20150910Petition for Reconsideration.pdf

Peter J. Richardson (lSB No. 3195)
Gregory M. Adams (lSB No. 7454) .. ., I .r , .,. {: ,1
Richardson Adams, PLLC
515 N. 27th Street
Telephone: [phone]
Fax: [phone]
peter@richardsonadams. com
gr e g@richard s onadam s. c om
Attorneys for the J. R. Simplot Company and
C learwater Paper Corporation
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
TN THE MATTER OF IDAHO POWER
COMPANY'S PETITION TO MODIFY TERMS
AND CONDITIONS OF PURPA PURCHASE
AGREEMENTS
CASE NO. IPC-E-I5-OI
IN THE MATTER OF AVISTA CORPORATION'S )
PETTTTON TO MODIFY TERMS AND ) CASE NO. AVU-E-15-01
CONDITIONS OF PURPA PURCHASE )AGREEMENTS )
IN THE MATTER OF ROCKY MOUNTAIN )
POWER COMPANY',S PETITION TO MODIFY ) CASE NO. PAC-E-15-03
TERMS AND CONDITIONS OF PURPA )
PURCHASE AGREEMENTS ; PETITION FOR RECONSIDERATION OF
5iBi*,,.jYJ.'?I"uoS'SS"offi,Jf '
Pursuant to Rule of Procedure ("RP"; 331 of the Idaho Public Utilities Commission
("Commission" or "IPUC"), IDAPA 31.01.01.331.01, the J. R. Simplot Company ("Simplot")
CASE NOS. IPC-E-I5-OI, AVU-E-I5-OI, PAC-E-I5-03
PETITION FOR RECONSIDERATION OF THE J.R. SIMPLOT COMPANY AND THE
CLEARWATER PAPER CORPORATION
PAGE I
and the Clearwater Paper Corporation ("Clearwater") hereby respectfully request reconsideration
of the Commission's Order No. 33357 (or the'oOrder"). The Order modified the IPUC's
implementation of the mandatory purchase provisions of the Public Utility Regulatory Policy Act
of 1978 ("PURP4") by reducing the term of PURPA contracts containing non-standard rates
from 20 years to two years for all ldaho utilities under the IPUC's rate-setting jurisdiction. The
new two-year contract term fails to provide each qualifuing facility ("QF") with the option to sell
its energy and capacity at a fixed price for such energy and capacity calculated at the time the QF
obligates itself to sell its output to an Idaho utility, as required by l8 C.F.R. 5 292.304(dx2xii)
and related regulations of the Federal Energy Regulatory Commission ("FERC"). Thus, as
explained below, Simplot and Clearwater respectfully request that the Commission reconsider its
determinations in the Order, and replace the Order with another order or rule that lawfully
implements PURPA.
I.
PROCEDURAL AND FACTUAL BACKGROUND
Under the IPUC's implementation of PURPA, standard rates are available for wind and
solar QFs with nameplate capacity of up to 100 kilowatts ("kW") and any other QF resource type
up to 10 average monthly megawatts ('oMW" and "aMW"). QFs ineligible for standard rates
must negotiate a rate based upon a computer modeling methodology referred to as the integrated
resource plan methodology (or "IRP Methodology").
Idaho Power Company ("Idaho Power") commenced this proceeding with its petition
requesting that the Commission reduce the contract length for PURPA contracts containing non-
standard rates from 20 years to two years. Shortly thereafter, Rocky Mountain Power and Avista
CASE NOS. IPC-E-1 5-01, AVU-E-I5-01, PAC-E-I5-03
PETITTON FOR RECONSIDERATION OF THE J.R. SIMPLOT COMPANY AND THE
CLEARWATER PAPER CORPORATION
PAGE 2
Corporation ("Avista") filed similar petitions seeking to limit the contract terms of PURPA
contracts applicable to them. Simplot and Clearwater intervened in this proceeding because
shortening PURPA contract terms materially limits their rights to utilize PURPA to sell
electricity at wholesale to Idaho utilities.
Simplot operates a 15.9 MW QF that has the capability to generate in excess of l0 aMW
at its Pocatello fertilizer plant. This QF produces electricity from waste heat that is produced in
an exothermic reaction in the production of sulfuric acid at the fertilizer plant, and additionally
uses the thermal energy remaining after the electricity production in functions at the plant. This
is a highly efficient use of a waste product that would otherwise be vented but for PURPA.
Although Simplot has thus far chosen to enter into standard rate contracts for QFs generating up
to l0 aMW of generation, Simplot has also requested IRP Methodology rates and considered
increasing the generation at its Pocatello QF to a level in excess of l0 aMW. Additionally,
Simplot has been investigating development of another cogeneration QF project sized up to 25
MW at its recently completed Caldwell potato processing facility, and is regularly considering
electricity generation as a means of increasing the economic viability of its other Idaho facilities.
Simplot thus actively opposed the proposal to shorten PURPA contract lengths.
