)
Sustainable Power Group, LLC ) Docket Nos. EL17-35-000
sPower Development Company, LLC ) QF17-502-000
)
Sustainable Power Group, LLC (sPower) and sPower Development Company, LLC
(collectively, Petitioners)1 hereby request leave from the Federal Energy Regulatory Commission
(Commission) to Answer the protests filed by Xcel Energy Services Inc. (XES) and the Colorado
Public Utilities Commission (CPUC) in this docket. Given that the Commission will not have a
quorum after February 3, 2017, Petitioners also respectfully request that the Commission issue a
Pursuant to Rule 213 of the Commissions Rules of Practice and Procedure, an answer
may only be made to a protest with Commission consent.2 Petitioners request an order granting
Petitioners leave to answer the protests filed by XES and the CPUC in this docket. Petitioners
file this Answer to provide information that will assist the Commission in its decision-making
process. Additionally, the CPUCs protest should be construed as a motion to dismiss the
1
Since the date of filing the Petition for Enforcement, sPower has filed self-certifications for additional QFs in
Colorado. The docket numbers for these additional QF self-certifications are as follows: QF17-557-000, QF17-558-
000, QF17-559-000, QF17-560-000, QF17-561-000, QF17-562-000, QF17-563-000, QF17-564-000, QF17-565-
000, and QF17-566-000.
2
18 CFR 385.213(a)(2).
1
Petition on ripeness grounds. Under Rule 213 of the Commissions Rules of Practice and
ANSWER
I. Response to XES4
A. XES asks the Commission to exempt Public Service from PURPAs must-buy
requirement because it holds an all-source solicitation process once every four years.
CPUC Rule 3902(c) requires a QF larger than 100 kW to win a quadrennial competitive
solicitation process to obtain a long-term contract or other legally enforceable obligation to sell
output to a utility in Colorado, such as Public Service.5 XES asks the Commission to find that
this process satisfies PURPAs must-buy requirement, and therefore Public Service should be
relieved of all PURPA obligations to purchase energy and capacity from QFs larger than 100 kW
outside of this process. The Commission should decline to introduce such a significant loophole
into PURPA. Such a finding would render PURPAs must-buy requirement a nullity for all but
the smallest QFs. If XES would like for Public Service to be relieved of its must-buy
requirements, the Commission should require Public Service to meet the standards the
Commission has set for relieving utilities of must-buy requirements under Section 210(m)
PURPA, which have not been met in this or any other proceeding relative to Public Service.6
XES asks the Commission to grant Public Service an unprecedented exemption from
PURPAs must-buy requirement. Neither PURPA nor the Commissions regulations contemplate
an exemption from the must-buy requirement simply because a utility holds a quadrennial all-
source competitive solicitation in which QFs may participate. A quadrennial bidding process is
3
Id. at (a)(3).
4
In the discussion that follows in this section, Petitioners respond primarily to the arguments of XES, but to the
extent a similar argument was made by both XES and the CPUC, Petitioners respond to it in this section.
2
in no way analogous to the non-discriminatory access to wholesale markets that a utility must
demonstrate to receive an exemption from the must-buy requirement under Section 210(m) of
PURPA.7 In the absence of a finding that Public Service has been relieved of PURPAs must-buy
requirements pursuant to a filing under Section 210(m) of PURPA, the Commission should find,
as it did in Windham Solar, that regardless of whether a QF has participated in a request for
In addition to Petitioners legal concerns with the quadrennial bidding process, practically
speaking the four-year acquisition schedule aggravates the already high burden faced by QF
developers in Colorado. Few developers would be able to raise capital and enter into long-term
site control agreements for a single opportunity in four years to obtain a long-term contract.
Given the rapid advancement and cost declines of renewable resources, holding one solicitation
every four years is not sufficient to provide opportunities to QFs to sell their output.
B. The Bidding NOPR was never approved by the Commission and is not relevant or
applicable to this docket.
XES mistakenly argues that the Bidding NOPR9 should be determinative in this docket.
