20250514Appellants Reply Brief.pdf

Electronically Filed
5/14/2025 3:29 PM
Idaho Supreme Court
Melanie Gagnepain,Clerk of the Court
By:Brad Thies,Clerk
IN THE SUPREME COURT OF THE STATE OF IDAHO
PACIFICORP DBA ROCKY MOUNTAIN )
POWER, )
Supreme Court Case No. 52508-2024
Petitioner-Appellant, )
vs. )
IDAHO PUBLIC UTILITIES )
COMMISSION, )
Respondent. )
APPELLANT'S REPLY BRIEF
Appeal From the Idaho Public Utilities Commission
Case No. PAC-E-24-05
Commissioners Eric Anderson, John R. Hammond Jr., and Edward Lodge presiding

_____________________________............................................_______________________.........................................................................................._________________________________________________________________________________________________._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._:
Dallas DeLuca,pro hac vice Adam Triplett
[e-mail] Deputy Attorney General
Joseph M. Levy,pro hac vice PO Box 83720
[e-mail] Boise, ID 83720-0074
Markowitz Herbold PC [e-mail]
1455 SW Broadway, Suite 1900
Portland, OR 97201 Attorneys for Respondent
W. Christopher Pooser, Bar No. 5525
[e-mail]
Stoel Rives LLP
101 S Capitol Boulevard, Suite 1900
Boise, ID 83702
Attorneys for Petitioner-Appellant

TABLE OF CONTENTS
Page
INTRODUCTION .....................................................................................................1
ARGUMENT.............................................................................................................2
I. The Commission unreasonably interpreted the unambiguous
Protocol........................................................................................................2
IL The Commission's interpretation of the Protocol is not entitled to
deference......................................................................................................8
III. The Commission's decision is not fair,just, and reasonable. ...................I I
CONCLUSION........................................................................................................15
i

TABLE OF AUTHORITIES
Pau(s)
Cases
Amerada Hess Pipeline Corp. v. F.E.R.C.,
117 F.3d 596 (D.C. Cir. 1997)..................................................................................... 10
Coats-Sellers v. State, ex rel. Dep't of Transp.,
192 Or. App. 432, 85 P.3d 881 (2004)......................................................................... 10
Comm'r of Corr. v. Freedom of Info. Comm'n,
307 Conn. 53, 52 A.3d 636 (2012) .............................................................................. 10
In Re Decision on Joint Motion to Certify Question of L. to Idaho Supreme
Ct. (Dkt. 31, 32, 45),
165 Idaho 298, 444 P.3d 870 (2018).............................................................................. 8
Duncan v. State Bd. of Accountancy,
149 Idaho 1, 232 P.3d 322 (2010).................................................................................. 9
Ellis-Hall Consultants v. Pub. Serv. Comm'n,
2016 UT 34, 379 P.3d 1270 (2016) ............................................................................... 9
Invenergy Thermal LLC v. Watson,
701 F. Supp. 3d 1080 (W.D. Wash. 2023)................................................................... 14
Loper Bright Enters. v. Raimondo,
603 U.S. 369 (2024)..................................................................................................... 11
Michigan v. E.P.A.,
576 U.S. 743 (2015)....................................................................................................... 3
Mills v. Holliday,
94 Idaho 17, 480 P.2d 611 (1971).................................................................................. 3
Nw. Pub. Commc'ns Council v. Qwest Corp.,
323 Or. App. 151, 527 P.3d 30 (2022)........................................................................... 9
ii