Clearwater is a customer of Avista and currently owns generation facilities that are
certified to sell electric energy and capacity as PURPA QFs at its paper production plant near
Lewiston, Idaho. Clearwater's existing QFs have a cumulative generation capacity of
approximately I I I MW. These generators utilize a biomass waste product from the paper
production process as the fuel to generate electricity, and further utilize the remaining thermal
output after electricity generation in other useful processes at the paper plant. Like Simplot's
CASE NOS. IPC-E-I5.OI, AVU-B.I5-OI, PAC-E-I5-03
PETITION FOR RECONSIDERATION OF THE J.R. SIMPLOT COMPANY AND THE
CLEARWATER PAPER CORPORATION
PAGE 3
generator in Pocatello, Clearwater's generators near Lewiston use the available fuel in a highly
efficient manner. Additionally, Clearwater has discussed with Avista the possible installation of
additional cogeneration units at its Idaho plant, which will require a long-term contract to
support development of this new generation facility. Clearwater thus actively opposed the
proposal to shorten PURPA contract lengths.
Simplot and Clearwater (along with other parties) argued that FERC's regulations require
the utilities to enter into fixed-price contracts for the sale of energy and capacity with such rates
calculated on the date the QF obligates itselfl, and that the proposals for two-year contracts
simply failed to satisfy that requirement. In a compromise effort to provide middle ground,
Simplot and Clearwater proposed that the Commission could maintain the 2O-year contract
length but re-price the energy component of new contracts in year l0 of the contract while
leaving the capacity rate fixed for the entire 2}-year term. See Order No. 33357 at23. Notably,
except in the case of a replacement contract for an existing QF, the QF would not be
compensated for capacity under this alternative proposal until the date that the utility projects it
will be capacity deficient, thus ensuring that the avoided costs do not overcompensate the QF for
capacity prior to when it is planned to be added to the system. Id. at 14,25; Order No. 32697 at
2l . Other parties made similar proposals that sought to address the issues raised by the utilities'
filings. Order No. 33357 at23. However, Idaho Power maintained that the contract length for
non-standard rates should be shortened to two years.
In the Order, the Commission sided with the utilities. The Order first concluded that
"PURPA and FERC regulations do not specify a mandatory length for PURPA contracts." Order
No. 33357 at 12. Because FERC's regulations "do not dictate a specific number of years or
CASE NOS. IPC-E-I 5-OI, AVU-E-I 5-OI, PAC.E-I5-03
PETITION FOR RECONSIDERATION OF THE J.R. SIMPLOT COMPANY AND THE
CLEARWATER PAPER CORPORATION
PAGE 4
establish a time period for PURPA contracts," the Commission stated, "we find the issue of
contract length is left to this Commission's discretion." Id.
The Order noted the evidence that the avoided cost rate for each new QF will decrease
"as the 'older' QFs add capacity to the system," id. at 14, and found that the "abundance of
PURPA generation extends the utilities' capacity surpluses to 2024 for Idaho Power and 2028 for
PacifiCorp." Id. at24. The Order correctly concluded that the capacity deficiency date extends
out with each new QF, and that each successive QF should displace lower and lower cost
resources in the IRP Methodology, resulting in lower avoided costs offered to each successive
IRP-based QF. See also id. at26-28 (implementing a change to the pricing queue to ensure that
the prices offered to new IRP-based QFs will be lower even during a rush of contract requests).
Yet the Order used this undisputed fact - that each new IRP-based QF will be offered a
lower rate than the immediately preceding QF in the queue with identical generation
characteristics - to illogically find it is therefore "axiomatic that long-term avoided cost rates
determined at the time parties enter into their contract will 'overestimate' future avoided costs
collected from utility ratepayers." Id. at22-23. The Order further found that an adjustable rate
contract - such as Simplot and Clearwater's proposal to update the energy price in year l0 of a
2}-year contract - 'oruns the risk of violating FERC regulations that mandate a 'fixed rate' at the
time of contracting." Id. at24 (citing l8 C.F.R. 5 292.304(dX2Xii); Tr. at 213-15). Although
the Order found that a rate that will be partially adjusted after l0 years may violate l8 C.F.R. $
292.304(d)(2)(ii), the Order somehow concluded arate that remains fixed for only two years will
not violate that regulation. Id. at25.
The Order then acknowledged that lRP-based QFs will not be able to sell capacity under
CASE NOS. IPC-E-I5-OI, AVU-E-I5-OI, PAC-E-I5.03
PETITION FOR RECONSIDERATION OF THE J.R. SIMPLOT COMPANY AND THE
CLEARWATER PAPER CORPORATION
PAGE 5
a two-year contract and sought to address this shortcoming through a "clarification in calculating
the capacity deficiency[.]- Id. Specifically, the Order provides:
We recognize that a new two-year contract would be unlikely to reach a capacity
deficiency date. Therefore, we find it reasonable for utilities to establish capacity
deficiency at the time the initial IRP-based contract is signed. As long as the QF
renews its contract and continuously sells power to the utility, the QF is entitled to
capacity based on the capacity deficiency date established at the time of its initial
contract. For example, if the QF comes on-line in 2017 and the utility is capacity
deficient in2020, the QF would be eligible for capacity payments in the second
year of its second contract and thereafter if in continuous operation. This
adjustment recognizes that in ensuing contract periods, the QF is considered part
of the utility's resource stack and will be contributing to reducing the utility's
need for capacity. This mitigates the concern that short-term contracts will not
contribute to the avoidance of utility capacitylgeneration.
Id. at25-26.
II.
LEGAL STANDARI)
IPUC RP 331.01 provides, "Petitions for reconsideration must set forth specifically the
ground or grounds why the petitioner contends that the order or any issue decided in the order is
unreasonable, unlawful, erroneous, or not in conformity with the law, and a statement of the
nature and quantity of evidence or argument the petition will offer if reconsideration is granted."
