON
GREGORY ADAMS
RICHARDSON ADAMS
5I5 N 27TH STREET
BOISE ID 83702
E-mail: [e-mail]
gree@richa"rdsonadams. comdockets@ idahopower. com
|(rn;Aftravlt'tV
Keri J. Hawfer
Legal Assistant
COMMISSION STAFF BRIEF 15