In the Matter of PacifiCorp d/b/a Pacific Power, Application for Partial
Waiver of OAR Chapter 860-089, Request to Engage Independent
Evaluator, and Approval of 2025 Draft RFP,
Docket No. UM 2383 PacifiCorp's Expedited Application for Partial
Waiver of OAR Chapter 860-089, Request RFP (Or. PUC Apr. 16,
2025) ..............................................................................................................................4
PacifiCorp v. Watson,
No. 3:23-cv-06155-TMC, 2024 WL 3415937 (W.D. Wash. July 15, 2024)............... 14
Petition for an Exemption from Utility Customer Relations Rules 311(3)
and(S),
Case No. SUZ-W-19- 01, Order No. 34405 at 6 (Aug. 13, 2019)............................... 12
S.C. Pub. Serv. Auth. v. F.E.R.C.,
762 F.3d 41 (D.C. Cir. 2014)....................................................................................... 12
Scenic Am., Inc. v. U.S. Dep't of Transp.,
836 F.3d 42 (D.C. Cir. 2016)....................................................................................... 11
St. Luke's Health Sys., Ltd. v. Bd. of Comm'rs of Gem Cnty.,
168 Idaho 750, 487 P.3d 342 (2021)............................................................................ 10
State v. Bujak,
174 Idaho 102, 551 P.3d 771 (2024).............................................................................. 9
In the Matter of Suez Water Idaho Inc. 's Petition for an Exemption from
Utility Customer Relations Rules 311(3) and(S),
Case No. SUZ-W-19- 01, Order No. 34405 at 6 (Aug. 13, 2019)............................... 12
In the Matter of the Application for Approval of the 2020 PacifiCorp Inter-
Jurisdictional Allocation Protocol,
Case No. PAC-E-19-20, Order No. 34640 (Idaho PUC Apr. 22, 2020) ..................... 10
In the Matter of the Application of Idaho Power Co.for Auth. to Modify Its
Rule HLine Extension Tariff Related to New Serv. Attachs. &Distrib.
Line Installations,
Case No. IPC-E-08-22, Order No. 30955 (Idaho PUC Nov. 30, 2009) ...................... 11
M

In the Matter of the Application of Intermountain Gas Company to Change
its Rates and Charges for Natural Gas Service in the State of Idaho,
Case No. INT- G- 16- 02, Order No. 33757 at 35 (Apr. 28, 2017) ............................. 12
Utah Power &Light Co. v. Idaho Pub. Utils. Comm'n,
105 Idaho 822, 673 P.2d 422 (1983)............................................................................ 12
Statutes
Wash. Admin. Code § 173-446-600.................................................................................... 5
Wash. Admin. Code § 173.446.610 .................................................................................... 5
Wash. Rev Code 70A.65.080 .............................................................................................. 6
Wash. Rev. Code 70A.65.200 ............................................................................................. 5
Other Authorities
Acquire, WEBSTER'S NEW INT'L DICTIONARY 18 (3d ed. 2002)........................................4
FUNDAMENTALS OF ENERGY REGULATION at 183 (2d ed., Public Utilities
Reports, Inc. 2013)....................................................................................................... 12
iv

INTRODUCTION
The meaning of the 2020 Inter-Jurisdictional Cost Allocation Protocol (the
"Protocol" or "2020 Protocol") is unambiguous: generation-related dispatch costs or
generation-related taxes are system costsi.e., costs that are recoverable from all
states parry to the Protocol (the "Member States"). Washington's Climate
Commitment Act requires PacifiCorp to purchase an "Allowance" from Washington
for each ton of greenhouse gases its Washington facility ("Chehalis") emits. Under
any plausible reading of the Protocol, Allowances are a recoverable as system costs.
Defendant-respondent Idaho Public Utility Commission (the "Commission")
does not proffer any plausible interpretation of the Protocol that would prohibit
PacifiCorp from recovering Allowance costs. Instead, the Commission creates
various exceptions and rules to recoverability that are found nowhere in the text of the
Protocol. It then requests deference for its unreasonable interpretation of the Protocol.
This request should be rejected. The Protocol should be applied according to its plain
terms.
The Commission also fails to explain how denying recovery for Allowance
costs is fair,just, and reasonable. It isn't. PacifiCorp is legally required to incur
Allowance costs to generate electricity from its Chehalis facility and Idaho customers
receive a substantial benefit from its generation. Those customers should pay for the
benefits they receive, rather than forcing PacifiCorp to absorb all the costs itself.
1

