UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION. Berry Petroleum Company ) Docket No. ER _

Transcription

1 UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION Berry Petroleum Company ) Docket No. ER _ MOTION TO INTERVENE OUT-OF-TIME AND MOTION FOR CLARIFICATION OF SOUTHERN CALIFORNIA EDISON COMPANY AND PACIFIC GAS AND ELECTRIC COMPANY Pursuant to Rules 212 and 214(d) of the Rules and Regulations of the Federal Energy Regulatory Commission ( Commission or FERC ), Southern California Edison Company ( SCE ) and Pacific Gas and Electric Company ( PG&E ) hereby request that FERC accept this Motion to Intervene Out-of-Time in the above-referenced proceeding involving the request of Berry Petroleum for market-based rate ( MBR ) authority. I. FERC S JUNE 16, 2011 ORDER TERMINATED SCE S AND PG&E S MUST- TAKE OBLIGATIONS FOR QUALIFYING FACILITIES LARGER THAN 20 MW On June 16, 2011, FERC issued an Order Granting Application to Terminate Purchase Obligation in Docket No. QM11-2, 1 covering the service areas of Pacific Gas and Electric Company, SCE, and San Diego Gas & Electric Company, (hereinafter referred to collectively as the California IOUs ) in which it removed the mandatory Public Utility Regulatory Policies Act ( PURPA ) purchase obligation for qualifying facilities ( QF ) over 20 megawatts ( MW ) ( Order ). This Order was to become effective after the CPUC decision approving the QF/CHP Settlement Agreement is final and non-appealable, and the date the Commission s approval of 1 Pacific Gas and Elec. Co., 135 FERC 61,234 (2011).

2 the Joint Applicants section 210(m) is final and non-appealable. 2 The CPUC decision was the last decision to become final and non-appealable on November 23, 2011 ( Settlement Effective Date ). As of this date, SCE and PG&E no longer had obligations to enter into PURPA Power Purchase Agreements ( PPAs ) with QFs over 20 MWs. SCE entered into a Transition PPA with Berry Petroleum ( Berry-SCE PPA ) for deliveries from its 42 MW facility after the Settlement Effective Date, i.e., after the PURPA mandate was lifted. Likewise, PG&E entered into a Transition PPA with Berry Petroleum ( Berry-PG&E PPA ) for deliveries from its 38 MW facility after the Settlement Effective Date. SCE understood that Berry would obtain FERC authority to enter into non-purpa contracts such as the Berry-SCE PPA and the Berry-PG&E PPA by seeking MBR authority. Per the Energy Policy Act of 2005, the primary criterion used by FERC to determine whether to terminate the must-take obligation under PURPA was non-discriminatory access of QFs to wholesale markets. In the Order, FERC clearly establishes this fact: We have reviewed the four components of the California market: (1) California s CHP Program; (2) California s RPS Program; (3) California s RA requirements; and (4) CAISO s implementation of the MRTU day-ahead market. And, we find that, considering these four components together, California s market will contain competitive qualities comparable to those identified in PURPA section 210(m)(1)(A) and (B). Therefore, we find that QFs will have non-discriminatory access to wholesale markets, comparable to those identified in PURPA sections 210(m)(1)(A) and (B), as required under PURPA section 210(m)(1)(C). 3 Once the Order is in place, parties must make a showing that they do not have nondiscriminatory access to wholesale markets, comparable to those identified in PURPA sections 2 3 Id., at Ordering Paragraph (A) Id. at P

3 210(m)(4) to reinstate the must-take obligation. 4 Berry has offered no evidence that it does not have non-discriminatory access to wholesale markets, comparable to those identified in those PURPA sections. Indeed, all four prongs of the FERC s original analysis of QFs nondiscriminatory access to markets are still in place. In the absence of such evidence, there is no basis for FERC to reinstate the PURPA must-take obligation. Moreover, there is ample evidence that supports SCE and PG&E s position that the parties to the QF Settlement understood that the Transition PPAs would be FERC-jurisdictional PPAs. First, the Standard Transition PPA has a Mobile Sierra clause. 5 The clause indicates the expectation of FERC, not the CPUC, having jurisdiction to amend the agreements but only under the public interest standard. Second, the PPAs have a provision that requires the Seller to take a certain position regarding filings it would make under FERC Order Nos. 652 and 697, which are orders that relate to entities with market-based rate authority. 6 Additionally, in the California IOUs application to be relieved of the PURPA obligation, in discussing the interconnection arrangements that QFs would need if the PURPA purchase obligation was terminated, the IOUs stated: Many interconnected QFs that sell their full output to a host under PURPA today, in the near future will likely enter into new full USC 824a-3(m)(4). Section 9.12 of the Standard Transition PPA reads: Notwithstanding any provision of this Agreement, neither Party will seek, nor will they support any third party in seeking, to prospectively or retroactively revise the rates, terms, or conditions of service of this Agreement through application or complaint to FERC pursuant to the provisions of Section 205, 206, or 306 of the Federal Power Act, or any other provisions of the Federal Power Act, absent prior written agreement of the Parties. Further, absent the prior agreement in writing by both Parties, the standard of review for changes to the rates, terms or conditions of service of this Agreement proposed by a Party, a non-party or the FERC acting sua sponte shall be the public interest standard of review set forth in United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 US 332 (1956) and Federal Power Commission v. Sierra Pacific Power Co., 350 US 348 (1956). 6 Section 9.13 reads in relevant part: Seller also agrees that it will not, in filings, if any, made subject to Order Nos. 652 and 697, claim that the contractual arrangement set forth in this Agreement conveys ownership or control of generation capacity from Seller to Buyer

