Staff Response to Astaris Motion.doc

JOHN R. HAMMOND, JR.
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, ID 83720-0074
Idaho Bar No. 5470
Tele: [phone]
FAX: [phone]

Attorney for the Commission Staff

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE PETITION OF THE COMMISSION STAFF REQUESTING THAT THE COMMISSION INVESTIGATE THE BUY-BACK RATES IN THE LETTER AGREEMENT ENTERED INTO BY IDAHO POWER COMPANY AND ASTARIS LLC. )
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CASE NO. IPC-E-01-43

RESPONSE TO ASTARIS’
MOTION TO DIMISS AND
BRIEF ON COMMISSION
AUTHORITY
Comes now the Staff of the Idaho Public Utilities Commission, by and through its attorney of record, John R. Hammond, Deputy Attorney General, and responds to Astaris’ Motion to Dismiss and Brief on Commission Authority. The Staff urges the Commission to deny the Motion to Dismiss for the reasons set out below.
BACKGROUND
On December 28, 2001, the Staff of the Idaho Public Utilities Commission filed a Petition requesting that the Commission investigate the load reduction rates contained in the Letter Agreement between Idaho Power Company and Astaris LLC. On January 8, 2002, the Commission issued a Notice of Petition and initiated an investigation to review the load reduction rates contained in a Letter Agreement between Astaris LLC and Idaho Power Company. The background and procedural history of this case is contained in Order No. 28928. However, a discussion of the Electric Service Agreement (“ESA”) and its amending Letter Agreement are relevant.
A. The Electric Service Agreement.
On April 27, 1998, the Commission approved the ESA, dated December 30, 1997, between Idaho Power and Astaris’ predecessor FMC. See Case No. IPC-E-97-13, Order No. 27463. See also Staff Exhs. 109 and 110. On or about April 1, 2000, FMC and Solutia, Inc. entered into a joint venture and formed Astaris LLC. At this point in time Astaris became the assignee of the ESA and took over operations of the Pocatello facility. Astaris Motion at 3. The ESA required Idaho Power to supply two large blocks of electric power to Astaris’ phosphate processing facility in Pocatello. Staff Exh. 109, ESA at p. 4, § 4.2.1. The first block is for 120,000 kilowatts (“kW”) per hour and is a “take or pay” block (i.e., Astaris must pay for the power whether it uses it or not). Id., ESA at p. 5, § 4.2.2; Staff Exh. 110, Order No. 27643 at p. 5, 11-12. Section 5.2.1 of the ESA provides for the charges for the first block of energy. Staff Exh. 109, ESA at p. 12, § 5.2.1. The second block of power is for 130,000 kW and the energy charge (unlike the fixed energy charge in the take or pay) was based upon “all of Idaho Power’s costs directly related to supplying the Second Block of Energy.” Id., ESA at p.12, § 5.25.
The initial term of the ESA was to end on December 31, 2002. Id., ESA at p. 3, § 3.1. Following expiration of the initial term, the ESA would remain in effect until either Idaho Power or Astaris gave written notice of termination. Id., ESA at p. 4, § 3.2. After December 31, 2000, either party could terminate the agreement by delivering a written notice of termination with actual termination to occur two years after the written notice. Id.
In its Order approving the ESA, the Commission observed that “[b]y statute, the Commission has continuing jurisdiction to review existing contracts and on its own motion to investigate rates or practices and to order them changed. Idaho Code § 61-503.” Staff Exh. 110, Order No. 27463 at p. 14. Furthermore, and most importantly, the Commission ordered that as a condition of approval of the ESA that it would retain “authority over the [ESA] to insure that, as it is implemented, it does not impair the financial ability of Idaho Power to continue its service nor harm other ratepayers.” Id. at p. 15 (emphasis added). Neither party to the ESA petitioned the Commission for reconsideration of this Order nor moved to void the ESA pursuant to section 14.

