20210121Rebuttal Brief.pdf

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Peter J. Richardson (lSB No. 3195)
Gregory M. Adams (lSB No. 7454)
Richardson Adams, PLLC
515 N. 27th Street
Boise, Idaho 83702
Telephone: [phone]
Fax: [phone]
peter@richardsonadams. com
greg@richardsonadams. com
BLACK MESA ENERGY, LLC
Complainant,
Vs.
IDAHO POWER COMPANY,
Defendant.
..,: .i,:.ii i i EH S: LB
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Attorneys for Black Mesa Energy, LLC
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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Case No. IPC-E-2O-17
BLACK MESA ENERGY, LLC'S
REBUTTAL BRIEF IN SUPPORT OF
ITS MOTION FOR SUMMARY
JUDGMENT
I. INTRODUCTION
COMES NOW, Black Mesa Energy,LLC ("Black Mesa") and respectfully lodges its
Rebuttal Brief in Support of its Motion for Summary Judgment in response to the briefs filed by
Idaho Power Company ("Idaho Power" or the "Company") and the Staff of the Idaho Public
Utilities Commission ("Staff') pursuant to that Notice of Briefing Schedule issued in Order No.
34849 by the Idaho Public Utilities Commission ("Commission'o or "IPUC").
Although, the Commission's Staffdid not take a position either opposing or supporting
Black Mesa's Motion for Summary Judgment, Black Mesa takes this opportunity to correct a
couple of misperceptions expressed in Staff s Brief.
Idaho Power's Brief, on the other hand, warrants substantive rebuttal. Although it is
replete with forcefully asserted (albeit erroneous) statements of both law and fact, it fails to
identify any facts that actually contest the Black Mesa's projects'entitlement toZ}-year contract
BLACK MESA ENERGY, LLC'S REBUTTAL BRIEF IN SUPPORT OF ITS MOTION FOR
SUMMARY JUDGMENT
IPC-E-20-07 _ PAGE I
terms utilizing published avoided cost rates applicable to "other" qualifying facilities ("QFs")
under the Commission's implementation of the Public Utility Regulatory Policies Act of I978
("PURPA"). Idaho Power's legal arguments are equally unpersuasive. Idaho Powsr's attempts
to resuscitate the losing battle that it (and this Commission) litigated in Franklin Energt Storage
v. Kjellander.r Although the name of the QFs may have changed (Franklin to Black Mesa),
should Idaho Power prevail here, then all of the facts from the Franklin ligation will back on the
table in this docket. Simply put, ldaho Power invites this Commission to disregard the lessons
leamed in the Franklin litigation with respect to its invited intrusion into an arena reserved
exclusively to the Federal Energy Regulatory Commission ("FERC").
Nothing in either Idaho Power's or Staff s briefs offer any justification for this
Commission to do anything other than issue an order granting summary judgment in Black
Mesa's favor and declaring that Black Mesa has formed two legally enforceable obligations: (l )
committing Idaho Power to purchase the net output of the Black Mesa Energy I storage QF for a
2}-year term of power sales utilizing the Commission's published avoided cost rates for "other"
facilities in effect on the date of the Complaint; and (2) committing ldaho Power to purchase the
net output of the Black Mesa Energy 2 storage QF for aZ0-year term of power sales utilizing the
Commission's published avoided cost rates for "other" facilities in effect on the date of the
Complaint.
II. ARGUMENT
There is no material dispute of fact that the Black Mesa QFs each created a legally
enforceable obligation ("LEO") to sell energy and capacity to Idaho Power pursuant to the
I Franklin Energt Storage One, LLC v. Kjellander, Case No.: I:18-cv-ffi236-REB, 2020
U.S. Dist. LEXIS 8892 (Jan. 17,2020).
BLACK MESA ENERGY, LLC'S REBUTTAL BRIEF TN SUPPORT OF ITS MOTION FOR
SUMMARY JUDCMENT
IPC-E-20-07 _ PAGE 2
Commission's implementation of PURPA for "Other" QFs entitled to published rates no later
than the date of the complaint, March 17,2020. Idaho Power and the Staff have not refuted that
as of that date, and indeed up until Order No. 34794 was issued on October 2,202O, the
Commission's implementation of PURPA entitled such energy storage QFs to the published rates
for "Other" facilities, such as the Black Mesa QFs, sized up to l0 aMW. As explained in Black
Mesa's Motion for Summary Judgment, the Black Mesa QFs are entitled to LEOs under any
reasonable application of the applicable legal standards. The Commission should therefore grant
summary judgment in Black Mesa's favor.