ARGUMENT
I. The Commission unreasonably interpreted the unambiguous Protocol.
The Commission's interpretation of the Protocol cannot be squared with its
plain meaning. The Protocol provides that "generation-related dispatch costs" or
"generation . . . taxes" are system costs that are allocated across Member States.
(R., p. 287, L. 217-18; R., p. 288, L. 232.)1 Allowances plainly fall under the
dictionary definitions of"cost" or "tax." (Opening Br. at 12.) But the Commission
has no response to this. Instead, the Commission fights the plain text of the Protocol
and proposes readings or carveouts that cannot be reconciled with the agreement.
The Commission first proposes definitions that are found nowhere in the
Protocol. For example, the Commission suggests that the Cap and Invest Program is a
Portfolio Standard because the Program "prescribes a process PacifiCorp must follow
to lawfully operate Chehalis to generate electricity." (Resp't Br. at 10.) The
Commission also contends that the Cap and Invest Program creates "artificially
inflated costs," and is situs-assigned for that reason. (Id. at 11.) But the
Commission's arguments could be made about any generation tax, including the
Wyoming Wind tax. Generation "taxes" are costs that PacifiCorp must pay to
lawfully generate electricity, and any generation tax will "artificially" inflate costs
due to the cost of the tax. Yet, the Protocol expressly says that generation taxes are
system costs, and so the Commission's re-interpretation of the agreement is in conflict
with its actual terms. (R., p. 287, L. 217-18; R., p. 288, L. 232.)
1 Citations to the record provide pages in the redacted record.
2

The Commission also contends that Allowance costs are not generation-related
because the ratio of carbon emissions to electricity will vary. (Resp't Br. at 18.) This
is not a finding made by the Commission below and should not be credited because
courts may uphold an agency action "only on the grounds that the agency invoked
when it took the action." See Michigan v. E.P.A., 576 U.S. 743, 758 (2015); accord
also Mills v. Holliday, 94 Idaho 17, 19, 480 P.2d 611 (1971) (refusing to uphold
agency decision when unsupported by findings of fact) (citations omitted).
Regardless, Allowance costs are still generation-related, even if the ratio of emissions
to electricity might vary. As generation increases, the costs go up—even if the
amount that the costs go up may vary over time depending on the weather. That can
only be described as a generation cost or generation tax. Accordingly, Allowance
costs are recoverable under the unambiguous text of the Protocol.
Pushing back, the Commission argues that Allowance costs are situs-assigned
because the Cap and Invest Program turns Chehalis into a state Resource. But under
the plain meaning of the Protocol, that cannot be correct. For a Resource to qualify as
a state Resource—and therefore be situs assigned—it must be "acquired" in
accordance with a state-specific resource or portfolio standard. (R., p. 347, L. 138-40;
R., p. 285, L. 173-75; R., p. 285, L. 168-72.) The Commission asserts that the
Protocol does not define "acquire," and from this silence, the Commission contends
that PacifiCorp "acquired" Chehalis once it was required to obtain Allowances.
(Resp't Br. at 12-13.) The Commission acknowledged, however, that PacifiCorp has
lost no property rights to Chehalis. (See R., p. 420.) The Commission's interpretation
is not a plausible reading of the Protocol.
3

To "acquire" means "to come into possession, control, or power of disposal
ofj.]" Acquire, WEBSTER'S NEW INT'L DICTIONARY 18 (3d ed. 2002). PacifiCorp did
not gain possession, control, or power to dispose of Chehalis after it was required to
purchase Allowances.2 Rather, it possessed, controlled, and could dispose of Chehalis
when it initially purchased the facility, more than a decade before the Cap and Invest
Program was enacted. In the Matter of the Application of PacifiCorp DBA Rocky
Mountain Power for Approval of Changes to Its Elec. Serv. Schedules, Case No.
PAC-E-08-07, Order No. 30783 (Idaho PUC Apr. 16, 2009).3 It makes little sense to
suggest that requiring PacifiCorp to incur a new cost or tax suddenly caused it to
come into possession or control of a facility that its already owns. By that logic, the
Wyoming Wind Tax also caused PacifiCorp to "acquire" its wind generation facilities
in Wyoming, meaning those would be sites-assigned. But they are not, and no party
has ever claimed that paying a tax in order to continue operations makes it a situs-
a In contrast, PacifiCorp has sought to acquire Resources to comply with
Oregon's portfolio standard, which will be situs-assigned. (See In the Matter of
PacifiCorp d/b/a Pacific Power, Application for Partial Waiver of OAR Chapter 860-
089, Request to Engage Independent Evaluator, and Approval of 2025 Draft RFP,
Docket No. UM 2383 PacifiCorp's Expedited Application for Partial Waiver of OAR
Chapter 860-089, Request to Engage Independent Evaluator, and Expedited Approval
of 2025 Draft RFP (Or. PUC Apr. 16, 2025), available at
http:Hedocs.puc.state.or.us/efdocs/HAA/haa336210026.pdf(last visited May 13,
2025).)
3 Order No. 30783 is available at htt2s://lf-
puc.idaho.gov/WebLink/DocView.aspx?dbid=0&id=77647; errata available at
https:Hlf-puc.idaho.gov/WebLink/DocView.aspx?id=77648. See also State of
Washington Energy Facility Site Evaluation Council, "Chehalis Generation Facility,"
available at https://www.efsec.wa.gov/energ_y-facilities/chehalis-generation-facility
(last visited May 13, 2025).
4