See also I.C. $ 6l-626.
III.
GROUNDS FOR RECONSIDERATION
The Order is not in conformity with the law because it fails to implement the bare
minimum requirements in FERC's PURPA regulations. As explained below, the Order
establishes a new implementation of PURPA that fails to provide each QF with the option to sell
CASE NOS. IPC-E-I5-OI, AVU-E-I5-01, PAC-E-I 5-03
PETTTION FOR RECONSIDERATION OF THE J.R. SIMPLOT COMPANY AND THE
CLEARWATER PAPER CORPORATION
PAGE 6
its energy and capacity to a utility at prices fixed for energy and capacity on the date of the QF's
obligation. The Order thus fails to implement FERC's PURPA regulations.
A. FERC's PURPA Regulations Require Long-Term Contracts with Prices Fixed for
Enerry and Capacity On the Date the Obligation Is Incurred.
Section 210 of the PURPA "seeks to encourage the development of cogeneration and
small power production facilities." FERC v. Mississippi, 456 U.S. 742,750, 102 S.Ct.2126
(1982) (emphasis added); l6 U.S.C. $ 824a-3(a). Congress found this to be necessary because
electric utilities were monopsonies, lone buyers of energy in a market with many potential
producers of energy, and "traditional electricity utilities were reluctant to purchase power from ...
nontraditional facilities." Mlssrss ippi, 456 U.S. at 750. Thus, PURPA gave FERC authority to
promulgate rules o'to encourage cogeneration and small power production" including rules that
"require electric utilities to offer to ... purchase electric energy from such facilities." l6 U.S.C. $
824a-3(a). PURPA in turn provided that "each State regulatory authority shall ... implement
[any] rule [prescribed by FERC under $ 824a-3(a)] for each electric utility for which it has
ratemaking authority." Id. $ 824a-3(f). Consequently, if a state chooses to regulate certain
electric utilities, it must implement FERC's regulations for such utilities. See Mississippi,456
U.S. at 751,759-61.
To ascertain whether a federal agency's regulation has spoken unambiguously to the
question at issue, federal courts use traditional means of statutory interpretation, which include
the text itself, its history, and its purpose. See Bassiri v. Xerox Corp., 463 F.3d 927,929-33 (9th
Cir.2006). If the regulation is silent or ambiguous - that is, it does not answer the precise
question at issue - federal courts will defer to the agency's own interpretation of the regulation.
CASE NOS. IPC-E-15-OI, AVU-E-I5-OI, PAC-E-I5-03
PETITION FOR RECONSIDERATION OF THE J.R. SIMPLOT COMPANY AND THE
CLEARWATER PAPER CORPORATION
PAGE 7
See Decker v. N.W. Envtl. Def. Ctr.,l33 S. Ct.1326,1337 (2013) ("When an agency interprets
its own regulation, the Court, as a general rule, defers to it unless that interpretation is plainly
erroneous or inconsistent with the regulation." (internal quotation omitted)).
Among other requirements, FERC's regulations provide that each QF shall have the
option to sell its energy and capacity at rates calculated on the date the obligation is incurred.
The applicable regulation provides:
Each qualifying facility shall have the option either:
(l) To provide energy as the qualifuing facility determines such energy to be
available for such purchases, in which case the rates for such purchases shall be
based on the purchasing utility's avoided costs calculated at the time of delivery;
or
(2) To provide energy or capacity pursuant to a legally enforceable obligation for
the delivery of energy or capacity over a specified term, in which case the rates
for such purchases shall, at the option of the qualiffing facility exercised prior to
the beginning of the specified term, be based on either:
(i) The avoided costs calculated at the time of delivery; or
(ii) The avoided costs calculated at the time the obligation is incurred.
l8 C.F.R. 5 292.304(d). The pertinent provisions of this regulation provide: "Each
qualifuing facility shall have the option . . . (2) To provide energy or capacit.v pursuant to
a legally enforceable obligation for the delivery of energy or capacity over a specified
term. in which case the rates for such purchases shall, at the option of the qualifuing
facility,. .. be based on. . .(ii) The avoided costs calculated at the time the obligation is
incurred;' l8 C.F.R. 5 292.304(dx2xii) (emphasis added). This regulation is known as
FERC's legally enforceable obligation ("LEO") rule.
CASE NOS. IPC-E-I5-01, AVU-E-I 5-OI, PAC-E-15-03
PETITION FOR RECONSIDERATION OF THE J.R. SIMPLOT COMPANY AND THE
CLEARWATER PAPER CORPORATION
PAGE 8
The plain language of l8 C.F.R. S 292.304(dx2)(ii) states that each QF shall have the
option to enter into a legally enforceable obligation to deliver energy or capacity over a term
wherein the rates shall be based upon the avoided costs calculated at the time the obligation is
incurred. It provides that each QF "shall" be provided with the following options: (l) to elect to
sell energy and capacity; (2) to elect to sell such energy and capacity over a term specified by the
QF; and (3) to elect that the obligation contain rates for energy and capacity calculated at the
time the QF incurs that obligation. FERC spoke "in terms of the mandatory 'shall,' which
normally creates an obligation impervious to judicial discretion." Lexecon Inc. v. Milberg Weiss
Bershad Hynes & Lerach,523 U.S.26,35,118 S.Ct.956 (1998).