A. The District Court's Decision in Franklin Instructs the Appropriate Commission
Treatment of the 5'Other" Status of the Black Mesa QFs as of the Date the LEOs
Were Created.
It is important to clear the waters that Idaho Power attempts to roil with respect to exactly
what the federal court did, and exactly what it did not do, in Franklin. Idaho Power asserts as
follows:
[T]he Federal District court specifically declined to order the IPUC to grant the proposed
Franklin battery storage QFs published rates and 20-year contracts as "other" eFs,instead referencing the'Jurisdictional divide" between state and federal authorities and
deforring to the Commission's determination as to proper avoided cost rates and
purchasing terms and conditions for proposed battery storage eFs.2
Idaho Power argues that the " 'jurisdictional divide' between the state and federal
authorities" appears to give this Commission complete discretion to determine the proper
avoided cost rates and contract terms and conditions for proposed battery storage QFs.3
Unfortunately, Idaho Power only tells half the story. The Commission's discretion is, in fact,
constrained by thc court's opinion in Franklin.
Idaho Power Answering Brief at p. 8
Idaho Power Answering Brief at p. 8
BLACK MESA ENERGY, LLC'S REBUTTAL BRIEF IN SUPPORT OF ITS MOTION FOR
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3
That constraint is found in the court's ruling that enjoined the IPUC from considering the
energy source input into the Franklin energy storage QFs for the purpose of classifying those
QFs in any way other than as energy storage QFs. The court stated:
Defendants [the three PUC Commissioners] are pennanently enjoined from enforcing or
applying either of such IPUC finat 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 'osolar 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 enorgy storage QFs.o
ldaho Power concedes (and it is largely true) that the Black Mesa projects are similarlys situated
to Franklin's projects with respect to seeking Schedule 73 PURPA contracts with ldaho Power.
Hence, the court's Franklin ruling, as Idaho Power suggests, is also instructive as to this
Commission's treatment of the Black Mesa projects.6 In FranHin, the court, prohibited the
Commission from applying any qualifying facility classification to the Franklin projects other
than as energy storage QFs. Therefore, under essentially "identicalo' facts, this Commission is
prohibited from failing to recognize Black Mesa's entitlement to claim to be energy storage QFs
and hence, an "other" QF under the Commission's implementation of PURPA. Schedule 73 then
requires that "other" QFs such as the Black Mesa "other" QFs are entitled to 20-year contracts
with published avoided cost rates and contract terms.
The'Jurisdictional divide" reference by the court and cited by ldaho Power may seem
a Franklin Energt Storage One, LLC,2020 U.S. Dist. LEXIS 8892 at *54.
5 Idaho Power uses the word "identical." See Idaho Power Answering Brief at p. 8.6 The court's decision is simply an articulation of the well settled principle of law that
FERC has exclusive jurisdiction as to the classification of qualifying facilities. Franklin Energt
Storage One, LLC,2020 U.S. Dist. LEXIS 8892, at*34 (stating all parties agree that "'[t]he
structure of PURPA and [FERC's] regulations, reflect Congress's express intent that [FERC]
exercise exclusive authority over QF status determinations.' lndep, Energy Producers Ass'n v.
Cal. Pub. Utils. Comm'n,36F.3d 848,856 (9th Cir. 1994)").
BLACK MESA ENERGY, LLC'S REBUTTAL BRIEF IN SUPPORT OF ITS MOTION FOR
SUMMARY JUDCMENT
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like two-way street, but in fact it is a complete prohibition that prevents the Commission from
reclassifying the Black Mesa Projects as anything other than energy storage QFs. It is true that
federal courts do not have the authority to order the Commission to order the application of
specific contract rates and terms to a specific QF, but such limitation exists purely because such
relief "involves the application of a state regulatory agency's rules to Plaintiffs as individual
petitioners.-7 Thattype of "relief is properly pursued before the IPUC," not the federal court.s
But this Commission, likewise, does not have the authority to question the Black Mesa projects,
QF status as energy storage QFs, which in turn qualifies the Black Mesa QFs to the ..other,, rates
under the implementation in effect at the time of LEos in this case.
The bottom line is that the Commission is constrained to applying its implementation
plan using the QF classification that Black Mesa choose in the self-certification process at
FERC, Idaho Power's brief correctly observed that federal courts defer "to the Commission's
determination as to proper avoided cost rates and purchasing terms and conditions.',e But, the
inevitable corollary to this Commission's ability to set avoided cost rates, is that this
Commission must accept, without alteration, the QF classifications that the Black Mesa projects
selected through FERC's QF certification processes.