B. The Letter Agreement.
In the fall and winter of 2000-2001, three external factors prompted the parties to amend the ESA. First, low water conditions reduced Idaho Power’s hydrogeneration. Second, these low water conditions compelled the Company to replace the lost generation with much higher priced power purchased in the volatile regional power market. Third, Astaris desired to discontinue its elemental phosphorus process and switch to a “wet” process. Hessing Dir. at p. 6. Consequently, its need for large amounts of power could be significantly reduced. The parties also noted that due to the increase in electric power prices they mutually desired to amend the ESA. Accordingly, on March 16, 2001, Idaho Power and Astaris filed an Application requesting approval of a Letter Agreement that would amend certain sections of the ESA. See Case No. IPC-E-01-9. The Letter Agreement was on Astaris letterhead and signed by the Astaris LLC CEO and President, as well as Idaho Power’s Vice-President for Regulatory Affairs. Id., LA at p. 3. Both parties were represented by separate counsel. The Application also states that FMC assigned the ESA to Astaris LLC. Staff Exh. 111, Application at n. 1.
The Letter Agreement proposed that Astaris would consume “no more than 70,000 kW’s of energy per hour” from the first block, starting from April 1, 2001 and continuing through the term of the Agreement. Id. at p. 2, ¶ 3. However, Astaris would continue to pay for 120,000 kW of energy per hour under section 4.2.1 of the ESA. Id. The difference – 50,000 kW or 50 MW – would be made available to Idaho Power for twenty-four (24) months beginning April 1, 2001 and ending March 31, 2003. Idaho Power would pay Astaris for the 50 MW at then projected market rates, over the two years of the Letter Agreement, minus a 13.5% discount. See Staff Exh. 111, LA, Schedule A. The total cost for the 50 MW of power was estimated at approximately $140 million over the two years, or about 15.9¢ per kWh ($159 per MWh). Id. Idaho Power also represented that the 15.9¢ proposed load reduction payment would be offset by the Company’s continued recovery of the energy charge for the entire 120,000 kWh in the first block. Finally, Idaho Power requested that the payments it would make to Astaris under the Letter Agreement be treated as a purchased power expense for purposes of Idaho Power’s Power Cost Adjustment (“PCA”) mechanism. Id. at p. 3, ¶ 7; Application at p. 2.
The Letter Agreement also provided for the shut down of furnaces No. 1 and No. 4 at the Astaris facility in Pocatello. Id. at p. 1, ¶ 1. As a result, the demand charge set forth in section 4.2.1 of the ESA would be reduced by 130,000 kW and the charges for the second block demand under section 5.2.4 of the ESA would be reduced accordingly as of April 1, 2001. Staff Exh. 109; See also ESA at pp. 8-9, § 4.5. The Letter Agreement proposed that the ESA be amended to terminate at midnight on March 31, 2003. Staff Exh. 111, LA at p. 1. The Letter Agreement also provided that Idaho Power and Astaris would negotiate in good faith to develop a replacement electric service agreement for the Pocatello facility, which would become effective after the amended termination date of the ESA and its Letter Agreement on March 31, 2003. Id. at p. 2, ¶ 5.
Idaho Power and Astaris represented that the Letter Agreement’s terms were conditioned on favorable approval by the Idaho Public Utilities Commission. Id.; LA at p. 2, ¶ 6. The Letter Agreement also stated that “[a]ll other terms and conditions of the [ESA] except those expressly modified by this Letter of Understanding shall remain in full force and effect.” Staff Exh. 111, LA at p. 3, ¶ 8.
On April 10, 2001, the Commission issued its final Order and approved the Letter Agreement as a system resource and allowed the load reduction to be added to the Company’s resource portfolio. Order No. 28695 at p. 6. In approving the Letter Agreement, the Commission noted that it could save Idaho Power and ratepayers as much as $21 million if the forward market prices used to establish the prices for the buy-back became a reality. Order No. 28695 at pp. 5-6. The Commission further found that reasonably incurred payments made by Idaho Power to Astaris for purchases of energy should be treated as a purchase power expense and recovered through the Company’s PCA mechanism. Id.
Through December 31, 2001, Astaris is expected to have received $80.4 million in payments from Idaho Power under the Letter Agreement with the remaining $59 million to be paid over the remaining 15 months of the contract.
C. Closure of Astaris Plant.
In another development, Astaris LLC announced on October 11, 2001 that the Company would cease elemental phosphorus production and close its operation at the Pocatello plant by year-end. Staff Exhs. 107 and 108. Following cessation of production by Astaris, FMC would be responsible for the site and decommissioning of the plant. Id. Astaris witness Alan Seder’s prefiled direct testimony states that the plant is now using about 3 MW of power. Seder at p.14, ll.17-20.
ASTARIS MOTION AND BRIEF
On January 28, 2002, Astaris filed its Motion to Dismiss and Brief on Commission Authority requesting that the Commission dismiss this case in its entirety. Astaris argues that contrary to the legal authority cited in Staff’s Petition, the Commission is constrained by its authority under Idaho law and barred by the Idaho and United States Constitutions from abrogating the load reduction rates and ordering Idaho Power to pay Astaris a reduced price. Astaris also argues that beyond being unlawful, such an action by the Commission at this time would be unjust because it would deprive Astaris of revenues promised under the Letter Agreement Amendment after it has fully performed its end of the bargain and incurred substantial and irreversible expenses in reliance on it. Astaris claims that these expenses cannot be recovered except through the ESA’s load reduction provisions and it would not have agreed to this arrangement if its compensation were subject to changeable market prices for power.
COMMISSION STAFF RESPONSE
Based on the arguments below, Staff contends that Astaris’ Motion to Dismiss is without merit and should be denied by the Commission.
A. The Commission has authority to investigate whether the load reduction rates contained in the ESA are unjust and unreasonable.