Aside from the plain language of the regulation, the history and purpose of the regulation
supports a conclusion that the regulation requires long-term, fixed-price contracts or other legally
enforceable obligations. According to FERC's preamble to the LEO rule, "use of the term
'legally enforceable obligation' is intended to prevent a utility from circumventing the
requirement that provides capacity credit to the qualifying facility merely by refusing to enter
into a contract with the qualifuing facility." Small Power Prod. and Cogeneration Facilities;
Regulations Implementing Sec. 210 of the Pub. Util. Reg. Pol. Act of 1978, FERC Order No. 69,
45 Fed. Reg.12,214,12,224 (Feb. 25, 1980). The preamble further explains that this rule
"enables a qualifuing facility to establish a fixgd contract Brice fu its enersy and capacitv at the
outset of its obligation . . . ." Id. (emphasis added). FERC recognized that to encourage the sort
of energy production required by PURPA, its regulations had to provide the certainty that comes
with having a long-term obligation. Thus, FERC invoked "the need for qualifuing facilities to be
able to enter into contractual commitments" and "the need for certainty with regard to return on
CASE NOS. IPC-E-I5-OI, AVU-E-I5-OI, PAC-E-I5-03
PETITION FOR RECONSIDERATION OF THE J.R. SIMPLOT COMPANY AND THE
CLEARWATER PAPER CORPORATION
PAGE 9
investment in new technologies" that only those long-term legally enforceable obligations could
provide. 1d.
FERC has consistently relied upon its statements in its Order No. 69 in subsequent
interpretations of its LEO rule. See Virginia Electric and Power Co.,l51 FERC nil,038,P 24
(2015) (quoting FERC Order No. 69 and stating, 'oSection 292.304(d) and the requirement that a
QF can sell and a utility must purchase pursuant to a legally enforceable obligation were
specifically adopted to prevent utilities from circumventing the requirement of PURPA that
utilities purchase energy and capacity from QFs"); Hydrodynamics Inc. et al.,146 FERC fl
61,193, P 3l (2014) (same); Cedar Creek Wind, LLC, 137 FERC u 61,006, P 32 (2011) (same);
New York State Electric & Gas Corp.,7l FERC n61,027,61,115-61,116 (1995) ("[FERC]
intended the regulations described above 'to reconcile the requirement that the rates for
purchases equal the utilities' avoided cost with the need for [QFs] to be able to enter into
contractual commitments based, by necessity, on estimates of future avoided costs."'(quoting
FERC Order No. 69, 45 Fed. Reg. at 12,224)).
In Hydrodynamics Inc. et a/., FERC directly stated that a state commission violated the
LEO rule where the state's rule "offers the competitive solicitation process as the only means by
which a QF greater than l0 MW can obtain long-term avoided cost rates." Hydrodynamics Inc.
et al.,146 FERC tl6l,l93 at P 33 (emphasis added). FERC additionally found that a 50-MW
cap for purchases from certain QFs violated the LEO rule by prohibiting such QFs from
obtaining "forecasted avoided cost rates." Id. atP 34. Thus, it is clear that FERC understood,
and still understands, the LEO rule as entitling each QF to a long-term contract to sell energy and
CASE NOS. IPC-E-15-OI, AVU-E-I5-OI, PAC-E-I 5-03
PETITION FOR RECONSIDERATION OF THE J.R. SIMPLOT COMPANY AND THE
CLEARWATER PAPER CORPORATION
PAGE I O
capacity based on forecasting the purchasing utility's avoided costs at the time the obligation is
incurred.
Importantly, FERC's explanation of the meaning of its own LEO rule is entitled to
substantial deference. Decker,l33 S. Ct. at 1337. "[U]nless an altemative reading is compelled
by the regulation's plain language or by other indications of the [agency]'s intent at the time of
the regulation's promulgation," deference is required. Thomos Jffirson Univ. v. Shalala, 512
U.S. 504, 512,ll4 S.Ct. 2381 (1994). Deference is especially appropriate where the federal
agency's "approach is consistent with [its] stated purpose for promulgating the regulation."
Barboza v. California Ass'n of Prof, Firefighters, 651 F.3d 1073, 1079 (9th Cir. 20ll); see also
Thomas Jeffirson Univ., 5 12 U.S. at 512 (deferring to statement of agency intent contained in a
regulatory preamble); Bassiri,463 F.3d at929-33 (same). Thus, to the extent there is any
ambiguity, FERC's clarifying statement in the LEO rule's preamble that each QF is entitled to a
"fixed contract price for its energy and capacity at the outset of its obligation" controls our
inquiry. 45 Fed. Reg. at 12,224 (emphasis added).
B. The Order Fails to Implement FERC's PURPA Regulations.
The Order fails to implement FERC's PURPA regulations because it deprives the IRP-
based QFs of a long-term, fixed contract price to sell energy and capacity with prices calculated
at the outset of the obligation. Although FERC provides states with "latitude in determining the
manner in which [FERC's] regulations are to be implemented" - whether that "manner" be
issuance of regulations, resolution of disputes on a case-by-case basis or some other manner -
the state's chosen "manner" of implementing PURPA must be "reasonably designed to give
effect to FERC's rules." FERC,456 U.S. at75l (emphasis added). As noted above, the plain
CASE NOS. IPC-E-I5-01, AVU-E-15-01, PAC-E-I5-03
PETITION FOR RECONSIDERATION OF THE J.R. SIMPLOT COMPANY AND THE
CLEARWATER PAPER CORPORATION
PAGE I I
language of FERC's LEO rule states that each QF shall have the option to enter into a legally
enforceable obligation to sell both energy and capacity wherein the rates shall be based upon the
avoided costs calculated at the time the obligation is incurred. l8 C.F.R. 5 292.304(dx2xii).
