UNITED STATES OF AMERICA

BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION

)
Sustainable Power Group, LLC ) Docket Nos. EL17-35-000
sPower Development Company, LLC ) QF17-502-000
)

REQUEST FOR LEAVE TO ANSWER AND ANSWER TO PROTESTS OF XCEL
ENERGY SERVICES INC. AND THE COLORADO PUBLIC UTILITIES
COMMISSION

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

decision in this docket by that date.

REQUEST FOR LEAVE TO ANSWER

Pursuant to Rule 213 of the Commission’s 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 CPUC’s 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 Commission’s Rules of Practice and

Procedure, Petitioners may answer a motion to dismiss.3

ANSWER

I. Response to XES4

A. XES asks the Commission to exempt Public Service from PURPA’s 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 PURPA’s 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 PURPA’s 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

PURPA’s must-buy requirement. Neither PURPA nor the Commission’s 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 PURPA’s 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

proposal, that QF has the right to obtain a legally enforceable obligation.”8

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 CPUC’s 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, Colorado’s 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 Colorado’s 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’

Petition for Enforcement.16

C. Quadrennial all-source solicitations are not sufficient for a utility to be relieved of its
must-buy obligations under PURPA.

In Hydrodynamics, the Commission determined that “requiring a QF to win a competitive

solicitation as a condition to obtaining a long-term contract imposes an unreasonable obstacle to

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,

CPUC Rule 3902(c) requires a QF to win a competitive solicitation as a condition to obtaining a

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

or legally enforceable obligation with a utility in Colorado.

XES attempts to dismiss Hydrodynamics and Windham Solar by focusing on facts that

were not determinative to the Commission’s 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 CPUC’s 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 Colorado’s 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 Commission’s 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

and Windham Solar.

D. The Commission’s decisions in Southern California Edison Company and other
similar cases are inapplicable to the issue in this docket.

The Commission’s 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 PURPA’s

must-buy requirement. Accordingly, Southern California Edison Company is irrelevant to this

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

solicitation process is an unreasonable burden that is inconsistent with PURPA’s must-by

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

never argued that any other method is legally required.25

22
70 FERC ¶ 61,215, 61666 (FERC 1995).
23
XES Protest at 18-19.
24
See sPower’s 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 CPUC’s
resource planning process.

Petitioners disagree with XES that QF procurement and the CPUC’s resource planning

process are incompatible. These policies coexist in other states, and they can coexist in Colorado.

The CPUC’s 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

PURPA’s must-buy requirement, it is well-equipped to manage other issues related to QF

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 Service’s 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 CPUC’s 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

A. There is no ripeness requirement that must be satisfied before a petition for
enforcement may be brought to the Commission.

PURPA Section 210(h) allows a QF to petition the Commission to enforce the

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

can issue a decision in this matter.30

Petitioners also disagree with the CPUC that a QF’s 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 CPUC’s non-

compliance with PURPA to the CPUC’s attention, it was told that the issue was not relevant31).

PURPA and the FERC’s 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 CPUC’s 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

B. The CPUC has the procedural tools to comply with PURPA.

The Commission should ignore the CPUC’s 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

CPUC’s and sPower’s 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 state’s 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

considers its current rules and actions to comply with PURPA.37

III. Conclusion and Requested Relief

Petitioners request that the Commission initiate an enforcement action against the CPUC

pursuant to Section 210(h)(2) to invalidate the requirement that a QF win a competitive

solicitation as a condition precedent to obtaining a long-term avoided cost contract in Colorado.

If the Commission opts not to initiate an enforcement action, Petitioners request that the

Commission find that it is inconsistent with PURPA and the Commission’s 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

decision in this docket on or before February 3, 2017.

Respectfully submitted on January 30, 2017.

BY: /s/ Scott F. Dunbar
Kevin T. Fox
Scott F. Dunbar
Keyes & Fox LLP
1580 Lincoln St., Suite 880
Denver, CO 80203
Phone: (510) 314-8201 (Fox)
Phone: (720) 216-1184 (Dunbar)
kfox@kfwlaw.com
sdunbar@kfwlaw.com

Counsel to Sustainable Power Group, LLC (sPower)

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:

Jeffrey Ackerman, Chairman
Frances Koncilja, Commissioner
Wendy Moser, Commissioner
Doug Dean, Director
Colorado Public Utilities Commission
1560 Broadway, Suite 250
Denver, CO 80202
Jeffrey.Ackermann@state.co.us
Frances.Koncilja@state.co.us
Wendy.Moser@state.co.us
Doug.Dean@state.co.us

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

William Dudley, Assistant General Counsel-Lead
Bill.Dudley@xcelenergy.com
James P. Johnson, Assistant General Counsel
james.p.johnson@xcelenergy.com
Terri Eaton, Director, Federal Regulatory Affairs
terri.k.eaton@xcelenergy.com
Joseph W. Lowell
joseph.lowell@morganlewis.com
Arjun P. Ramadevanahalli
arjun.ramadevanahalli@morganlewis.com

Dated this 30th day of January, 2017.

_______/s/ Scott Dunbar____________

11
LIST OF ATTACHMENTS

7. CPUC Decision No. C16-1075

8. CPUC Decision No. C16-0548-I

12