To the contrary, the Commission in Hydrodynamics found the Bidding NOPR has no relevance
because the Commission never issued rules as a result of the Bidding NOPR.10 The Commission
should similarly find that the Bidding NOPR has no relevance here.
5
As noted in the XES Protest, Public Service Company of Colorado is an operating company affiliate of XES. See
XES Protest at p. 1. Note also that the CPUCs Colorado Electric Rules were attached to the Petition for
Enforcement as Attachment 2.
6
16 U.S.C. 824a-3(m) and 18 CFR 292.309 and 310.
7
Id.
8
156 FERC 61,042.
9
Regulations Governing Bidding Programs, Notice of Proposed Rulemaking, FERC Stats. & Regs. P 32,455 (1988)
(Bidding NOPR)).
10
146 FERC 61,193, 61845, FN 70 (FERC 2014).
3
Even if the Bidding NOPR were relevant, which it is not, Colorados quadrennial ERP
process does not meet the tentative standards set out in the Bidding NOPR. 11 First, demand
response resources are not allowed to participate in Colorados electric resource plan (ERP).12
Second, XES misleadingly states, Under the Colorado rules, no resources can be acquired
outside of the ERP unless they fit into certain narrow exemptions. 13 To the contrary, in
Colorado, such exemptions not narrow. Public Service regularly acquires additional capacity
outside the resource planning process, including utility-owned resources, but does not offer
contracting opportunities for QFs between its quadrennial RFPs. 14 A recently issued CPUC
decision acknowledges the CPUC recently approved nearly 1 GW of new renewable energy
resources outside the ERP process. 15 This includes the 600 MW wind project that Public
Service will build and own but did not competitively procure, which is discussed in Petitioners
C. Quadrennial all-source solicitations are not sufficient for a utility to be relieved of its
must-buy obligations under PURPA.
obtaining a legally enforceable obligation. 17 The Commission reached precisely the same
conclusion in its Windham Solar decision.18 Similar to the state rules at issue in those decisions,
11
XES Protest at pp. 22-23.
12
Under 4 CCR 723-3-3607(a)(IX) and 3610(b)(II) (attached to the Petition for Enforcement as Attachment 2)
demand-side resources are treated as inputs to the resource need assessment that a utility such as Public Service
performs, rather than as resources that are compared to generation resources.
13
XES Protest at p. 23.
14
For example, Public Service regularly acquires new renewable distributed generation (DG) and community solar
garden (CSG) capacity outside of the quadrennial RFP process.
15
CPUC Decision No. C16-1075 (attached as Attachment 7), 126.
16
Petition for Enforcement at p. 13.
17
146 FERC at 61845.
4
long-term contract. In keeping with prior Commission decisions, the Commission should find
that CPUC Rule 3902(c) imposes an unreasonable obstacle to QFs obtaining a long-term contract
XES attempts to dismiss Hydrodynamics and Windham Solar by focusing on facts that
were not determinative to the Commissions decisions, such as the frequency of competitive
solicitations. The Commission did not, in those decisions, focus on the frequency of competitive
solicitations, other than to mention it as an aggravating factor. XES also ignores aggravating
factors that exist in Colorado. For example, the CPUCs requirement that QFs must compete in
and win a solicitation in order to obtain a long-term contract applies to QFs as small as 101 kW,
whereas in Hydrodynamics this burden was only imposed on QFs larger than 10 MW.19 The
Commission has determined that QFs that are located in areas with competitive wholesale
markets or RTOs but that are smaller than 20 MW are presumed to lack non-discriminatory
access to those competitive markets.20 Neither XES nor the CPUC has argued, and neither can
show, that a quadrennial ERP offers sufficient non-discriminatory market access such that Public
Service should be relieved of its must-buy obligation for these resources. Likewise, neither XES
nor the CPUC has demonstrated that Colorados quadrennial all-source RFP provides sufficient
market opportunities for XES to be relieved of its must-buy requirement for larger QFs.