FERC's long-standing interpretation of the rule is that it provides each QF with the option to sell
energy and capacity at forecasted avoided cost rates calculated at the start ofthe long-term
obligation.
Here, however, the Order's two-year limit for new contracts is so short that it completely
fails to allow the QF to the exercise the right to sell at long-term, forecasted rates for either
energy or capacity. It thus falls far short of implementing FERC's requirement that each QF be
provided the option to sell at forecasted avoided cost rates. See Hydrodynamics Inc. et al., 146
FERC fl 61,193 at PP 33-34.
In fact, although the Order allows for short-term, fixed-price compensation for energy
limited to two years, the Order allows for no fixed-price compensation for capacity. The QF is
deprived of a "fixed contract price for its energy and capacity at the outset of its obligation"
because, as the Order expressly acknowledges, a two-year contract will not provide a price for
capacity that is fixed at this time. 45 Fed. Reg. at 12,224; see Order No. 33357 at 25 ("We
recognize that a new two-year contract would be unlikely to reach a capacity deficiency date").
It will provide no price at all for capacity and thereby deprive the QF of the right to sell capacity.
The utility will thus evade the requirement to provide a capacity credit to the QF "merely by
refusing to enter into a contract" of sufficient length to provide such credit to the QF. 45 Fed.
Reg. at 12,224
Instead of providing a contractual right to sell capacity, the Order attempts to justify its
CASE NOS. IPC-E-15-OI, AVU-E-I5-OI, PAC-E-I 5-03
PETITION FOR RECONSIDERATION OF THE J.R. SIMPLOT COMPANY AND THE
CLEARWATER PAPER CORPORATION
PAGE I2
result through a contract renewal mechanism. The Order's "clarification in calculating capacity
deficiency" sets up a regime where the QF could hypothetically, several years in the future, have
a contractual right to sell capacity at a fixed price. See Order No. 33357 at25-26. For example,
according to the dates established in the Order, Idaho Power's deficiency period is currently set
at2024. Thus, a QF entering into a two-year contract today, would need to enter into the
following successive two-year contract terms to eventually obtain a contractual right to sell its
capacity: (1) 2015 to2017,(2)2017 to2019, (3) 2019 to202l,(4)2021to2023 and (5) 2023 to
2025. Thus, the Order sets up a regime where a QF entering into a2015 contract can only secure
the contractual right to sell its capacity if the current regulatory regime is still in place when the
QF enters into itsfifth consecutive contract in2023.
This clarification of the Order's two-year term limit fails to meet FERC's requirements
for at least two different reasons. First, there is no legal effect to the Order's clarification from
the QF's perspective because the 2015 Commission cannot bind the 2023 Commission to set a
capacity deficiency date at any particular point in a hypothetical future PURPA contract. I The
' Th" reserved powers doctrine limits the ability of a state legislative body to bind a future
legislative body. See U.S. v. l|'instar Corp.,5l8 U.S. 839, 874-91, I l6 S.Ct. 2432 (1996). It is well
established that "absent an 'unmistakable' provision to the contrary, 'contractual arrangements, including
those to which a sovereign itself is a party, remain subject to subsequent legislation by the sovereign."'
Id., 518 U.S. at 877 (quoting Bowen v. Public Agencies Opposed to Social Security Entrapment, 477 U.S.
41,52,106 S.Ct. 2390 (1986) (internal quotation omitted))); see also Atlantic Coast Line R. Co. v.
Goldsboro,232U.S.548, 558, 34 S.Ct. 364 (1914) ("[T]he power of the State to establish all regulations
that are reasonably necessary to secure the health, safety, good order, comfort, or general welfare of the
community ... can neither be abdicated nor bargained away, and is inalienable even by express grant");
Stone v. Mississippi, l0l U.S. 814, 817-19 (1880) (holding that reserved powers doctrine allowed
legislature to repeal corporation's 25-year charter to conduct lotteries after only one year because "no
legislature can curtail the power of its successors to make such laws as they may deem proper in matters
of police"). Moreover, the future Commissions will not be bound by past Commission orders. Idaho
Power Co. v. Idaho Pub. Utilities Commn.,l55 Idaho 780, 788, 316 P.3d 1278,1286 (2013). The QF
lacks any reasonable basis, therefore, to rely on the Order's promise for future capacity payments.
CASE NOS. IPC-E.15-01, AVU-E-15-OI, PAC-E-I 5-03
PETTTION FOR RECONSIDERATION OF THE J.R. SIMPLOT COMPANY AND THE
CLEARWATER PAPER CORPORATION
PAGE I3
QF cannot rely on the Commission's non-binding statements to support its right to sell its
capacity pursuant to such a hypothetical2023 contract. Second, even if the Order could
somehow bind future Commissions or this new regime could somehow be incorporated into the
two-year contract commencing in 2015 and remain binding until the capacity deficiency in2024,
this arrangement still fails to provide the QF with the option to sell its energy and capacity at a
forecasted rate calculated in 2015. Instead, the rate for capacity will not be calculated until 2023,
based on circumstances as they exist in 2023. This hypothetical option to sell capacity at a price
that is unknown today is obviously not what FERC had in mind when it stated its rule provides
each QF with a "capacity credit" through in a "fixed contract price . . . at the outset of its
obligation" that provides "certainty with regard to return on investment." 45 Fed. Reg. at
12,224.