B. Schedule 73 and the IPUC's Implementation of PURPA Established Black Mesa's
Entitlement to 20-Year Contracts at the Published Avoided Cost Rates at the Time
of Creation of the Black Mesa eFs' LEOs
Black Mesa classified its projects with FERC as energy storage QFs. Therefore, this
Commission has no other legal choice but to accept that classification when it applies whatever
7 Franklin Energy storage one, LLC,2020 u.s. Dist. LEXIS gg92 at *52.8 Id. at**52-53 (citing L\inding Creek Solar LLC, v. Peevey,293 F.Supp.3d 980, g93-gg4
(N.D. Cal. Dec.6, 2017)).e Idaho Power Answering Brief at p. 8.
BLACK MESA ENERGY, LLC'S REBUTTAL BRIEF IN SUPPORT OF ITS MOTION FORSUMMARY JUDGMENT
IPC-E-20-07 - PAGE 5
PURPA implementation plan it has adopted.r0 This Commission's implementation plan, at all
times relevant to Black Mesa's contract entitlement, is embedded in ldaho Power's Tariff
Schedule 73, which requires the Commission to treat the Black Mesa projects as "other" QFs that
are entitled to 20-year contract terms using published avoided cost rates.
The distinction between thc Commission's legitimate authority to set avoided cost rates
for different classes of QFs and the prohibition against the Commission actually determining
what class any particular QF falls into is the dynamic that is causing Idaho Power analyical
diffrculties. At no time when Black Mesa made its PURPA contract requests of ldaho Power,
and at no time when Black Mesa created its two LEOs, did the Idaho Commission have an
implementation plan specific to energy storage QFs. Instead, it had an implementation plan with
an eligibility determination set forth in Schedule 73 that provided:
Etieibilitv Cap means for all Qualifying Facilities except wind and solar Qualiffing
Facilities, 10 average megawatts in any given month. For wind and solar Qualifying
Facilities, "Eligibility Cap" means 100 kilowatts ("kW") nameplate capacity.ll
There is nothing ambiguous about the Commission's eligibility criteria for the three different
enumerated classes of qualifying facilities. Black Mesa, of course, is neither a wind nor a solar
qualifuing facility. tt bears repeating that for "all Qualifying Facilities except wind and solar"
the Commission set the Eligibility Cap at "l0 average megawatts in any given month."l2 This is
of course entirely consistent with the applicable Commission order implementing PURPA up
through the date of creation of the LEO in this case, and indeed even until October 2,2020,when
the Commission first implemented a storage-specific rate category different from the catch-all
l0
ll
t2
Franklin Energt Storage One, LLC,2020 U.S. Dist. LEXIS 8892, at *34.
Idaho Power's Schedule 73 at p. l.
Id.
BLACK MESA ENERGY, LLC'S REBUTTAL BRIEF IN SUPPORT OF ITS MOTION FOR
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IPC-E-20.07 _ PAGE 6
"other" rate category. | 3
Thus, Black Mesa was taking the only qvenue open toil pursuant to this Commission's
implementation of PURPA when it asked Idaho power to tender rates and contract terms and
conditions pursuant to Rate Option "4. Non-Levelized Non-Fueled Rates." That option provides,
in its entirety:
Non-Levelizgd Non-Fueled Rates. These rates shall apply to Qualifying Facility projects
at or below the Eligibility Cap when the Customer chooses to supply output inctuAing
energy and capacity under a contract based on Non-Levelized Avoided Cost Rates for
Non-Fueled Facilities. These rates shall apply to Facilities that do not use fossil fuels as
their primary fuel, and shall be fixed for the term. The rates are subject to a Seasonal
Factor, a Daily Shape Adjustment, and Integration Charges.
Black Mesa relied on the integrity of the Commission-approved tarift quoted above, when it
made its good faith requests for two separate contracts "based on Non-Levelized Avoided Cost
Rates for Non-Fueled Facilities" for its qualifuing facilities that are neither wind nor solar
quali fying facil ities.
Idaho Power apparently disagrees that it must comply with extant tariffs - even absent an
order granting it relief from those tariffs. It characterizes its position thusly:
Idaho Power has no obligation to blindly accept and acquiesce to any demand for rates
and purchase terms that a potential eF brings to Idaho power.la
The Company goes on to point out that: "The rstes and purchase terms are the exclusive
province of the IPUC to establish."ls The Commission did set the rates and purchase terms
when it adopted Schedule 73. Contrary to Idaho Power's assertion, Black Mesa does not rely on
Schedule 73 in some sort of bad faith game of "gotcha." Nor does it randomly assert just..any
dernand for rates." Black Mesa has never questioned the Commission's "exclusive province', in
t-l
l4
l5
.See Black Mesa Motion for Summary Judgment at pp. 8-15
Answering Brief at p. 10,
rd.
