Idaho Public Utilities Commission

Case No. IPC-E-11-15, Order No. 32580

June 28, 2012

Contact: Gene Fadness (208) 334-0339, 890-2712

PUC declines solar developer’s motion for summary judgment

The Idaho Public Utilities Commission denied a motion for summary judgment by a solar developer that wants to sell its output to Idaho Power Company and also receive all the financial benefits of the Renewable Energy Credits (RECs) associated with the project.

RECs are tradable environmental commodities that represent proof that 1 MWh of electricity is generated from an eligible renewable energy resource.

Grand View PV Solar Two LLC is the developer of a 20-megawatt solar generating plant proposed near Grand View in Elmore County. It hopes to sell its output to Idaho Power through a formal Power Purchase Agreement (PPA) that has yet to be proposed to the commission. Developer Robert Paul claims that without compensation from Idaho Power for the value of the RECs, the project’s financial viability will be compromised.

Grand View sought to have language removed from a draft Power Purchase Agreement that says RECs “will be governed by any and all applicable federal or state laws and/or any regulatory body or agency deemed to have authority” to regulated environmental attributes. Grand View claimed such language violates federal PURPA law, the Commerce Clause and constitutes an unconstitutional taking. Grand View Solar claims that federal PURPA law (Public Utilities Regulatory Policies Act) and previous Idaho commission orders dictate that the value associated with RECs remain with the project developer.

In its order, the commission noted that the Federal Energy Regulatory Commission has frequently observed that RECs did not exist when PURPA was created in 1978 and that states have the authority to determine REC ownership. The Idaho commission also found that Grand View Solar had misconstrued previous commission orders. In past PURPA agreements, the Idaho commission has allowed utilities and developers to negotiate the disposition of RECs, resulting in some contracts where REC ownership stayed with the developer, some where the developer and the utility share REC ownership and still others where the utility retains ownership.

The commission said state determination of REC ownership is not a constitutional taking because the disputed draft PPA language “does not purport to assign REC ownership” to either the utility or the developer and that Grand View “has failed to adequately demonstrate that it is the de facto owner of all the RECs.”

Grand View Solar also argued that the disputed language would allow for the possibility that the contract would be re-opened after it had been signed.

The commission said the language “merely reflects that REC ownership will be determined by applicable law when the PPA is executed and approved. It does not subject Grand View to future changes in the ownership of RECs. Moreover, we note that the parties have not entered into a contractual agreement and the commission has not approved the PPA.”

The question of REC ownership is one of many issues that are part of a larger case pending before the commission (GNR-E-11-03) to review PURPA contract provisions. Technical hearings in that case are scheduled for Aug. 7-9.

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