The Order's own statements demonstrate non-compliance with FERC's LEO rule. The
Commission found that a rate that is partially adjusted at year l0 may violate l8 C.F.R. $
292.304(d)(2xii). See Order No. 33355 at24. But if the LEO rule requires fixed rates and
prohibits adjusting the energy portion of the rates in new contracts even after 10 years, it must
also require that fixed rates be provided for longer than two years in the first place. Additionally,
the Order's "clarification" that attempts to allow the QF to eventually sell its capacity, implicitly
recognizes that FERC's LEO rule entitles the QF to enter into an obligation to sell its capacity.
Order No. 33357 at25-26. Yet the Order's "clarification" overlooks that the LEO rule requires
that the QF be provided a hxed price to sell that capacity at the time of commencement of the
obligation - not a rate calculated at the commencement of the fifth successive obligation several
years from now.
CASE NOS. IPC-E-I 5-OI, AVU-E-I 5-OI, PAC-E-15-03
PETITION FOR RECONSIDERATION OF THE J.R. SIMPLOT COMPANY AND THE
CLEARWATER PAPER CORPORATION
PAGE 14
The Order relies heavily on the lack of a precise number of years for a minimum contract
term specified in FERC's regulations. However, the LEO rule specifically provides the QF with
the option to sell energy and capacity over a "specified term" - meaning that regulation provides
the QF with the option to determine the length of the specified term. l8 C.F.R. $
292.304(d)(2xii). The lack of a precise number of years specified in the regulation does not
mean a state may set the term so short that the QF has no option to enter into a long-term
commitment to sell energy and capacity. Reading the regulation in this manner undermines the
entire purpose of PURPA and FERC's regulations. As such, the Order creates an
implementation plan that is not "reasonably designed to give effect to FERC's rules." FERC, 456
U.S. at 751.
The Commission should therefore reconsider the Order on the ground that it is not in
conformity with the applicable laws. The Commission should replace the findings and
conclusions with an order that meets the requirements of PURPA and FERC's regulations by
providing each QF with the option to sell its energy and capacity at a fixed price for energy and
capacity calculated on the date of the obligation. Simplot and Clearwater submit that either
retaining the prior 2}-year contract term or adopting Simplot and Clearwater's alternative
proposal of a 2O-year contract with an update to energy prices in new PURPA contracts in
contract year 10, would meet the minimum requirements of FERC's LEO rule that QFs be
provided a forecasted, long-term rate for energy and capacity.
Finally, while FERC's regulations require the Commission to offer long-term, fixed-rate
contracts, the regulations also provide the Commission with broad discretion in setting the
avoided cost rates. Cal. Public Util. Comm'n, 133 FERC fl 6l ,059, at P 24 (2010) (explaining
CASE NOS. IPC-E-I5-01, AVU.E-I5-OI, PAC-E-I5-03
PETITION FOR RECONSIDERATION OF THE J.R. SIMPLOT COMPANY AND THE
CLEARWATER PAPER CORPORATION
PAGE I5
that FERC is reluctant to second guess a state commission's fact-specific rate-setting
determinations, and therefore FERC's regulations provide state commissions with guidelines on
factors to be taken into account, to the extent practicable, in determining a utility's avoided cost).
The self-correcting mechanism in the IRP Methodology should ensure that the rates decline as
more QFs enter the contracting queue, resulting in rates that - while reflecting the avoided costs
- should become too low to support further QF development during times of a large influx of
contract requests. See Order No. 33357 at 14,24,26-28. The Order itself further enables this
result by allowing the contracting queue to be updated more regularly. Id. at26-28. The correct
solution to any remaining problems is to further adjust the avoided cost pricing mechanisms.
The Commission could lawfully adjust any additional aspects of the IRP Methodology for
calculating rates in long-term contracts instead of unlawfully setting the contract term at a length
that is arbitrarily designed to deprive QFs of long-term avoided cost rates for energy and
capacity.
C. The Order Is Arbitrary Because It Cuts a "Solution" from Whole Cloth Outside of
the Record.
The solution landed upon by the Commission was not advocated by any party, and
therefore no party has had an opportunity to address the Commission's capacity upon renewal
scheme. [t is made up of whole cloth. No party discussed this idea in testimony; it was not
vetted at hearing. Adoption of a policy upon which no party had an opportunity to address
and/or rebut is arbitrary. It is axiomatic that the Commission's findings and conclusions must be
made upon the record developed before it, and that when an administrative agency strays from
the record its findings are not supportable on review.
CASE NOS. IPC-E-1 5-01, AVU-E-15-01, PAC-E-I 5-03
PETITION FOR RECONSIDERATION OF THE J.R. SIMPLOT COMPANY AND THE
CLEARWATER PAPER CORPORATION
PAGE 16
As the Idaho Supreme Court has repeatedly held:
When the agency was required by the provisions of this chapter or by other
provisions of law to issue an order, the court shall affirm the agency action unless
the court finds that the agency's findings, inferences, conclusions, or decisions
are:
(a) in violation of constitutional or statutory provisions;
(b) in excess of the statutory authority of the agency;
(c) made upon unlawful procedure;
(d) not supported by substantial evidence on the record as a whole; or
(e) arbitrary, capricious, or an abuse of discretion.