4 output contracts with their hosts that restrict sales to third parties, but such sales will not be under PURPA and will not be at avoided cost and therefore will be FERC-jurisdictional sales, requiring FERC-jurisdictional interconnection agreements. 7 This statement clearly states that the power sales (i.e., the output contracts ) of QFs in the near future likely would not be under PURPA and would be FERC-jurisdictional. While counsel for various QF interest groups protested the discussion of FERC jurisdiction over such future interconnection agreements, such counsel did not protest the characterization of future power sale contracts in the above-referenced application as not under PURPA. 8 II. SCE AND PG&E DID NOT INTERVENE IN THIS DOCKET BEFORE BECAUSE THEY SUPPORTED BERRY S REQUEST FOR MBR AUTHORITY SCE and PG&E did not intervene in Berry s request for MBR authority because they fully supported Berry s request and had no opinion on whether Berry merited a waiver of Prior Notice for its sales that occurred prior to the effective date of the MBR Tariff. In its original filing in this docket, Berry acknowledged that its contracts no longer meet the requirements for exemption from the Commission s rate regulation. 9 Berry even distinguished its two contracts, the Berry-SCE PPA and the Berry-PG&E PPA, from a PURPA contract that its under 20 MW QF had entered into. Berry has reported both its Berry-SCE PPA and its Berry-PG&E PPA on its Electric Quarterly Report ( EQR ) as being under its MBR Tariff. After FERC rejected Berry s waiver request, Berry Petroleum Company, 140 FERC 61,186 (2012), Berry issued a refund report, which again raised no issues causing SCE and PG&E any concern. SCE and PG&E fully agreed that the refunds were calculated correctly in Application at 36-37, Dkt. No. QM11-2 (Mar. 18, 2011). Joint Reply Comments of and Motion for Intervention of the California QF/CHP Parties in Support of the PURPA 210(m) Application of PG&E, et al., filed on April 15, 2011 in Dkt. No. QM Berry Application at 11 (July 11, 2012)

5 that there was no difference between a market-based rate and a cost-based rate because the contract was an avoided cost-based contract that merely happened to be entered into under MBR authority. On rehearing, Berry asked for the rejection of its waiver request to be reconsidered on two grounds that the failure to grant waiver reflected a departure from precedent and that there were extraordinary circumstances meriting the waiver. Crucially, Berry never indicated that FERC erred by asserting jurisdiction over the Berry-SCE PPA and the Berry-PG&E PPA. III. MOTION TO INTERVENE OUT OF TIME Although SCE and PG&E did not believe that the Commission would or should now address the issue of whether the Berry-SCE PPA and the Berry-PG&E PPA are FERCjurisdictional or are state-jurisdictional PURPA PPAs, it is now intervening to verify that this proceeding is closed as to the issue of whether Berry-SCE PPA and the Berry-PG&E PPA are FERC-jurisdictional service agreements. As discussed below, SCE and PG&E had no basis for knowing that such issue might be raised in this case. There is good cause for the intervention because Berry s own actions had led SCE and PG&E to believe that jurisdiction was a non-issue. SCE, a wholly-owned subsidiary of Edison International, is an investor-owned utility, subject to the Commission s jurisdiction. SCE s principal place of business is 2244 Walnut Grove Avenue, Rosemead, California SCE is a party to the Berry-SCE PPA and thus has a direct interest in the proceeding. SCE designates the following persons for service on the Commission s service list in this proceeding: Jennifer L. Key Steptoe & Johnson LLP 1330 Connecticut Avenue, N.W. Washington, D.C (202) jkey@steptoe.com Carol A. Schmid-Frazee Southern California Edison Company 2244 Walnut Grove Ave. Rosemead, CA (626) Carol.Schmidfrazee@sce.com - 5 -