assigned cost, as it would effectively mean that every cost is situs-assigned. This
would eviscerate the Protocol.
Nor has PacifiCorp ever lost the right to "lawfully employ" Chehalis, contrary
to the Commission's claim otherwise. (Resp't Br. at 13.) As an initial matter, the
Cap and Trade Program does not require PacifiCorp to buy allowances in advance.
PacifiCorp can buy them during and even after the compliance year and surrenders
them to Washington months and years later. Wash. Admin. Code §§ 173-446-600(3)
& (4).4 Regardless, though, nothing in the Cap and Invest Program strips PacifiCorp
of its right to lawfully operate Chehalis without Allowances. Regulated entities must
demonstrate compliance with the law, and failure to comply with the law can result in
penalties, ranging from $10,000 to $50,000 per day. Wash. Rev. Code ("RCW")
70A.65.200(2)-(5); see also Wash. Admin. Code §§ 173.446.610(2)-(6). Nothing
would prohibit PacifiCorp from operating if it does not obtain Allowances; it would
simply face financial penalties.
Purchasing or failing to purchase Allowances does not mean that PacifiCorp is
acquiring the entire Chehalis facility as a new state resource. The Commission's logic
to the contrary would mean that PacifiCorp ceased lawfully operating Chehalis if it
failed to pay its yearly property taxes and faced a financial penalty, thereby meaning
that PacifiCorp has "acquired" Chehalis due to property taxes. This cannot be correct
because then every legally required cost—from payroll taxes to mandated safety
a The Washington Department of Ecology has a graph of the compliance
deadlines here: https://ecolog_y.wa.gov/air-climate/climate-commitment-act/cap-and-
invest/auctions-and-market/compliance (last visited May 13, 2025).
5

equipment—would become situs-assigned. Indeed, PacifiCorp cannot "lawfully
operate" its wind turbines in Wyoming unless it pays the Wind Tax, but all parties
agree that PacifiCorp doesn't "re-acquire" its Wyoming wind Resources every time it
pays this tax.
The Commission incorrectly asserts that the Cap and Invest Program serves the
same purpose as a portfolio standard. (Resp't Br. at 17-18.) As evidence, the
Commission suggests that if the Cap and Invest Program had limited greenhouse gas
emissions (and thereby required acquiring different resources to sustain the same
levels of energy generation), then it would be a portfolio standard. Critically, though,
this is not how the Cap and Invest Program works. As explained, the Cap and Invest
Program does not require any resource acquisition (as a portfolio standard does), but
requires only that PacifiCorp pay for carbon dioxide equivalent emitted from
Chehalis. This is a generally applicable requirement on all generators in Washington
with annual emissions that equal or exceed 25,000 metric tons of carbon dioxide
equivalent. RCW 70A.65.080(1)(b). This imposition of costs—with no resource
acquisition requirement—is not a portfolio standard.
The Commission suggests that the mere imposition of costs on emissions could
constitute a portfolio standard (Resp't Br. at 17-18), but this isn't right either. If that
were enough to make a policy a portfolio standard, then the Wyoming Wind Tax
could be considered a portfolio standard because the imposition of a tax on wind
energy discourages the use of wind power—thereby incentivizing the use of non-wind
power. But the fact that a policy creates economic incentives and disincentives for
certain energy sources does not mean the policy transforms into a renewable portfolio
6