BLACK MESA ENERGY, LLC'S REBUTTAL BRIEF IN SUPPORT OF ITS MOTION FORSUMMARY JUDGMENT
IPC.E-20-07 - PAGE 7
setting avoided cost rates and contract terms. [n fact, quite the opposite is true - Black Mesa is
relying on the Commission's legitimate determinations as to Idaho Power's avoided cost rates
and contract terms. Black Mesa is simply requesting that Idaho Power stop hiding the ball and
comply with its tariff schedule 73 through which this Commission implements PURPA.
The crux of tdaho Power's opposition to the Black Mesa projects is that it simply does
not want to comply with the parameters of Schedule 73 -- Idaho Power argues that Schedule 73
is "incorrecf' and "harmful" and "not proper" and not "lawful" and that reliance on its terms is
nothing more than a "game of 'gotcha."' 16 The appropriate time for Idaho Power to question
the legitimacy of Schedule 73 was when the Commission was in the process of adopting that
tariff and not many years after the fact. Incredibly, Idaho Power makes the claim that it has the
unilateral authority to suspend the effectiveness ofits tariffschedules:
When a QF brings a demand to the utility under Schedule 73 that it is not entitled to, the
utility is not obligated to move forward by offering incorrect rates and contacts to that
QF. The Commission expects and demands that the utility not take actions that would be
harmful to its customers and expects the utility to bring questions regarding the lawful
rates and purchase terms of PURPA purchase to it for resolution. This is exactly what
Idaho Power did.r7
As pointed out in Black Mesa's Motion for Summary Judgment, the filed rate doctrine prohibits
just this type of unilateral, acl hoc disregard for the application of duly adopted tariffs. Most
decidedly, the Commission does not "expect and demand that the utility not take actions" that are
required in its tariffs. Indeed, it is illegal for a utility to "not take actions'o that are required in its
tariffs. A utility's intentional failure to comply with Commission-approved tariffs is a criminal
act for which fines and imprisonment are provided for under Idaho Code Sections 6l-706
l6
l7
Id atp. 12.
rd.
BLACK MESA ENERGY, LLC'S REBUTTAL BRIEF IN SUPPORT OF ITS MOTION FOR
SUMMARY JUDGMENT
IPC-E-20-07 _ PACE 8
through 6l-709. Black Mesa pointed out in its Motion for Summary Judgment that at all times
relevant to the creation of Black Mesa's LEO, the Commission had issued no order staying or
modifying the applicability of Schedule 73.18 Although, Idaho Power's response ignores this
fact, it is fatal to the Power Company's assertion that it has the unilateral ability to disregard the
requirements of that Tariff.
Idaho Power does not have some reserved mysterious esoteric obligation to protect
ratepayers from the application of its own tariffs whenever it believes that a particular tariff may
no longer be "proper." Indeed, there would be no need to have a public utility commission at all
if such cornplete discretion were allowed to be exercised by utilities. Idaho power is fully
empowered to seek temporary relief from its tariffs, but in this case it did not do so - leaving the
"other" rates available to the Black Mesa QFs until lawfully changed on October 2,202A.
Idaho Power is not challenging the applicability of Schedule 73 to the Black Mesa
projects. ldaho Power is actually challenging the very terms and foundational definitions in that
Schedule. There is no question that the Black Mesa projects meet and fully complied with all of
the definitional requirements in Schedule 73 and are therefore entitled to Option 4 Non-
Levelized Non-Fueled rates and a Z}-year fixed-price contract as provided for in that tariff,
Idaho Power's assertion that Black Mesa was not "entitled to" the Schedule 73 rates is an
argument that it wished to change Schedule 73's criteria for entitlement such that Black Mesa
would then (at some later time) become no longer entitled to that Tariff. This is evidenced by
Idaho Power's own argument:
The Commission expects and demands that the utility not take actions that would be
harmful to its customers and expects the utility to bring questions regarding the lawful
rates and purchase terms of PURPA purchases to it for resolution. This is exactly what
Idaho Power did in response to Black Mesa's demands. As soon a[s] [sic] practitalty
r8 Black Mesa Motion for Summary Judgment at p. 23.