Astaris argues that the Commission does not have authority pursuant to Idaho Code §§ 61-502 and 61-503, Idaho Supreme Court precedent or its reservation of authority in Order No. 27463 to abrogate the load reduction rates in the Letter Agreement Amendment to the ESA. Astaris argues that the Commission’s authority to interfere with a contract is limited only to transactions involving sales and rates to retail customers. Thus, Astaris contends that these authorities do not apply because the load reduction transaction is not a sale of regulated utility service to a retail customer pursuant to a contract, but rather is the reverse, a private vendor transaction to supply a good or service to a utility. Astaris’ analysis regarding the Commission’s authority is flawed for several reasons.
Under the Public Utilities Laws, the operative factor for jurisdictional purposes is the receipt of services. Anyone receiving services from a public utility is subject to public utility regulations and control. United States v. Utah Power & Light Co., 98 Idaho 665, 570 P.2d 1353 (1977). The ESA and its amending Letter Agreement is a single utility service “special” contract setting out the rates and terms for Idaho Power to provide electric service to Astaris. The special contract contains the terms of service to Astaris and a system of rates that address different considerations, i.e., energy rate, demand rate, customer or minimum charge, various penalty provisions, market based rate, sharing of profits from the sales of unused energy and load reduction payments. Astaris is clearly receiving services from a regulated utility and the ESA (and its Letter Agreement Amendment) were and are subject to this Commission’s jurisdiction.
1. The ESA and the Letter Agreement are a Single Special Contract. Astaris’ arguments insinuate that the ESA and its amendment are two separate contracts. However, the record plainly shows that the Letter Agreement is part of the single utility service special contract – the ESA between Idaho Power and Astaris. In the parties’ Application which accompanied the Letter Agreement, both parties’ counsel represent that the “attached Letter Agreement provide[s] for revision to the underlying [Electric Service] Agreement dated December 30, 1997 (“Agreement”) between the parties.” Staff Exh. 111, Application at p. 1 (Case No. IPC-E-01-9). The Application was signed by each party’s separate counsel. Id. at p. 4.
By its very terms, the Letter Agreement states that “the parties mutually desire to amend the [Electric Service] Agreement as set forth below. The purpose of this letter is to memorialize the parties understanding regarding the agreed upon amendments to the [Electric Service] Agreement.” Id. at p. 5, LA at p. 1. Paragraph 6 of the Letter Agreement also states that the parties “acknowledge and agree that this letter agreement is subject to the approval of the Idaho Public Utilities Commission. . . .” Id. at ¶ 6. Finally, paragraph 8 of the Letter Agreement states that “All other terms and conditions of the [Electric Service] Agreement except those expressly modified by this Letter of Understanding shall remain in full force and effect.” Id. at p. 7, ¶ 8. The Letter Agreement is signed by officers of both Astaris and Idaho Power. Id. Thus, it is apparent that the parties intended that the load reduction mechanism be included in the ESA.
It is readily apparent the parties recognized that the Commission has jurisdiction over the ESA and the Letter Agreement. Both documents were submitted to the Commission for review and approval. Section 13 of the ESA states that it is subject to the “jurisdiction and regulatory authority of the Commission and the laws of the State of Idaho.” Staff Exh. 109 at p. 21, § 13; see also Exh. 110. Likewise, paragraph 6 of the Letter Agreement states that it is subject to the approval of the Commission. Staff Exh. 111 at p. 6, § 6.