standard. And the purpose of the policy is also irrelevant, contrary to the
Commission's suggestion otherwise. Indeed, it is entirely possible that the Wind Tax
was intended to reduce wind energy, but that does not make it a portfolio standard.
Simply put, neither the Wyoming Wind Tax nor the Cap and Invest Program require
any resource acquisition, and so neither constitute a renewable portfolio standard.
In any event, the Commission fails to acknowledge that the Protocol requires
both "[c]osts and benefits" associated with a portfolio standard be situs-assigned—
meaning that Idaho customers should not receive any of the benefits of Chehalis if
they do not incur all of the costs. (R., pp. 285-86, L. 173-79.) By allowing Idaho
customers to retain the benefits of Chehalis generation, the Commission's ruling
implicitly acknowledges that the Cap and Invest Program is not a portfolio standard.
Otherwise, Idaho customers would not be permitted to retain the benefits. This self-
contradictory ruling is unreasonable. And if the Commission's decision is affirmed, it
should be instructed to remove the benefits of Chehalis from customer rates in
accordance with the mechanics of the Protocol. The Commission should not be
permitted to pick and choose provisions of the Protocol to enforce or ignore.
The Commission also contends that PacifiCorp should go to Washington to
recover Allowance costs, rather than Idaho customers. (Resp't Br. at 20.) But Idaho
customers are the ones receiving this part of the benefit of Chehalis generation, not
Washington customers. Also, the parties are operating in the framework established
by the Protocol, which the Commission found "fairly and reasonably allocates the
Company's system costs," and is "in the public interest." Order No. 34640 at 4. The
Commission made this determination while recognizing the "evolving state policies
7

on carbon based electricity and the decision to either retire or continue operating coal
generation assets." Id. Operating within this agreed-upon framework, PacifiCorp
now seeks to recover for costs that were well within the anticipated scope of the
Protocol, and that are to be incurred by all Member States. And Idaho customers will
incur the exact same costs if Washington customers are forced to pay their share.'
In sum, the Commission's proposed interpretation of the Protocol cannot be
squared with the requirements of that agreement. The Protocol should be enforced by
its plain terms.
II. The Commission's interpretation of the Protocol is not entitled to
deference.
The Commission suggests that its erroneous interpretation of the Protocol is
entitled to deference. This is not true.
As just explained, the Protocol is unambiguous and the Commission's
interpretation is not reasonable. The Cap and Invest Program is plainly a generation
cost or generation tax under the Protocol, and all of the Commission's arguments
otherwise depend on injecting new language or requirements into the agreement.
This alone strips the Commission of any claim to deference. In Re Decision on Joint
Motion to Certify Question of L. to Idaho Supreme Ct. (Dkt. 31, 32, 45), 165 Idaho
298, 305, 444 P.3d 870, (2018) (agency entitled to no deference if it contradicts "clear
' As an aside, the Commission points to decisions by other state utility
commissions disallowing recovery of Allowance costs. (Resp't Br. at 13-14.) These
decisions were wrong, and PacifiCorp has appealed them. In any event, these other
decisions do not bear on the merits of this appeal. The Commission's interpretation
cannot be squared with the language of the Protocol, and for that reason, its decision
should be reversed.
8

