20220209Petition for Reconsideration.pdf

Holden Kidwell
Hahn & Crapo ,,,,
February 9,2022
Vt^ BtU^An ena U.S.lVtUl,
Jan Noriyuki, Commission Secretary
IpeHo Punuc Urrunps ComnssroN
P.O. Box 83720
Boise, Idaho 83720-007 4
secretary@puc. idaho. gov
Re:Case No. PAC-E-21-05
In the Matter of Roclry Mountain Power's Application for Approval or Rejection of
the Power Purchase Agreement with Commercial Energy Management, fnc.
Dear Ms. Noriyuki:
Enclosed for electronic filing, please find Commercial Energy Management, Inc.'s Petition
for Reconsideration of IPUC Order 35303 in the above maffer. A copy is being mailed to you as
well, at the above address, and copies are being mailed and emailed to Rocky Mountain Power.
Please feel free to contact me directly with any questions you might have about this filing.
l.,\\\ot.I'I(F.s
,. i,:, -'3 Pii 3: I I
I " t' t''ii ' /" I \'r
lfiX) Rivenvalk ffriu.. Sulrc ZOO
PO Box 501.10
ldaho Falls. ldaho ftl405
Tel: (201t) 521-0620
Fax: (201t) 5ll-95 I tt
*rnr'. holdr'n lc gal.cont
arawlings(a holdenlegal.com
Cordially,
,M:fr-*,i.gs,Esq
HoLonN, KIDwELL, HerrN & CRApo, p.L.L.c.
Copy: Emily Wegener
Rocxv Mouuran PowrR
1470 West North Temple, Suite 320
Salt Lake City, Utah 841l6
emily.we gener@pac ifi corp.com
and
Ted Weston
Rocrv Motxranq Powun
ted.weston@pac ifi corp.com
G:\WPDATA\DAR\_I Poding\al54l-000 Comrcirl Etrcr5l Mstgdot\Cor.{ordac.UPuc Publ Cnr 2022.02.09 LTR. rmsidsrtioo.doq
D. Andrew Rawlings, Esq. (ISB No.9569)
HolorN, Kmwelr,, HAHN & Cnaro, P.L.L.C.
1000 Riverwalk Dr., Ste. 200
P.O. Box 50130
Idaho Falls, Idaho 83405
Telephone: [phone]
Facsimile: [phone]Email: [e-mail]
Court eService: [e-mail]
Attorneys for C ommerc ial Ener gt Management, Inc.
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
TN THE MATTER OF ROCKY MOI.JNTAIN
POWER'S APPLICATION FOR APPROVAL
OR REJECTION OF THE POWER PURCHASE
AGREEMENT WITH COMMERCIAL
ENERGY MANAGEMENT, INC.
Case No. PAC-E-21-05
PETITION FOR
RECONSIDERATION OF
IPUC ORDER353O3
Commercial Energy Management, [nc. ("&!b"), by and through its counsel of record,
Holden, Kidwell, Hahn & Crapo, P.L.L.C., submits this Petition for Reconsideration of IPUC
Order 35i03. Pursuant to ldaho Code $ 6l-626, Seller asks the Idaho Public Utilities Commission
(the "Commission") to reconsider its final Order 35303 in this matter (the "Qrdel353.03.") for the
reasons explained herein. Specifically, Seller requests that the Commission reconsider
Order35303 in relation to requiring and allowing the imposition of the 90/ll0 clause (the
"90/l L0 Provision") in the Power Purchase Agreement (the "PPA") between Seller and Rocky
Mountain Power, a division of PacifiCorp ("Company"). This petition is based upon the
following:
PETITION FOR RECONSIDERATION OF
IPUC ORDER 35303
I. LEGAL STAI\IDARI)
A party must seek reconsideration prior to initiating an appeal to the Idaho Supreme Court.
ldaho Code $ 6l-627. An issue not presented to the Commission on reconsideration will not be
considered on appeal. Key Transp. Inc. v. Trans Magic Airlines Corp.,96 Idaho ll0, 524 P.zd
1338 (1974). "The purpose of an application for rehearing is to afford an opportunity to the parties
to bring to the attention of the Commission in an orderly manner any question theretofore
determined in the matter and thereby afford the Commission an opportunity to rectiff any mistake
made by it before presenting the same to this Court." Washington Water Power Co., v. Kootenai
Environmental Alliance, 99 ldaho 875,879,591 P.2d 122, 126 (1979) (citations omitted).
The Commission may grant reconsideration by reviewing the existing record; by
submission of briefs, memoranda, written comments, interrogatories, and statements; or by
evidentiary hearing. TDAPA 31.01.01.331.03 and 31.01.01.332.