Contrary to the characterizations made by Astaris, the ESA and its amending Letter Agreement are not vendor transactions supplying Idaho Power with goods or services such as office supplies or vehicles. The ESA and its amendment is a contract affecting or relating to rates and services. As such, Idaho Code § 61-305 requires that such contracts be filed with the Commission. Idaho Code § 61-307 provides that no change to the public utility contract “relating to or affecting any rate, fair, toll, rental, charge, classification or service” shall be made except after 30 days notice to the Commission. The Commission is empowered to review contracts and set rates and services that are just, reasonable and in the public interest. Idaho Code §§ 61-502, 61-503, 61-622.
The ESA is not a private vendor contract – it and the amending Letter Agreement are a special contract for the provision of electric service to Astaris. Its load reduction provisions are no different than the provision of electrical service and the establishment of rates for other load reduction programs that the Commission approved during 2001. See Idaho Power’s Irrigation Load Reduction Program (Case No. IPC-E-01-3); Idaho Power’s Industrial Load Reduction Program (Case No. IPC-E-01-4); PacifiCorp’s Irrigation Buy-Back Program (Case No. PAC-E-01-4); and Avista’s Irrigation Buy-Back Program (Case No. AVU-E-01-4).
Taken as a whole, the ESA is a contract for the provision of utility services to Astaris. As amended, the ESA still obligates Idaho Power to furnish electric service to Astaris. Under the ESA and its amending Letter Agreement, Idaho Power is obligated to furnish demand and energy to Astaris under the “take or pay” provisions. Astaris is obligated to pay Idaho Power for 120 MW of energy and demand. Under the Letter Agreement, Astaris agrees to reduce its consumption and in “consideration for the reduction in Astaris’ consumption of energy as set forth in paragraph 3 above, Idaho Power shall pay to Astaris the amount set forth in Schedule A. . . .” Staff Exh. 111 at p. 6; LA at ¶ 4 (emphasis added). Even with the load reductions, the Letter Agreement contemplated the possibility that Astaris would reconnect its two furnaces to utilize power available in the second block. In other words, Astaris still has the right to utilize 70 MW of the first block power and 130 MW of the second block power. Contrary to the arguments of Astaris, the ESA and the load reduction amendment constitutes a single contract for utility service.
2. State and Federal Authorities Grant the Commission Jurisdiction Over This Matter. As the Staff recognized in its Petition, once the Commission has approved utility service contracts, they are usually protected from governmental interferences by the Idaho Constitution, Article I, § 16. Staff Petition at pp. 8-9. However, federal and state law is well-settled that the Commission has authority to abrogate contract rates if it becomes necessary in the public interest. Article XI, § 8 of the Idaho Constitution provides that “the police powers of the state shall never be abridged or so construed as to permit corporations to conduct their business in such a matter as to infringe . . . the general well being of the state.” As the Idaho Supreme Court stated in Sandpoint Water & Light Company v. City of Sandpoint,
It is held uniformly and universally that the power to supervise and regulate rates or charges for services rendered by public utilities is an inherent function of government, and occupies a large place within the domain of the police powers of the state.”