A&B lrrigation Dist. v. Idaho Dep. of Water Resources,l53 Idaho 500, 506, 284P.3d225,231
(2012); accord Washington Water Power Co. v. Idoho Pub. Util. Commn.,l01 Idaho 567, 575,
617 P.2d 1242,1250 (1980) (holding, "(a)n order based upon a finding made without evidence ...
or upon a finding made upon evidence which clearly does not support it ... is an arbitrary act
against which courts afford relief' (quoting Oregon Shortline Railroad v. Pub. Util. Commn.,47
Idaho 482, 484, 276 P. 970, 97 | (l 929))).
Here, the Commission's decision is "not supported by substantial evidence on the record
as a whole;" in fact, it is not supported by any evidence on the record whatsoever. As such, the
Order is arbitrary and an abuse of the Commission's discretion.
ry.
CONCLUSION
For the reasons set forth above, Simplot and Clearwater respectfully request that the
Commission reconsider Order No. 33357, and replace the Order with another order or rule that
lawfully implements PUMA. Simplot and Clearwater stand ready to present further briefing,
oral argument, or any further technical testimony the Commission may request on the issues
raised in this Petition.
CASE NOS. IPC-E.I5-01, AVU-E-15-OI, PAC-E-I 5-03
PETITION FOR RECONSTDERATION OF THE J.R. SIMPLOT COMPANY AND THE
CLEARWATER PAPER CORPORATION
PAGE I7
Respectfully submitted on September 10, 2015.
zuCHARDSON ADAMS, PLLC,.?ffirM
Peter J. Richardson (ISB No: 3195)
Gregory M. Adams (ISB No: 7454)
Attorneys for J.R. Simplot Company and
C learwater Paper Corporation
CASE NOS. IPC.E-I5.0I, AVU-E-I5-OI, PAC-E-I5-03
PETITION FOR RECONSIDERATION OF THE J.R. SIMPLOT COMPANY AND THE
CLEARWATER PAPER CORPORATION
PAGE 18
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 10th day of September,2015, a true and
correct copy of the within and foregoing PETITION FOR RECONSIDERATION of
the CLEARWATER PAPER CORPORATION and the J.R. SIMPLOT COMPANY
was served as shown to:
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington
Boise, Idaho 83702
i ean. i ewell@puc. idaho. sov
Donald L. Howell, II
Daphne Huang
Deputy Attorneys General
Idaho Public Utilities Commission
472 West Washington
Boise, ID 83702
don. howell@puc. idaho. sov
daphe. huanqEpuc. idaho. eov
C. Tom Arkoosh
Twin Falls Canal Company
North Side Canal Company
American Falls Reservoir District #2
Arkoosh Law Offices
802 W Bannock Ste 900
Boise ID 83702
tom. arkoo sh@arkoo sh. com
Erin Cecil
Arkoosh Law Oflices
erin. cecil@arkoosh. com
X Hand Delivery
_U.S. Mail, postage pre-paid
_ Facsimile
_ Electronic Mail
_ Hand Delivery
_U.S. Mail, postage pre-paid
_ FacsimileX Electronic Mail
_ Hand Delivery
_U.S. Mail, postage pre-paid
_ Facsimile
X Electronic Mail
_ Hand Delivery
_U.S. Mail, postage pre-paid
Facsimile
Electronic Mail
CASE NOS. IPC-E-I5-OI, AVU-E-I5-OI, PAC-E-I5-03
CERTIFICATE OF SERVICE
PETITION FOR RECONSIDERATION OF THE J.R. SIMPLOT COMPANY AND THE
CLEARWATER PAPER CORPORATION
PAGE I
X
Ben Otto
Idaho Conservation League
710 N 6th
Boise ID 83702
botto@idahocon servation. or g
Leif Elgethun PE LEED AP
Intermountain Enerry Partners LLC
PO Box 7354
Boise TD 83707
leifl@sitebasedenerpy. com
Dean J Miller
McDevitt & Miller LLP
PO Box 2564
Boise lD 83702
i oe@mcdevitt-mi11er. com
Daniel E Solander
Yvonne R. Hogel
PacifiCorp I dba Roclry Mountain Power
2O1 South Main Street Ste 240O
Salt Lake City UT 84111
daniel. solander@pacificorp. com
wonne. hoqel@pacificorp. com
datareque s(@pacifi corp. com
Ted Weston
Rocky Mountain Power
201 South Main Ste 2300
Salt Lake City UT 84111
ted. weston@pacificorp. com
Kelsey Jae Nunez
Snake River Alliance
PO Box I73l
Boise ID 83701
knunez@snakeriveralliance. org
_ Hand Delivery
_U.S. Mail, postage pre-paid
_ Facsimile
X Electronic Mail
_ Hand Delivery
_U.S. Mail, postage pre-paid