II. BACKGROTIhII)
The Order adequately describes the factual background of the issues in this matter:
The Company asserted that the Seller owns and operates a 900 kilowatt
("kW") hydroelectric qualiffing facility ("QF") under the Public Utility
Regulatory Policies Act of 1978 ("PURPA"). Application at l. The QF is
on the Portneuf River east of Lava Hot Springs in Bannock County, Idaho.
Id. at l-2. The Seller and the Company's previous contract for the sale of
energy from the QF was dated November 12, 1991. Id. at2. The Company
asserts this contract was entered into prior to the Company's separation of
its energy supply and transmission functions as required by FERC and
included provisions that addressed both energy sales and interconnection
requirements. Id. at 3. In June 2020, the Commission approved an
extension to this contract that extended its term through March 1,2021, or
upon the replacement date of the new PPA, whichever was sooner. Id.
citing Order No. 34792, PAC-E-20-09.
Order 35303 at L [n relation to the 90/l l0 Provision, the Commission noted that "Seller asserted
that the original l99l contract with the Company did not include this concept." Order 35303 at2
PETITION FOR RECONSIDERATION OF
IPUC ORDER 35303
2
(citation omitted). This assertion is true and, perhaps more importantly, is not contested by the
Company or in the Commission's Staff Comments. See Order 35303 at2-5; see also Commission
Order 34792 (a prior order between these same parties as to the amendment of this original PPA
from 1991, with the staffcomments noting that the o'Amended PPA does not include 90/ll0
provisions because the original PPA was entered into before the 90/110 rule was
implemented" (emphasis added)).
Ultimately, as relevant to this petition, the Commission left the 90/110 Provision in the
PPA, but required that the definition of Expected Net Output "to reflect that the forecast is not
updated after contracting and should use the correct amount of 2,310 MWtr/year." Order 35303
at 6.
III. PETITION FOR RECONSIDERATION
The Commission did not provide any independent analysis of the 90/l l0 Provision or the
rationale behind it, instead it appears that Order 35303 relies on the Commission's Staff Comments
in this regard. Order 35303 at2-3. In relation to the 90/ll0 Provision, the StaffComments
analyzed the monthly estimates (which resulting in the recommendation that the definition of
Expected Net Output be amended), the advanced notice requirement, and the market price
determination. But in relation to the rationale of the 90/110 Provision, the Commission only
explained: "Staff confirmed the PPA contains the 90/110 provisions required by Commission
Order 29632." Order 35303 at 2. Specifically, the StaffComments state:
Staff confirmed the PPA contains the 90/110 Rule as required by
Commission Order 29632. The 90/ll0 Rule requires a QF to provide
utilities with a monthly estimate of the amount of energy the QF expects to
produce. If the QF delivers more than 110 percent of the estimated amount,
then the utility must buy the excess energy for the lesser of 85 percent of
the market price or the contract price. If the QF delivers less than 90 percent
of the estimated amount, then the utility must buy total energy delivered for
-t PETITION FOR RECONSIDERATION OF
IPUC ORDER 35303
the lesser of 85 percent of the market price or the contract price. ,See Order
No.29632 at20.
Staff Comments at 2. "The Company also disagreed with the Seller's objection to the 90/l l0
provision in the PPA asserting that this provision has been approved by the Commission in
previous cases and is consistent with law and past practice, as detailed in Staff Comments." Order
35303 at 5 (citation omitted). While this adequately describes the 90/l l0 Provision, the
Commission, the Commission Stafi and the Company have not wrestled with the underlying
rationale for a 90/l l0 Provision and whether it should be imposed and allowed in this PPA.
Seller explained in its comments:
Obviously, the 90/110 concept favors the buyer, but-to [Seller'sl
knowledge-the issue has never been assessed from the seller's
perspective. Frankly, any matter outside the narrow definition of Force
Majeure (see Agreement, $ l4.l) can cause [Seller] to incur devastating
liabilities to [Company]. The rationale for the 90/110 concept is to
economically incentivize a seller's reliability and predictability. While
those bases specifically favor buyers and take a buyer's concems and
market issues into account, nothing has addressed a seller's concerns or
market issues. While worded as an economic incentive, it is actualty a
penalty, requiring payment of a mandated rate when production is
within l07o of predictions, but providing for drastic reductions in price
when power production is more than 107o off from the predictions.
There is no corresponding "upside" for sellers-there is no added
premium paid when production matches predictions, just the regulated
rate is paid. In short, the 90/l l0 approach creates a regime for buyers to
penalize unreliability without creating any corresponding or resulting
advantage for sellers (other than having the ordinary rates as published by
the Commission).