31 Idaho 498, 501, 173 P.2d 972, 973 (1918).
Pursuant to this police power, it is also well-settled that the Commission may set new rates for public utility service that will supersede rates previously established by private contract. In Agricultural Products Corporation v. Utah Power & Light Company, the Idaho Supreme Court recognized that the Commission does have authority to abrogate a rate contract. 98 Idaho 23, 552 P.2d 617 (1976). In that case, the Court stated that
Interference with private contracts by the state regulation of rates is a valid exercise of the police power, and such regulation is not a violation of the constitutional prohibition against impairment of the contractual obligation. A public utilities commission may thus annul or supersede contract rates between utilities and their customers. Private contracts with utilities are regarded as entered into subject to reserve authority of the State to modify the contract in the public interest.

98 Idaho at 29, 557 P.2d at 623 (internal citations and footnotes omitted, emphasis added).
The Idaho Supreme Court has consistently recognized the Commission’s power to modify utility contracts. United States v. Utah Power & Light Co., 98 Idaho 665, 570 P.2d 1353 (1977); Afton Energy Company v. Idaho Power Company, 107 Idaho 781, 786-87, 693 P.2d 427, 432-33 (1984); Afton Energy v. Idaho Power Company, 111 Idaho 925, 929, 729 P.2d 400, 404 (1986); Idaho Power Company v. Cogeneration, Inc., 129 Idaho 46, 49, 921 P.2d 746, 749 (1996). The United States Supreme Court has also recognized the authority of the Federal Power Commission (now FERC) to abrogate utility service contracts when it is in the public interest to do so. Federal Power Commission v. Sierra Pacific Power Company, 350 U.S. 346, 76 S.Ct. 368, 100 L.Ed. 388 (1956); United Gas Pipe Line Company v. Mobile Gas Service Corporation, 350 U.S. 332, 76 S.Ct. 373, 100 L.Ed. 373 (1956). Moreover, Idaho Code §§ 61-502 and 61-503 grant the Commission power to investigate existing contract rates or contracts affecting rates and to establish new just and reasonable rates if it finds the existing rates are unjust and unreasonable.
Staff also recognizes that the Commission’s authority to abrogate a contract rate is subject to a higher threshold standard than the standard employed to modify tariff rates. This dichotomy has normally been referred to as the difference between changing rates under a “tariff standard” versus a “contract standard.” Before the Commission may abrogate a rate in a contract, it must find that the current rates are unjust, unreasonable, discriminatory or preferential. Idaho Code § 61-502. Courts have articulated this standard as to require a finding that the existing contract rates are
so low as to adversely affect the public interest – as where it might impair the financial ability of the public utility to continue its service, cast upon other consumers an excessive burden, or be unduly discriminatory.

Agricultural Products, 98 Idaho at 29, 557 P.2d at 623 quoting Federal Power Commission v. Sierra Pacific Power Company, 350 U.S. 348 (1956); see also Afton Energy, Inc. v. Idaho Power Company, 111 Idaho at 929, 729 P.2d at 404.
Staff witness Hessing has asserted that the rate reduction payments are no longer fair, just or reasonable to Idaho ratepayers. He has calculated that continuation of the load reduction payments would result in payments of 437% above current market rates. In other words, the load reduction payments are approximately $45.5 million in excess of current market rates. Reducing rates to current market rates would represent a savings to ratepayers through the PCA of approximately $34.8 million over the remaining term of the contract. Hessing Prefiled Testimony at p. 21. Based on the authorities above, the Motion to Dismiss should be denied.
3. Astaris’ Arguments Based Upon Case Law and Statutes Are Misplaced. Astaris has also misinterpreted relevant Idaho case law and Idaho Code sections. Specifically, Astaris asserts that the Commission’s authority to interfere with a contract is limited only to transactions involving sales by a public utility to a retail customer. However, this is exactly the situation before the Commission. Idaho Code § 61-502 gives the Commission the authority either upon its own motion or upon complaint to abrogate existing rates or contracts affecting such rates that are found to be “unjust, unreasonable, discriminatory, preferential, or in any way in violation of law” and fix new rates in their stead. Idaho Code § 61-502; see also Agricultural Products, 98 Idaho at 23, 557 P.2d at 617 (1976); Utah Power & Light, 98 Idaho at 667-68, 570 P.2d at 1356.
Astaris mischaracterizes the holding in United States v. Utah Power & Light Co., 98 Idaho 665, 570 P.2d 1353 (1977). Astaris represents that the Idaho Supreme Court in this case held that the Commission’s authority to interfere with a contract under the Agricultural Products Doctrine was limited to transactions involving sales and rates to retail customers. On the contrary, this decision upheld the Commission’s authority to consider questions of contracts affecting rates. Utah Power & Light Co., 98 Idaho 665, 667-68, 570 P.2d 1353, 1356.
4. The Commission Specifically Retained Authority Over the ESA. Finally, the Commission’s reservation of authority over the ESA extends to the Letter Agreement Amendment as the latter is merely an amendment to the former. This is clearly demonstrated by the record in Case No. IPC-E-01-9. As previously mentioned, Idaho Power and Astaris filed an Application requesting approval of a Letter Agreement that would amend certain sections of the ESA. See Application, Case No. IPC-E-01-9. As a result of the Commission’s approval of the Letter Agreement Amendment it became part and parcel of the ESA. In approving the ESA the Commission conditioned its approval by retaining authority over the [ESA] to insure that “it does not . . . harm other ratepayers.” Staff Exh. 110 at p. 14. Thus, the Commission through its reservation of authority over the ESA still retains authority to monitor the ESA with its modifications made by the Letter Agreement Amendment. Irregardless of whether Staff prevails on this argument it must be remembered that the Commission still retains the authority to abrogate the load reduction rates in the Letter Agreement Amendment by virtue of the Agricultural Products Doctrine and Idaho Statutes.
Based on the foregoing the Commission Staff contends that Astaris’ arguments in this portion of its Motion are without merit and should be denied.
As amended, the ESA is a “special” utility contract and completely different than a contract supplying goods and services to Idaho Power.