BLACK MESA ENERGY, LLC'S REBUTTAL BRIEF IN SUPPORT OF ITS MOTION FORSUMMARY JUDGMENT
TPC-8.20-07 _ PAGE 9
feasibly, and within Schedule 73's initial ten-day response time, Idaho Power responded
to Black Mesa in writing that it did not agree that Black Mesa was eligible for the rates
and terms its [sic] had requested - and - that Idaho Power had additionally initiated
proceedings at the IPUC seeking its determination as to the proper rates and terms for the
QF's proposed purchase. le
But at the time Idaho Power initiated proceedings at the IPUC seeking its determination as to the
proper rates and terms for the QF's proposed purchase, the Commission already had a PURPA
compliant implementation plan applicable to Black Mesa QFs. Idaho Power was not asking the
Commission to implement a plan for energy storage QFs, it was asking the Commission to
change its implementation plan for energy storage QFs such that they would no longer be
eligible for 20-year fixed-price contracts. Idaho Power never bothered to explain why it believes
the Black Mesa projects are not entitled to the rates in the existing Schedule 73. Rather, it
argued that the existing Schedule 73 should be changed to ex post facto eliminate the ability for
the Black Mesa projects to their legitimate entitlement to 20-year fixed-price contracts.
C. Idaho Power Cannot Defeat Black Mesa's Ctaim to LEOs with ldaho Power's Non-
Sequitur Argument that It Did Not Refuse to Contract rYith Black Mesa.
In defensc against the LEO claim, tdaho Power incorrectly contends that it did not refuse
to contract with Black Mesa. Idaho Power asserts that it:
did not refuse to contract with Black Mesa. On both occasions alleged by Black Mesa
(2017 and2020) Idaho Power followed the procedure set forth in Schedule 73. . . . [O]n
both occasions [Idaho Power] filed a proceeding with the Commission to determine the
proper avoided cost rate and contract terms and conditions for propgsed battery storage
bni - also within the initial lO-day rosponse time of Schedule 73. 20
Nowhere in Schedule 73 is it provided that a proper response to a Schedule 73 request for a
contract is for the utility to file an application to terminate the applicability of Schedule 73.
re tdaho Power Answering Brief at p.12.70 ldaho Power Answering Brief at p.9; see also id. at p. l0 (stating that "'[daho Power did
not refuse to contract with Black Mesa").
BLACK MESA ENERGY, LLC'S REBUTTAL BRIEF IN SUPPORT OF ITS MOTION FOR
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Rather than o'contract with Black Mesa" ldaho Power initiated a proceeding with the express
intent of avoiding the requirement that it "contract with Black Mesa" as an "other" QF. No
matter how many times ldaho Power claims that black-is-white and up-is-down, and that it did
not refuse to contract with Black Mesa, Idaho Power's inconvenient reality is that black-is-black,
up-is-up, and ldaho Power has been in a continual state of refusal to contract with Black Mesa
since at least January 21,2020, when Black Mesa submitted its two Schedule 73 applications.
Idaho Power incorrectly asserts that the fact that it filed its application for a declaratory
ruling justifies its refusal to contact with Black Mesa. Idaho Power states:
The Commission has ruled that a reasonable dispute between the parties regarding
contract terms and conditions in the same context where the utility files the dispute with
the Commission for resolution, does not constitute intransigence or a failure to negotiate
on the part of the utility, and DoES NoT trigger the creation of a LEo. order No.
33785, p 12, Case No. IPC-E-17-01.21
There is no similarity between the "reasonable dispute" referenced by the Commission in Order
No. 33785 and ldaho Power's current refusal to contract with Black Mesa.
The faux22 dispute between Franklin and Idaho Power was a one-sided cosmetic
o'dispute" that was created by Idaho Power out of whole cloth, which is apparent from the
Commission's order that is cited by ldaho Power, where the Commission stated
Franklin further maintains that it has established a legally enforceable obligation (LEO)
requiring Idaho Power to purchase its energy. Franklin Comments at 17. However,
Franklin has failed to prove that Idaho Power impeded Franklin's ability to enter into
PURPA contracts. See ldaho Power, 155 Idaho at787 . To the contrary, Idaho Power
notified the battery storage facilities that the utility did not believe the projects were
entitled to 20-year, published rate contracts and requested the projects "supplement your
Applications with additional information that verifies eligibility for the requested rates
and terms, or modifu your Applications to request rates and terms that your proposed
projects may qualify for."
2t ldaho Power Answering Brief at p. 14. Emphasis in original.22 ldaho Power's belief that a tariff (as written) may no longer be in the public intertest
cannot reasonably be bootstrapped into a faux dispute over the applicability of its terms.
BLACK MESA ENERGY, LLC'S REBUTTAL BRIEF IN SUPPORT OF TTS MOTION FOR
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IPC-E.20-07 - PAGE II
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.23
Idaho Power created the "dispute" upon which the Commission hung its hat by responding to
Franklin that it needed "additional information'o in order to verify "eligibility for the requested
rates and terms."
