QF developers pairing energy storage with generation scored a substantial victory when a federal judge ruled in a case involving the Idaho PUC that state regulators cannot classify such QFs by their generation resource. Instead, they must be treated as energy storage QFs.
U.S. Magistrate Judge Ronald Bush ruled Jan. 17 that the Idaho PUC violated PURPA when it deemed developer Franklin Energy's proposed QFs as solar projects, despite their self-certification with FERC as energy storage QFs. He further prohibited the commission from making such changes in future dockets.
He stopped short of ordering the IPUC to approve specific contract terms between Franklin Energy and Idaho Power. Bush also declined to require the commission to treat energy storage QFs as projects classified as "other QFs," a catchall category used by the commission for all QFs not powered by wind or solar.
The ruling comes nearly three years after Idaho Power asked the commission to settle its contract dispute with developer Franklin Energy [IPC-E-17-01]. The IPUC sided with Idaho Power's request that the developer's four proposed projects be treated as solar QFs, which are limited to two-year contracts in Idaho.
The developer took its argument that the commission overstepped in reclassifying the QF's classification to FERC. However, FERC declined to intervene in the dispute.
In mid-2018, Franklin Energy filed a lawsuit against the commission in U.S. District Court of Idaho [cv-00236-REB].
In arguing their respective sides, the IPUC and Franklin Energy both pointed to a 1990 FERC decision, Luz Development and Finance Corp.
Luz proposed a battery-storage system that would draw power from the grid during off-peak hours and discharge during peak hours. However, given the resource mix on the local grid, more than a quarter of the facility's total energy input would come from fossil fuel-fired resources. FERC determined that even energy storage QFs must meet PURPA fuel requirements. Idaho Power and then the IPUC argued that Luz meant QFs should be classified by their energy input, while Franklin Energy argued that was a misapplication of Luz's narrow ruling, which only addressed QF fuel requirements.
Bush agreed with Franklin Energy.
FERC's Luz ruling only addressed "the requirements an energy storage facility must satisfy to qualify for FERC certification as a QF," he said in his order.
Luz's precedent is that FERC considers whether the resource used to charge the QF's storage system meets PURPA requirements, but FERC still consider "energy storage facilities [as] a renewable resource for purposes of QF certification."
QF designation only "requires that renewable power be used for the power that goes into the battery storage system," Bush wrote.
In misapplying the Luz decision, the ruling said, the Idaho commission exceeded its authority under PURPA. The commission "used a misplaced reliance on the holding in Luz as a means of claiming the right to make their own determination of plaintiffs' QF status," the ruling noted, adding that the PUC overstepped when it looked behind a project's QF status with FERC, the ruling states.
"In other words, each time the commissioners purport to say that the plaintiffs' QF status was neither put at issue by Idaho Power's petition, nor did they make any decision upon plaintiffs' QF status," Bush writes, "the fact of the matter is that the relief sought by Idaho Power and the decision of the commissioners granting such relief could not have been reached without making a decision upon plaintiffs' QF status." [Emphasis in original]
The court denied Franklin Energy's request to require the IPUC to implement a 20-year contract per the commission's 'other QF' category. To do so, the court would overstep its purview under PURPA, Bush wrote.