expression"); see also Duncan v. State Bd. of Accountancy, 149 Idaho 1, 3, 232 P.3d
322 (2010) (no deference if agency interpretation is unreasonable). Accordingly, this
Court should follow the plain meaning of the Protocol, and afford no deference to the
Commission's unreasonable interpretation.
The Commission's reliance on State v. Bujak is misplaced. 174 Idaho 102, 551
P.3d 771 (2024). Bujak concerned deference to a court's interpretation of its own
order, not an agency's interpretation of its prior order. Id. The trial court ordered that
the defendant should serve thirty days in jail, which the court later interpreted to mean
thirty, twenty-four hour days—meaning that serving from Friday morning to Sunday
morning is two days, not three days. Id. This Court recognized that a court is best
positioned to understand what its prior orders mean, and therefore deferred to this
reasonable interpretation. Id. In that situation, the trial court drafted its own order
and was the sole party responsible for interpreting and applying the order, and its
interpretation was reasonable. With these factors present, deference made sense.
In contrast, the rationales for deference are not present here. See Duncan, 149
Idaho at 3, 232 P.3d at 324 (citation omitted). This Court has never held that an
agency is entitled to deference for interpretations of its prior orders, and many states
afford no such deference (including multiple Member States). See, e.g.,Nw. Pub.
Commc'ns Council v. Qwest Corp., 323 Or. App. 151, 164, 527 P.3d 30 (2022); Ellis-
Hall Consultants v. Pub. Serv. Comm'n, 2016 UT 34, ¶28, 379 P.3d 1270 (2016).
And, although the Commission is ultimately tasked with rate-setting, it is not
responsible for the Protocol. The Protocol reflects an agreement between
"Commission staff members, State regulatory agencies, customers, consumer
9

advocates, conservation organizations," and other interested parties from the Member
States. (R., p. 278, L. 2-9; see also Resp't Br. at 15 n.8 (recognizing that the Protocol
was developed with "interested stakeholders").) It is interpreted and applied by
numerous utility commissions across states, each with differing policy priorities.
In other circumstances where multiple different agencies have been tasked with
interpretation or application, this Court has declined to defer to any particular agency.
See St. Luke's Health Sys., Ltd. v. Bd. of Commis of Gem Cnty., 168 Idaho 750, 755,
487 P.3d 342 (2021).
Relatedly, the Commission did not draft or edit its relevant provisions. (See In
the Matter of the Application for Approval of the 2020 PacifiCorp Inter-Jurisdictional
Allocation Protocol, Case No. PAC-E-19-20, Order No. 34640 (Idaho PUC Apr. 22,
2020).)6 Courts have held that the "principle of deference to agency interpretation of
its own rules does not extend to agency interpretation of rules not promulgated by that
agency." Coats-Sellers v. State, ex rel. Dept of Transp., 192 Or. App. 432, 439, 85
P.3d 881 (2004) (citation omitted); see also Comm'r of Corr. v. Freedom of Info.
Comm'n, 307 Conn. 53, 65, 52 A.3d 636 (2012) (only giving deference to the
"promulgating agency");Amerada Hess Pipeline Corp. v. F.E.R.C., 117 F.3d 596,
600 (D.C. Cir. 1997) ("We generally do not accord deference to an agency's
interpretation of regulations promulgated by another agency that retains authority to
administer the regulations.").
6 Order No. 34640 is available at https:Hlf-
puc.idaho.gov/WebLink/DocView.aspx?id=80765.
10

The Commission argues that it should be entitled to deference because the
Protocol has a "public interest gloss." (Resp't Br. at 15.) This is not a standalone
basis for deference, and the Commission's reliance on Scenic Am., Inc. v. U.S. Dep't
of Transp., 836 F.3d 42, 56 (D.C. Cir. 2016), is misplaced. As a threshold matter,
Scenic America relied on Supreme Court precedent that has since been overruled.
Loper Bright Enters. v. Raimondo, 603 U.S. 369, 396 (2024). In any event, the
Commission is entitled to no deference, for the reasons explained above, and so the
fact that the Protocol bears on the public interest does not itself provide a reason to
defer to the Commission.
III. The Commission's decision is not fair,just, and reasonable.
The Commission's decision to disallow recovery of Allowance costs is also
unfair, unjust, and unreasonable. The Commission does not dispute the "fundamental
ratemaking principle" that "utility costs should be paid by those entities that cause the
utility to incur the costs." In the Matter of the Application of Idaho Power Co.for
Auth. to Modify Its Rule HLine Extension Tariff Related to New Serv. Attachs. &
Distrib. Line Installations, Case No. IPC-E-08-22, Order No. 30955 at 13 (Idaho PUC
Nov. 30, 2009);' (see also Resp't Br. at 19). The Commission has frequently
referenced its intent to "adhere to the principles of cost causation" when it sets utility
I Order No. 30955 is available at https://If-
puc.idaho.gov/WebLink/DocView.aspx?dbid=O&id=6125 1.
11