No such dispute exists with respect to the Black Mesa contract requests. [n response to
the Black Mesa requests for contracts, Idaho Power skipped the pretense of a "dispute" and
simply asserted that Schedule 73 was not applicable while informing Black Mesa of its
application seeking a declaratory order -- effectively pulling Schedule 73 out from under the
Black Mesa contract requests. Idaho Power's response to ths Black Mesa request did not assert
a dispute as to the applicability of Schedule 73 to its projects. Schcdulc 73 is plainly written,
unambiguous and succinct. It is not suspectable to disputes as to its applicability. Idaho Power's
response to the Schedule 73 requests by Black Mesa provides, in part:
Regardless of the deficiency in your Applications,2a Idaho Power does not agree that your
proposed projects are eligible for published avoided cost Rate Option 4, Non-Levelized
Non-Fueled Rates, with a 2}-year contract term. [Reference to the Franklin litigation
omitted - which is discussed in detail infra.l
On January 2l,zDz},Idaho Power filed a petition with the Idaho Public Utilities
Commission to established avoided cost rates applicable to PURPA energy storage QFs
The outcome of the filed petition will determine the contract term and avoided cost
pricing methodology for which your proposed project may be eligible. ,See IPUC Case
No. IPC-E-2O-02.2s
21 Order No. 33785 atp. 12 (underscoring and parentheticals in original).24 The alleged deficiency was addressed by Black Mesa the very next business day to which
Idaho Power has never responded. See Declaration of Brian Lynch ISO Black Mesa's Motion
for Summary Judgment, at Exhibit I (Dec. ll,2020}2s ,See Idaho Power Motion to Dismiss, at Attachment No. I (containing February 3,2020,
letter from Michael Darrington to Brian Lynch).
BLACK MESA ENERGY, LLC'S REBUTTAL BRIEF IN SUPPORT OF ITS MOTION FOR
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Idaho Power did not bother to contrive a dispute this time. It simply asserted that it does not
agree that the projects are eligible under Schedule 73 andthat it was filing an application to
"establish avoided cost rates applicable to PURPA energy storage QFs." Not mentioned is the
fact that the Commission's Schedule 73 already had established avoided cost rates for energy
storage QFs to which the Black Mesa projects were entailed.
Idaho Power is asking the Commission to engage in the prohibited practice known as
"retroactive ratemaking" which is a universally prohibited ratemaking construct. Idaho law
recognizes a general prohibition on retroactive ratemaking. The tdaho Supreme Court has
explained:
I.C. $ 6l-502 provides that:
Whenever the commission . . . shall find that the rates . . . are unjust,
unreasonable, discriminatory or preferential, . . . or that such rates . . . are
insufficient, the commission shall determine the just, reasonable or sufficient rates
. . . to be thercafter observed. . . .
This section provides only prospective relief.26
ldaho Power's attempt to impose the results of its declaratory ruling request relative to the
treatment of energy storage QFs in a retroactive fashion runs afoul of this well-established
principle prohibiting retroactive ratemaking and should not be tolerated by this Commission.
D. StafPs Brief ldentifies No Reason to Deny Black Mesa's Entitlement to LEOs.
Nothing in Staff s Brief contradicts Black Mesa's LEO claims. The Commission Staff,
in its brief, aptly notes as follows:
Under ldaho's implementation of PURPA, a LEO requires reciprocal obligations. The
utility is obligated to purchase ... because ofthe must-purchase obligations of PURPA.
26
(1e84).
utah Power & Light vs. Idaho Pub. utils. comm'n,lo7 Idaho 47,52, 685 p.2d 276,2gl
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[citation omitted] 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 QF." Order No. 32861 at 18, IPC-E-I l-15.27
Reciprocity of obligation can, of course, bc challenging to dcmonstrate when one part to the
reciprocal arrangement is noncompliant.
Idaho Power has been noncompliant in that it refused to comply with its obligation to
respond to Black Mesa's Schedule 73 overtures with the required indicative pricing and contract
terms. Staff s agrees:
Based on the record, tdaho Power never provided Black Mesa with indicative pricing. tn
response to Black Mesa's 2017 Schedule 73 application ldaho 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 QF category.28
Black Mesa was challenged by the failure of the supposed reciprocating party (Idaho Power) to
take the next step in the Schedule 73 "dance" that has been carefully and thoughtfully
choreographed by the Commission. Black Mesa's good faith compliance with Schedule 73
should, under any reasonable interpretation of the Commission's LEO precedent, entitle Black
Mesa to its requested contracts and terms.
Black Mesa did not passively wait for the (as of yet still to be received) responses from
Idaho Power to its Schedule 73 requests. It took the unusual and unrequired step of actually
executing power purchase agreements that were drafted to almost exactly copy recently approved
power purchase agreements executed by Idaho Power and approved by the Commission. In
transmitting those executed power purchase agreements, Black Mesa made it clear that it was
Commission StaffBrief at p. 8,
Id. atp.ll.