Seller's Comments at 2-3 (emphasis added). Again, Seller is unaware of any attempt by the
Commission to assess the 90/l l0 Provision from a seller's perspective and, despite Seller's explicit
invitation to do so here, the Commission has again passed on the chance to review the one-sided
reasoning underlying 90/l l0 Provisions. Reconsideration of Order 35303 provides the
Commission another opportunity to finally do so.
PETITION FOR RECONSIDERATION OF
IPUC ORDER 35303
4
This Seller's original contract with the Company in l99l did not contain anything
analogous to the 90/l l0 Provision in the current PPA. Of course, the prior contact was executed
before the Commission considered 90/l l0 Provisions in Commission Order 29632. However, the
Commission should not now allow the Company to fundamentally alter the parties' relationship-
particularly without a basis for doing so.
The Commission, its Staff, and the Company all rely on Commission Order 29632 and
"past practice" since that order to justiff imposition of the 90/1l0 Provision in this PPA. But a
review of the past order shows why the same justifications do not exist in this case. There, the
Commission held in relation to the 90/100 Provision:
For a QF it translates into an obligation or commitment to deliver its
monthly estimated production. Idaho Power proposes that this delivery of
committed energy fall within a90ll10 band. Staffproposes that the band be
expanded to 80/120. We find 90/ll0 to be reasonable. The Commission
recognizes that excess energy is not accepted by the Company without
consequence. If unplanned for and not easily integrated the energy may as
suggested by the Company have to be sold in the surplus market or other
more economic resources of the Company backed down.
The Commission finds that energy delivered in excess of I l0%
should be priced at 85o/o of the market or the contract price, whichever is
less. As reflected in our discussion of l0 MW we find it reasonable to cap
the maximum monthly generation that qualifies for published rates at the
total number of hours in the month multiplied by l0 MW. This is also a cap
for excess energy payments. By way of example, a QF that commits to
deliver a monthly total of 7,000 kwh in January and delivers greater than
90% of the commitment amount that month will receive the posted rate for
all energy up to I l0% of the 7,000 kWh commitment amount and 85% of
the Mid-C market price for energy exceeding ll0% up to the l0 MW cap.
The QF will receive no payment for any energy provided above the l0 MW
cap.
Idaho Power proposes that if the QF delivers less than 90Yo of the
scheduled "net energy" amount (for reasons other than forced outage or
forced majeure events) that the shortfall energy be priced at 85Yo of the
market price, less the contract rate, the difference capped at 150%o of
contract rate. The Commission believes that such a shortfall energy pricing
method might have the potential of exacting too heavy a price. We instead
PETITION FOR RECONSIDERATION OF
IPUC ORDER 35303
5
find it reasonable when the QF fails to deliver 90Yo of the monthly
commitment amount to price all delivered energy at 85o/o of the market
price, or the contract rate, whichever is less.
Commission Order 29632 at 20. In considering this, the issue was very clearly framed as a
buyer-favoring penalty: "Should [the buyer] be allowed to include contractual provisions that
impose financial penalties or liquidated damages if a PURPA generator's energy deliveries vary
by more than plus or minus l0% from its forecasted performance?" Commission Order 29632 at
4 (emphasis added). There, the generators at issue used the "Rafter River Geothermal Power
Plant" and "wind power projects." Commission Order 29632 at l-2. [n contrast to Seller's
hydroelectric facility here, the generators there (or at least the geothermal facility) provided more
regular, steady power generation.
Further, the geothermal plant at issue in Commission Order was likely "capable of
producing up to 15.6 MW of electrical power from each square mile" and the buyer wanted to
"purchase a maximum of l0 MW in any given hour." Commission Order 29632 at 2. The wind
turbine projects there had a "capacity of 325 kW" and "eleven 900 kW NEG-micron turbines,"
respectively. Commission Order 29632 at2-3. These projects are much larger than Seller's "900
kilowatt ('kW') hydroelectric qualifting facility ('QF')." Order 35303 at l. Thus, as a matter of
economics, the 90/l l0 Provision would have a proportionately lower effect on the larger projects
of Commission Order 29632 than it will on Seller here. Consider: the 107o band for the
geothermal facility in Commission Order 29632 was I Mw-which is more than the
generatine canacitv of Seller's facilitv here. Not only is the margin for error much narrower for
a smaller facility like Seller's, but the financial penalties or liquidated damages imposed by
the 90/110 Provision will have a much greater impact on a small company, Iike Seller, than
larger companies like those at issue in Commission Order 29632.