6 PG&E is an electric and natural gas utility, organized and existing under the laws of the State of California, with its principal place of business at 77 Beale Street, San Francisco, California, PG&E is a FERC-jurisdictional public utility that transmits electric energy in interstate commerce. PG&E is a party to the Berry-PG&E PPA. As such, PG&E has a substantial interest in this proceeding. Accordingly, PG&E requests that the Commission grant PG&E s motion to intervene in this proceeding. PG&E designates the following persons for service on the Commission s service list in this proceeding: Evelyn C. Lee Pacific Gas and Electric Company 77 Beale Street B30A Post Office Box 7442 San Francisco, CA (415) ECL8@pge.com IV. SCE AND PG&E SEEKS CLARIFICATION THAT FERC WILL NOT ADDRESS JURISDICTION OVER THE BERRY-SCE PPA AND BERRY-PG&E PPA ABSENT A PROCEDURALLY APPROPRIATE REQUEST SCE and PG&E seek assurance that FERC will not address the issue of whether it lacks jurisdiction over the Berry-SCE PPA and Berry-PG&E PPA absent a proper request for such a ruling. Time and again, FERC has ruled that it will not issue rulings on whether contracts, activities, or transactions submitted to it are jurisdictional unless the applicant files a Petition for Declaratory Order ( PDO ) and submits a filing fee. As explained in PacifiCorp, 125 FERC 61,034 (2008): 29. As a procedural matter, when an applicant seeks a disclaimer of jurisdiction by the Commission, the proper forum in which to present such a request is in a petition for a declaratory - 6 -

7 order, pursuant to 18 C.F.R (a)(2) (2008) of the Commission s regulations Because this proceeding did not include a PDO, or a filing fee, SCE and PG&E seek confirmation that the issue of jurisdiction over the Berry-SCE PPA and the Berry-PG&E PPA is not and will not be considered. SCE and PG&E are concerned that Berry believes such issue may be addressed in the absence of a specific request that FERC rule on the jurisdictional issue. Specifically, Berry states in footnote 22 of its rehearing request: Berry has become aware that others are seeking confirmation from the CPUC that the Transition Contracts at issue here were executed pursuant to a state regulatory authority s implementation of PURPA, such that they would be exempted from sections 205 and 206 of the FPA. Order No. 671 at P 92. If a clarification or interpretation of this matter is made available, Berry may submit that information to the Commission with a request for reconsideration of the September 7 Order s requirement to pay refunds and time value interest payments. SCE and PG&E seek clarification that Berry may not seek reconsideration of the September 7 Order on the issue of whether it owes refunds until and unless it files a PDO to obtain a ruling on jurisdiction in a new proceeding or, at the very least, pays the filing fee. 11 Additionally, the jurisdictional issue should not be considered because a final, nonappealable order has been issued on the jurisdictional issue. Although Berry argued on rehearing that there was uncertainty as to whether a Transition PPA is a tool for state implementation of PURPA, it did not frontally attack the refund decision on the grounds the Berry-SCE PPA and the Berry-PG&E PPA were not jurisdictional. Berry only attacked the denial of the waiver. The See also Direct Access Management, L.P., 75 FERC 61,112 at p. 61, 393 (1996) ( [A]nyone seeking a formal Commission determination regarding the jurisdictional status of certain of its activities must file a petition for declaratory order pursuant to 18 C.F.R and , accompanied by the appropriate filing fee. ). In Neptune Regional Transmission System, LLC, FERC addressed a request to disclaim jurisdiction included in a Section 203 filing because the applicant submitted the requisite filing fee. 111 FERC 61,306 at P 3 n.2 (2005)

8 Specification of Error states: (T) he imposition of a refund obligation is inconsistent with prior Commission precedent that provides for waiver of the prior notice requirement in extraordinary circumstances. 12 Plainly, the only error being asserted is FERC s denial of the waiver. The Statement of Issues likewise focuses on the waiver rather than FERC jurisdiction. 13 Given that Berry has conceded jurisdiction and has not sought rehearing of the jurisdictional issue, there is a final and now non-appealable FERC order on this issue. V. THERE IS NO BASIS FOR A FERC FINDING DISCLAIMING JURISDICTION In the unlikely event that FERC does not remain silent on the issue of jurisdiction and/or does not grant SCE and PG&E s clarification, it should be aware that SCE and PG&E disagree with the notion that the Berry-SCE PPA and the Berry-PG&E PPA could have been entered into pursuant to PURPA for the simple reason that SCE and PG&E are no longer mandated by PURPA to purchase energy or capacity from over 20 MW QFs. Any claim that the PURPA mandate existed after November 23, 2011 is a collateral attack on a final, non-appealable order. VI. CONCLUSION Wherefore, the Commission should grant this motion to intervene and provide the clarification requested. Respectfully submitted, /Carol A. Schmid-Frazee/ Carol A. Schmid-Frazee Southern California Edison Company 2244 Walnut Grove Ave. Rosemead, CA (626) /Jennifer L. Key/ Jennifer L. Key Steptoe & Johnson LLP 1330 Connecticut Avenue, N.W. Washington, D.C (202) Berry Rehearing Request at 1 (Oct. 9, 2012). Id. at

9 /Evelyn C. Lee/ Evelyn C. Lee Pacific Gas and Electric Company 77 Beale Street B30A Post Office Box 7442 San Francisco, CA (415)

10 CERTIFICATE OF SERVICE I hereby certify that I have this day served the foregoing document upon each person designated on the official service list compiled by the Secretary in this proceeding. Dated at Washington, D.C. this 17th day of December, /Jennifer L. Key/ Jennifer L. Key Steptoe & Johnson LLP 1330 Connecticut Avenue, N.W. Washington, D.C (202)

11 Document Content(s) Berry.PDF