BLACK MESA ENERGY, LLC'S REBUTTAL BRIEF IN SUPPORT OF ITS MOTION FOR
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27
28
unequivocally and unconditionally committing itself to deliver power to the utility.2e In sum, all
of the salient facts for delivery of the output from the Black Mesa projects were unequivocally
settled at the time Black Mesa made its Schedule 73 requests and also at the time Black Mesa
tendered executed contracts to ldaho Power. Deficiencies that tdaho Power alleged were
immediately addressed by Black Mesa and the output profile of the projects were confirmed.
Staff highlights the requirement for a QF to obtain commercial operation within 365 days
of the Commission's determination of a LEO. Schedule 73 requires that the project be able to
deliver "its electrical output within 365 days of such determination" with such determination
being defined as follows:
The indicative pricing proposal provided to the Customer pursuant to Section l.c
will not be final or binding on either party. Prices and other terms and conditions will
become final and binding on the parties under only two conditions:
ii. The applicable prices that would apply at the time a complaint is filed by a
Qualiffing Facility with the Commission shall be final and binding upon approval of
such prices by the Commission and a final non-appealable determination by the
Commission that:
(a) a "legally enforceable obligation" has arisen and, but for the conduct of the
Company, there would be a contract, and
(b) the Qualifying Facility can deliver its electrical output with 365 days of such
determination.3o
But Black Mesa's LEO claims are consistent with this 365-day requirement. Staffpoints
out that the contacts tendered by Black Mesa as well as the Schedule 73 applications all
identified the first energy date as May l, 2023. Staff continues by intimating that there may bc a
disconnect between the May 2O23, date, and the Declaration of Mr. Lynch in which he states that
2e .See Idaho Power's Answer and Motion to Dismiss, at Attachment No. 3 (containing
January 24,2020, transmittal letters from Black Mesa to Idaho Power, which states: "Black
Mesa here by enters into a legally enforceable obligation to provide such capacity and energy to
Idaho Power...")30 ldaho Power's Schedule 73 atp.5.
BLACK MESA ENERGY, LLC'S REBUTTAL BRIEF IN SUPPORT OF ITS MOTION FOR
SUMMARY JUDGMENT
IPC-E-20-07 - PAGE I5
the projects will be able to produce energy withing 365 days of the Commission's final
determination. Of course, the two dates (Schedule 73 date) and the on-line date after a
successful complaint procedure are not equivalent. Had ldaho Power complied with its
obligations under Schedule 73, the May 2023 date would control as it would have been the
mutually agreed on-line date. However, Black Mesa, having to resort to the Commission's
established complaint process, is obligated to adhere to the accelerated on-line date required in
that process - which Black Mesa has committed to do. Black Mesa made good faith efforts to
comply with Schedule 73 and Black Mesa reasonably assumed Idaho Power was going to
respond in good faith as well, in which case the May 2023 date would be in the power purchase
agreement. Idaho Power's bad faith actions required Black Mesa to file its complaint, which in
turn forces Black Mesa to commit to meet the Commission's accelerated online date. Any
intimation that Black Mesa's commitment was somehow unsettled or contingent because of the
365 day on-line requirement is therefore misplaced.
Staff also noted that the power purchase agreements submitted by Black Mesa omitted
certain provisions that Staff submits should be included the agreements, but any such
discrepancy does not foreclose the creation of the LEO claims. As Staffacknowledged, the LEO
claims are not contingent upon the Commission approving the precise non-rate and non-term-
length provisions of the written agreements submitted by Black Mesa. Each LEO claim in the
Complaint requests the Commission order use of the non-rate terms and non-term-length contract
provisions proposed in the power purchase agreement unilaterally executed by Black Mesa for
the applicable energy storage QF or such other non-rate and non-term-length provisions as the
Commission determines, within the bounds of its lawful discretion, to be just and reasonable.3l
3r Black Mesa's Complaint at pp. l3-15.
BLACK MESA ENERGY, LLC'S REBUTTAL BRIEF IN SUPPORT OF ITS MOTION FOR
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IPC-E-20.07 - PAGE 16
The Complaint reflects the reality that the precise non-ratc provisions of the Commission-
approved PURPA contracts are not all identical, and it would not be possible to correctly guess
which provisions would ultimately be considered reasonable for the contracts proposed here.