PETITION FOR RECONSIDERATION OF
IPUC ORDER 35303
6
Simply, the Commission cannot carry on imposing a blanket policy of allowing 90/ll0
Provisions in every instance without an individualized analysis or justification. In the prior case,
the Commission found "90/l l0 to be reasonable" (Commission Order 29632 at 20), but there is
no similar finding here (and no basis for such a finding based on the Application or the other
submissions in this maffer). Each case-and this PPA specifically--deserves the Commission's
consideration in this kind of proceeding so that the Commission can wield its statutory powers in
compliance with the constitutional and statutory requirements, including due process and the
appropriate exercise of quasi-judicial powers. Here, Seller's facility is subjectto more variation
than a geothermal plant. Seller's facility is a hydroelectric power plant, generating less than
I MW, and subject to "run-of-the-river" flows that are controlled by a private irrigation company
(r.e., the Marsh Valley Canal Company). Also, the prediction of snow falls, freezing condition of
winter months, and ground water absorption are very difficult and nearly impossible to predict
within the scope of the 90/l l0 Provision.
Thus, Order 35303 unreasonably, unlawfully, erroneously, and not in conformity with the
law imposes the 90/l l0 Provision on Seller without any individualized basis for doing so.
SeeIDAPA 31.01.01.331.01. Accordingly, Seller asks the Commission to remove the 90/ll0
Provision from this PPA altogether. At a minimum, the Commission must reconsider Order 35303
to provide an individualized basis for allowing the 90/l l0 Provision in this PPA (rather than
providing a blanket authorization for such a provision in all agreements without any individual
consideration).
7 PETITION FOR RECONSIDERATION OF
IPUC ORDER 35303
IV. NATURE AI\ID EXTENT OF EVIDENCE AIYD ARGUMENT
TO BE OFFf,,RED ON RECONSIDERATION
IDAPA 31.01.01.331.01 requires that Seller state the nature and extent of evidence or
argument it will present or offer if reconsideration is granted. Seller respectfully asks that the
Commission grant reconsideration in this matter and amend final Order 35303 to (a) direct that the
90/l l0 Provision be removed from this PPA altogether; or (b) justiff the 90/l l0 Provision in this
PPA on an individualized basis specific to this PPA.
Alternatively, should the Commission grant reconsideration in this matter, Seller suggests
that the Commission set a procedural schedule whereby it may take and consider additional
information provided the Parties regarding the items and issues identified herein related to the
90/ll0 Provision in final Order 35303. Should the Commission grant reconsideration, Seller
stands ready to augment the evidentiary record by additional comments, legal briefing, testimony,
exhibits, and hearing, any or all of which as determined to be appropriate and at the discretion of
the Commission.
V. CONCLUSION
Seller respectfully requests that the Commission reconsider Order 35303 and (a) remove
the 90/l l0 Provision from this PPA altogether because the original PPA was entered before the
90/l l0 rule was adopted; or (b) at least provide an individualized basis for allowing the 90/l l0
Provision in this PPA (rather than providing a blanket authorization for such a provision in all
agreements without any individual consideration). Doing so will comport with the Commission's
statutor], due process, and other constitutional obligations in making this decision.
Dated this 96 day of February 2022.
Rawlings, Esq.
PETITION FOR RECONSIDERATION OF
IPUC ORDER 35303
8
HoLoeN, KIuwELL, HAI{N & CRApo, p.L.L.c
CERTIFICATE OF SERVICE
I hereby certiS that on this 9ft day of February, 2022,I served a copy of the following
described pleading or document on the afforneys and/or individuals listed below by the method
indicated below.
DOCUMENT SERVED: Petitionfor Reconsideration of IPaC Order i5303
ATTORNEYS AND/OR INDIVIDUALS SERVED :
Jan Noriyuki, Commission Secretary
Ioauo PusI.rc Uru.rrres ComnssroN
P.O. Box 83720
Boise, Idaho 83720-007 4
Email: [e-mail]. eov
Ted Weston
Rocry MouNrenr Powrn
Email: ted.weston@pacifi com.com
Emily Wegener
Rocry Moullr.lrN Powpn
1470 WestNorth Temple, Suite 320
Salt Lake City, Utah 84116
Email: [e-mail]
tr U.S. Mail
tr Hand Delivery
E Facsimile
E Email/E-Service
tr U.S. Mail
tr Hand Delivery
E Facsimile
B Email/E-Service
I U.S. Mail
tr Hand Delivery
E Facsimile
I Email/E-Service
D. Andrew Rawlings, Esq.
HoLntrN, KrowtrLt, HAIrN& Cnero, p.L.L.c.
G:\WPDATA\DAR\-I Pcnding\21541400 Commercial Encrgy MamgementUPUC Reconsideration\IPUC Rcconsidcration FINAL.docx
PETITION FOR RECONSIDERATION OF
IPUC ORDER 35303
9