_ Facsimile
X Electronic Mail
_ Hand Delivery
_U.S. Mail, postage pre-paid
_ Facsimile
X Electronic Mail
_ Hand Delivery
_U.S. Mail, postage pre-paid
_ Facsimile
X Electronic Mail
_ Hand Delivery
_U.S. Mail, postage pre-paid
_ Facsimile
X Electronic Mail
_ Hand Delivery
_U.S. Mail, postage pre-paid
_ FacsimileX Electronic Mail
CASE NOS. IPC-E.15-01, AVU-E-I 5-OI, PAC-E-I5-03
CERTIFICATE OF SERVICE
PETITION FOR RECONSIDERATION OF THE J.R. SIMPLOT COMPANY AND THE
CLEARWATER PAPER CORPORATION
PAGE 2
Ken Miller _ Hand Delivery
Snake River Alliance _U.S. Mail, postage pre-paid
kmille(Dsnakeriveralliance.org _ FacsimileX Electronic Mail
Donovan E. Walker _ Hand Delivery
Lisa A. Grow _U.S. Mail, postage pre-paidRandyAllphin _ Facsimile
Idaho Power Company X Electronic Maill22l West Idaho Street
Boise,ID 83702
dwalke(Eidahopower. com
[e-mail]
rallphin@idahopower. com
doc ket s@i dah opower. c o m
Clint Kalich _ Hand Delivery
Avista Corporation _U.S. Mail, postage pre-paidl4ll E Mission Ave MSC-7 _ FacsimileSpokaneWlgg2o2 X ElectronicMail
clint. kalich@avistacorp. com
Michael Andrea _ Hand Delivery
Avista Corporation _U.S. Mail, postage pre-paid
L4ll E Mission Ave MSC-23 _ Facsimile
Spokane WA992O2 X Electronic Mail
michael. andrea@avistacorp. com
Scott Dale Blickenstaff _ Hand Delivery
The Amalgamated Sugar Company LLC _U.S. Mail, postage pre-paid
1951 S Saturn Way Ste 100 _ Facsimile
Boise ID 83702 X Electronic Mail
sblicken staff@amal su gar. com
Richard E. Malmgren _ Hand Delivery
Micron Technologr Inc _U.S. Mail, postage pre-paid
800 South Federal Way _ Facsimile
Boise ID 83716 X Electronic Mail
re malm qre n@ micron . c o m
CASE NOS. IPC-E-I5-OI, AVU-E-I5-OI, PAC-E-I5-03
CERTIFICATE OF SERVICE
PETITION FOR RECONSIDERATION OF THE J.R. SIMPLOT COMPANY AND THE
CLEARWATER PAPER CORPORATION
PAGE 3
Frederick J. Schmidt
Pamela S. Howland
Holland & Hart LLP
377 South Nevada Street
Carson City NV 897OL
fsch mid t@holland hart. com
Matt Vespa
Sierra Club
85 Second St 2nd Floot
San Francisco CA 94105
matt. ve spa@ sierraclub. org
Eric L. Olsen
Racine, Olson, Nye, Budge & Bailey,
chd.
PO Box 1391
Pocatello, ID 83204-1391
elo(Eracinelaw.net
Anthony Yankel
298L4 Lake Road
Bay Village, OH 44140
[e-mail]
Ronald L. Williams
Williams Bradbury, PC
1015 W. Hays St
Boise, lD 83702
ron@williamsbradbury. com
Irion Sanger
Sanger Law, PC
lll7 SW 53'a Avenue
Portland, OR 97215
[e-mail]
Andrew Jackura
Camco Clean Enerry
9360 Station Street, Suite 375
Lone Tree, CO 80124
andrew. i ackura@camcocleaneneref,r. com
_ Hand Delivery
_U.S. Mail, postage pre-paid
_ FacsimileX Electronic Mail
Hand Delivery
U.S. Mai1, postage pre-paid
Facsimile
Electronic Mail
_ Hand Delivery
_U.S. Mail, postage pre-paid
Facsimile
Electronic Mail
_ Hand Delivery
_U.S. Mail, postage pre-paid
_ Facsimile
X Electronic Mail
_ Hand Delivery
_U.S. Mail, postage pre-paid
_ Facsimile
X Electronic Mail
_ Hand Delivery
_U.S. Mail, postage pre-paid
_ FacsimileX Electronic Mail
_ Hand Delivery
_U.S. Mail, postage pre-paid
_ FacsimileX Electronic Mail
CASE NOS. IPC-E-I 5-OI, AVU-E-I5-OI, PAC-E-I5-03
CERTIFICATE OF SERVICE
PETITION FOR RECONSIDERATION OF THE J.R. SIMPLOT COMPANY AND THE
CLEARWATER PAPER CORPORATION
PAGE 4
John R. Hammond, Jr.
Fisher hrsch LLP
101 South Capital Blvd., Ste. 701
Boise, Idaho 83702
E-mail i rh@risherpusch. com
John Gorman
Ecoplexus, Inc.
650 Townsend Street, Ste. 310
San Francisco, CA 941O3
[e-mail]
_ Hand Delivery
_U.S. Mail, postage pre-paid
_ FacsimileX Electronic Mail
_ Hand Delivery
_U.S. Mail, postage pre-paid
Facsimile
Electronic Mailx
Peter Richardson
CASE NOS. tpC-E-l 5-01, AVU-E-15-01, PAC-E-15-03
CERTIFICATE OF SERVICE
PETITION FOR RECONSIDERATION OF THE J.R. SIMPLOT COMPANY AND THE
CLEARWATER PAPER CORPORATION
PAGE 5