rates,' and this principal is widely acknowledged in other state and federal
jurisdictions.' The Commission never concluded below that the Allowance costs
were imprudently incurred, (see R., pp. 179-81; R., pp. 418-24), given that PacifiCorp
was obligated by law to purchase them to generate electricity from Chehalis. See
Utah Power &Light Co. v. Idaho Pub. Utils. Comm'n, 105 Idaho 822, 826, 673 P.2d
422 (1983) (discussing a utility's "right to collect a return on necessary and prudent
investments"). And the Commission does not contest that shutting down Chehalis
operations would increase overall costs for Idaho customers by millions of dollars
(though it disputes the precise amount). (Resp't Br. at 19.)
Instead, the Commission primarily argues that the Cap and Invest Program is
not fair,just, and reasonable because of the Protocol. (Id. at 16-18.) But these
arguments do not address how the decision is fair,just, or reasonable in its own right.
As explained above, per the Protocol's unambiguous language, the Cap and Invest
s See e.g., In the Matter of Suez Water Idaho Inc. 's Petition for an Exemption
from Utility Customer Relations Rules 311(3) and(S), Case No. SUZ-W-19- 01, Order
No. 34405 at 6 (Aug. 13, 2019), available at https:Hlf-
puc.idaho.gov/WebLink/DocView.aspx?dbid=0&id=101341; In the Matter of the
Application of Intermountain Gas Company to Change its Rates and Charges for
Natural Gas Service in the State of Idaho, Case No. INT- G- 16- 02, Order No. 33757
at 35 (Apr. 28, 2017), available at https:Hlf-
puc.idaho.gov/WebLink/DocView.aspx?dbld=O&id=90422 ("We continue to adhere
to the principle of cost causation, namely that the cost causing customer is responsible
for the costs associated with its service.").
' Jonathan A. Lesser, Ph. D.& Leonardo R. Giacchino, Ph.D., FUNDAMENTALS
OF ENERGY REGULATION at 183 (2d ed., Public Utilities Reports, Inc. 2013)("One
fundamental regulatory principle is to allocate costs to those who cause them."); S.C.
Pub. Serv. Auth. v. F.E.R.C., 762 F.3d 41, 87-88 (D.C. Cir. 2014) (the cost-causation
principal compares "the costs assessed against a party to . . . benefits drawn by the
party.").
12

Program is a generation cost or tax under the Protocol. Resorting to the text of the
Protocol simply bolsters PacifiCorp's position.
The Commission also attempts to distinguish the substantively identical
Wyoming Wind Tax—which everyone concedes should be paid by out-of-state
customers—on the basis that it does not apply as a flat tax across the board. (Id. at
17.) But if one Member State opted not to receive any wind energy from Wyoming
(and thus did not need to pay the Wind Tax), or if the Wyoming legislature exempted
certain customers from the Wind Tax, it would still be fair,just, and reasonable for
consumers who benefit from Wyoming wind energy to pay the Wind Tax that is
incurred to provide them that benefit.10 Likewise, it is fair,just, and reasonable to
allocate Allowance costs across Member States proportional to the energy they
receive from Chehalis, even though Washington customers do not incur the costs due
to no-cost Allowances (just as a Member State would not incur the Wind Tax if that
state opted out of wind energy from Wyoming).
Imagine a scenario in which a group of friends go out to dinner, and one friend
pays the bill on the expectation that the others will repay him. If one of the other
friends refuses to pay (or, to be parallel to the Climate Commitment Act, the server
provides that friend's meal for free), is it just and reasonable for the other friends to
io The Commission focuses on the requirements of the Protocol here, but as
explained, that does not address whether the decision is fair,just, and reasonable on
its own. Either way, though, there is nothing in the Protocol to suggest that a
"generation-related cost" or a "generation . . . tax[]" ceases to be system-allocated
simply because one state has opted out. In other words, the Wind Tax would continue
to be allocated across the Member States that incur the tax, proportional to the wind
energy those Member States receive—even if one Member State did not have to pay.
13