Staff specifically recommends that any agreements contain certain liquid security deposit
requirements in the agreements and use of standard seasonal a-djustments to the published rates.32
Black Mesa agrees that inclusion of the liquid security deposit provision and seasonal adjustment
provisions suggested by Staff is a provision within the Commission's discretion to order to be
included in the final executed documents, and therefore omission of those items from the
documents to date does not foreclose the creation of the LEOs.
Finally, Staffstates that certain evidence was missing from the record with respect to
Black Mesa's response to tdaho Power's contention that Black Mesa failed to properly submit an
annual, hourly output profile with its Schedule 73 application.l3 The Declaration of Brian Lynch
attested as follows
On behalf of Black Mesa, I responded to Idaho Power via letter dated February 4,Z0ZO,
to clarify for Idaho Power that the Schedule 73 requests for the Black Mesa Energy I
storage QF and the Black Mesa Energy 2 storage QF did in fact contain 8,760 electrical
output profile estimates for thc proposed facilities, and that such hourly generation
profiles are consistent with the capability of the proposed battery storage facilities as
described in the FERC Form 556s for such facilities. I also explained that Black Mesa
did not agree with ldaho Power's legal assertions made in Idaho Power's letter. My letter
dated February 4,2020, is attached hereto as Exhibit I to this Declaration. 3a
Staff notes that Idaho Power has characteizedthis letter dated Febru ary 4,2020, as a
correspondence made on February 5,2020, and suggests that the record may be missing an
32
JJ
34
19.
Staff Brief at p. 9.
Staff s Brief at pp. l2-13.
Declaration of Brian Lynch ISo of Black Mesa's Motion for Summary Judgment, at fl
BLACK MESA ENERGY, LLC'S REBUTTAL BRIEF IN SUPPORT OF ITS MOTION FOR
SUMMARY JUDGMENT
[PC-E-20-07 - PACE l7
additional correspondence. The discrepancy is due to the fact that Mr. Lynch send the email
attaching his letter on February 5,2A20, and Black Mesa is submitting a Supplemental
Declaration of Brian Lynch to include in the record that email dated February 5, 2020.35 The
email dated February 5,2020, does not add anything substantive to the analysis, but the record is
now complete on the point.
III. CONCLUSION
Neither Idaho Power's nor StafPs briefs in this matter offer any valid reason to reject
Black Mesa's request that this Commission issue an order granting summary judgment in its
favor and declaring that Black Mesa has formed two legally enforceable obligations: (t)
committing Idaho Power to purchase the net output of the Black Mesa Energy I storage QF for a
2}-year term of power sales utilizing the Commission's published avoided cost rates for "Other"
facilities in effect on the date of the Complaint; and (2) committing ldaho Power Company to
purchase the net output of the Black Mesa Energy 2 storage QF for a}O-year term of power sales
utilizing the Commission's published avoided cost rates for'oOther" facilities in effect on the
date of the Complaint.
3s Supplemental Declaration of Brian Lynch ISO of Black Mesa's Motion for Summary
Judgment, at !J 5 & Ex. l.
BLACK MESA ENERGY, LLC'S REBUTTAL BRIEF IN SUPPORT OF ITS MOTION FOR
SUMMARY JUDGMENT
IPC-E-20-07 _ PAGE 18
DATED this 21st day of January 2021
RICHARDSON ADAMS, PLLC
Peter J. Richardson (ISB No. 3195)
Gregory M. Adams (ISB No. 7454)
Richardson Adams, PLLC
515 N.27th Street
Boise,Idaho 83702
Telephone: [phone]
Fax: [phone]M
peter@richardsonadams. com
greg@ichardsonadams. com
Attorneys for Black Mesa Energy, LLC
BLACK MESA ENERGY, LLC'S REBUTTAL BRIEF IN SUPPORT OF ITS MOTION FOR
SUMMARY JUDGMENT
IPC-E-20-07 - PAGE 19
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 21st of January 2O2l,a true and correct copy of the within and
foregoing BLACK MESA ENERGY'S REBUTTAL IN SUPPORT OF ITS MOTION FOR
SUUfUAny JUDGMENT in Docket No. IPC-E-20-17 was serued, pursuant to Commission
Order No. 34602, exclusively via electronic mail to:
Idaho Public Utilities Commission
Jan Noriyuki, Secretary
Edward Jewell, Deputy Attorney General
ian.noriyuki@ouc. idaho. gov
Edward [e-mail]. eov
Idalro Power Company
Donovan Walker, Attorney for tdatrc Power Company
dockets(@ idahooower. com
[e-mail]
By:
Peter J. Richardson (ISB No. 3195)
BLACK MESA ENERGY, LLC'S REBUTTAL BRIEF IN SUPPORT OF ITS MOTTON FOR
SUMMARY JUDGMENT
IPC-8.20-07 _ PAGE 20