The Commission has already found that providing QFs no more than an opportunity to
win a competitive solicitation is inconsistent with PURPA and the Commissions regulations
implementing PURPA.21 Additionally, the length of time between solicitations in Colorado, the
acquisition of large utility-owned generation outside the solicitation process, and the lack of non-
18
156 FERC at 61042 (citing Hydrodynamics, 146 FERC at 61845).
19
146 FERC at 61840.
20
18 CFR 292.309(d)(1).
21
Hydrodynamics at 61845.
5
discriminatory market access further compound this unreasonable burden placed on all QFs
larger than 100 kW in Colorado. XES and the CPUC have provided no justification for the
Commission to reach a decision that is inconsistent with its prior decisions in Hydrodynamics
The Commissions 1995 decision in Southern California Edison Company dealt with the
ways in which bidding can and cannot be used to set an appropriate avoided cost rate.22 The
decision did not address whether bidding is an acceptable method of implementing PURPAs
docket. Furthermore, because that case dealt only with an avoided cost rate methodology, the
Commission was not required to announce a departure from its prior policies, as XES suggests,
when it found in Hydrodynamics and Windham Solar that requiring QFs to win a competitive
requirement.23
Petitioners have never alleged that using a competitive solicitation process to set an
avoided cost rate is unacceptable or inconsistent with PURPA. sPower simply recommended to
the CPUC that it consider alternative methods of determining an avoided cost rate,24 but has
22
70 FERC 61,215, 61666 (FERC 1995).
23
XES Protest at 18-19.
24
See sPowers Motion for Waiver (attached to the Petition for Enforcement as Attachment 3), p. 1, 16, and 18.
25
XES is technically correct that sPower, in its earlier Motion for Waiver (attached to the Petition for Enforcement
as Attachment 3) before the CPUC did not explicitly argue for the right to match a bid or have winning bids used as
a basis to set avoided cost rates. By the same token, however, XES has consistently told sPower that its QFs must
actually win the upcoming competitive bidding process. Petitioners consider the threshold issue that must be
resolved is the right to obtain a long-term contract or other legally enforceable obligation. This issue must be
resolved in Colorado before determining an accurate avoided cost purchase rate.
6
E. XES is incorrect that the relief sought by Petitioners would undermine the CPUCs
resource planning process.
Petitioners disagree with XES that QF procurement and the CPUCs resource planning
process are incompatible. These policies coexist in other states, and they can coexist in Colorado.
The CPUCs Colorado Electric Rules, which Petitioners attached to their Petition for
Enforcement, contain at least 28 rules related to QFs.26 Though the CPUC has not been enforcing
procurement, such as enforcing technical requirements, assigning upgrade costs, and overseeing
interconnection procedures through its existing rules. Petitioners have not argued that the law
requires the CPUC to relinquish its control over other aspects of QF procurement.
The CPUC also does not limit resource capacity additions to the resource planning
process. Significant amounts of capacity, as well as demand response resources and energy
efficiency programs, are regularly approved outside the resource planning process in Colorado.
As a result, the CPUC does not consider the full range of alternatives in its resource planning
process.27 In the current Public Service ERP proceeding, new DG capacity, new CSG capacity,
demand response capacity, demand reductions from energy efficiency programs, and the
capacity value of Public Services recently approved 600 MW utility-owned wind farm are
simply used as externally-approved inputs to the ERP. For these reasons, Petitioners disagree
that the relief Petitioners seek will undermine the CPUCs resource planning process.
26
See 4 CCR 723-3-3900 3953, attached as Attachment 2 to the Petition for Enforcement.
27
XES Protest at p. 26.
7
II. Response to CPUC28
requirements of PURPA against a state regulatory authority, such as the CPUC.29 The Petition
for Enforcement was filed pursuant to this section, not as an appeal of a CPUC decision.
Accordingly, the ripeness issues raised by the CPUC are irrelevant to whether the Commission
Petitioners also disagree with the CPUC that a QFs right to petition the Commission
under Section 210(h) should be contingent on a QF pursuing all alternative state options for
relief first. Petitioners have no responsibility to create a forum to ensure the proper
implementation and enforcement of federal law (and when sPower did bring the CPUCs non-
compliance with PURPA to the CPUCs attention, it was told that the issue was not relevant31).