then refuse to pay their shares, leaving the one friend covering the entire cost of the
dinner? Of course not. The other friends still received the benefit of a meal and
should pay the costs associated with that benefit. And, like the other friends in this
scenario, Idaho customers continue to receive a massive benefit from Chehalis
generation, on either parry's account. This remains true even if the server was not
authorized to provide the free meal, as that has no bearing on the amount owed by the
friends.
Though PacifiCorp has challenged the Cap and Invest Program as
unconstitutional, its purported illegality has no effect on the fairness of Idaho
customers paying for costs incurred for their benefit. (See Resp't Br. at 19.) And, in
any event, multiple courts have upheld the scheme as constitutional. See Invenergy
Thermal LLC v. Watson, 701 F. Supp. 3d 1080, 1093 (W.D. Wash. 2023), aff'd,
No. 23-3857, 2024 WL 5205745 (9th Cir. Dec. 24, 2024); PacifiCorp v. Watson,
No. 3:23-cv-06155-TMC, 2024 WL 3415937, at *7 (W.D. Wash. July 15, 2024),
appeal docketed, No. 24-4803 (9th Cir. Aug. 6, 2024). Regardless, these no-cost
Allowances for Washington customers do not affect the prices paid by customers in
other states, and so they have the same effect as any other situation where one
Member State simply does not incur system costs. Even if PacifiCorp is successful in
challenging the Cap and Invest Program for violating the dormant Commerce Clause,
the costs incurred for Idaho customers will remain unchanged. (Opening Br. at 24-
25.)
14

CONCLUSION
The Commission's interpretation of the Protocol is implausible because it is
contradicted by the plain text of the agreement. The Commission is owed no
deference for this implausible interpretation. And, in any event, the Commission's
decision not to allow PacifiCorp to recover legally mandated costs incurred in
providing energy to Idaho customers is unjust, unfair, and unreasonable. This Court
should vacate the Commission's orders and remand with instructions to allow
PacifiCorp to recover the Allowance costs.
DATED: May 14, 2025 STOEL RIVES LLP
ls/ W. Christopher Pooser
W. Christopher Pooser, Bar No. 5525
[e-mail]
MARKOWITZ HERBOLD PC
Dallas DeLuca,pro hac vice
[e-mail]
Joseph M. Levy,pro hac vice
[e-mail]
Attorneys for Petitioner-Appellant
15

CERTIFICATE OF SERVICE
I hereby certify that on May 14, 2025, I caused to be served, via email, a true and
correct copy of APPELLANT'S REPLY BRIEF in Docket No. 52508-2024 to the following:
Commission Staff
Adam Triplett
Deputy Attorney General
Idaho Public Utilities Commission
11331 W. Chinden Blvd., Bldg No. 8
Suite 201 A
Boise, ID 83720-0074
adam.triplettgpuc.idaho.gov
Bayer Corporation
Thomas J. Budge Brian C. Collins
Racine, Olson PLLP Greg Meyer
201 E. Center Brubaker&Associates
Pocatello, ID 83204-1391 16690 Swingley Ridge Rd., #140
[e-mail] Chesterfield, MO 63017
[e-mail]
me er consultbai.com
PacifiCorp Idaho Industrial Customers
Ronald L. Williams Bradley Mullins
Brandon Helgeson MW Analytics
Hawley Troxell Ennis & Hawley LLP Teitotie 2, Suite 208
PO Box 1617 Oulunsalo Finland, FI 90460
Boise, ID 83701 [e-mail]
[e-mail]
[e-mail]
Val Steiner Kyle Williams
Itafos Conda LLC BYU Idaho
val.steiner itafos.com williamsk byui.edu
Idaho Attorney General
Raul R. Labrador
Idaho Attorney General
Office of Attorney General
P.O. Box 83720
Boise, ID 83720-0010
[e-mail]
/s/ W. Christopher Pooser
W. CHRISTOPHER POOSER
16