PURPA and the FERCs regulations implementing PURPA place the compliance obligation on
the CPUC and utilities, such as Public Service, to faithfully implement federal law. Any
procedural limitations that the CPUC believes it faces in enforcing PURPA are not relevant to
the Petition for Enforcement, nor is the CPUCs apparent invitation that sPower request
resolution of these issues through appropriate filings and proceedings.32 The CPUC may not
28
As noted earlier, to the extent that the CPUC made similar arguments as XES, Petitioners have responded to them
in the preceding section of this Answer.
29
16 USCS 824a-3(h)
30
CPUC Protest at pp. 10.
31
See CPUC Decision No. C16-1156-I (attached to the Petition for Enforcement as Attachment 1).
32
CPUC Protest at pp. 8-9.
8
take any action that violates PURPA, regardless of the type of proceeding in which the action is
taken.33
The Commission should ignore the CPUCs arguments that its own rules have prevented
it from complying with PURPA. The CPUC is obligated to comply with federal law, regardless
of its own procedural rules. Furthermore, the CPUC may and regularly does waive its rules for
good cause.34 For example, the CPUC recently granted several rule waivers in the proceeding
that led to the approval of a large 600 MW utility-owned wind farm.35 sPower believed that
noncompliance with federal law is sufficient justification for the CPUC to waive Rule 3902(c)
until such time as the CPUC could develop a new rule that is compliant with PURPA.
It is also unclear why the CPUC suggests that sPower could have resolved its PURPA
compliance concerns through appropriate filings and proceedings, when the CPUC has clearly
stated that it believes that the language and implementation of Rule 3902(c) is already compliant
with PURPA. 36 It is inconsistent for the CPUC to argue on the one hand that it could have
resolved the PURPA compliance issues that sPower has raised if only sPower had requested to
do so through an appropriate proceeding or filing, while also arguing on the other hand that no
PURPA compliance issues exist that need to be resolved. It would have been a waste of both the
CPUCs and sPowers time and resources for sPower to have requested that the CPUC open a
33
See Allco Fin. Ltd. v. Klee, 805 F.3d 89, 97 (2d Cir. 2015) (A states ongoing obligation under 824a-3(f) to
implement PURPA regulations can be accomplished in a variety of ways, but, at a minimum, 824a-3(f)
undoubtedly prevents states from violating 824a-3(a)).
34
See sPower Motion for Waiver of Rule 3902(c) (attached to the Petition for Enforcement as Attachment 3), p. 15.
35
CPUC Decision No. C16-0548E, Proceeding Nos. 16A-0117E and 16V-0314E (attached as Attachment 8), 67-
81.
36
CPUC Protest at pp. 6-7 and 9.
9
rulemaking proceeding as the CPUC suggests, given that the CPUC has already stated that it
Petitioners request that the Commission initiate an enforcement action against the CPUC
If the Commission opts not to initiate an enforcement action, Petitioners request that the
Commission find that it is inconsistent with PURPA and the Commissions regulations for
CPUC Rule 3902(c) to require QFs larger than 100 kW to win a competitive solicitation process
as the only means by which they can obtain a long-term contract or legally enforceable
obligation to sell their output.38 Petitioners also respectfully request that the Commission issue a
37
Id. at p. 6-7.
38
XES similarly requested that the Commission issue an order advising the parties of the position it would take in an
enforcement action, if it does not initiate an enforcement action. See XES Protest at FN 6.
10
CERTIFICATE OF SERVICE
I hereby certify that I have this day served this document upon the following:
Cynthia Coffman
Attorney General
Paul Gomez, First Assistant Attorney General
Erin McLauthlin, Assistant Attorney General
Matthew Lindsay, Assistant Attorney General
Colorado Department of Law
1300 Broadway, 10th Floor
Denver, CO 80203
Paul.Gomez@coag.gov
Erin.McLauthlin@coag.gov
Matt.Lindsay@coag.gov
11
LIST OF ATTACHMENTS
12