Astaris argues that the Commission’s authority to modify a contract does not extend to transactions between a utility and a vendor providing goods or services. Astaris states that for example the Commission does not have authority to establish the price to be paid by Idaho Power to Cessna for a corporate airplane. The Staff agrees with Astaris’ example but maintains the example is not applicable to this case.
Typically, the Commission neither approves contracts nor reforms contracts where a vendor is providing goods and services to Idaho Power. However, the ESA and its load reduction are not like vendor supply contracts. The ESA is a special contract to supply electric service to Astaris. It is a utility service special contract like similar special contracts between Idaho Power and INEEL, Micron, and Simplot. The Commission reviews and approves special contracts; it does not review and approve vendor contracts. Consequently, Astaris’ argument in this regard is irrelevant and misdirected. Here the Electric Service Agreement and its Letter Agreement were brought to the Commission for its review and approval prior to becoming effective. These matters were brought to the Commission for approval because they would affect the rates that Idaho Power provided service to Astaris under but also the rates of all Idaho Power ratepayers. Idaho Code §§ 61-305.
In addition, Idaho Power has been authorized by the Commission to treat the costs resulting from the load reduction program as a purchase power expense in the PCA. Because the rates of the load reduction program of the Letter Agreement are drastically higher than current forward market prices, the Commission has the duty under the Agricultural Products Doctrine and Idaho Statutes to investigate whether these load reduction rates are unjust and unreasonable on a going forward basis. Agricultural Products Corporation v. Utah Power & Light, 98 Idaho at 28, 557 P.2d at 622 (1976). See also Utah Power & Light, 98 Idaho at 665, 570 P.2d at 1353.
Based on the foregoing, Staff contends that Astaris’ arguments regarding the Commission’s authority in this section are without merit. Accordingly, Staff requests that the Commission deny Astaris’ Motion on these grounds.
C. Abrogating the load reduction rates in the Letter Agreement is not an unlawful collateral attack on Order No. 28695.

Astaris argues that the Commission is barred from abrogating the load reduction rates by Idaho Code § 61-625 which prohibits collateral attacks on final and conclusive orders. Idaho Code § 61-625 provides, “[a]ll orders and decisions of the commission which have become final and conclusive shall not be attacked collaterally.” Astaris also alleges that the remedy sought in this matter amounts to equitable relief enjoining Idaho Power from paying amounts to Astaris under the ESA and its load reduction program.
Astaris completely mischaracterizes the Commission’s investigation. The Commission on its own motion initiated this investigation under Idaho Code §§ 61-502 and 61-503 to determine whether the rates under the load reduction program of the ESA are just and reasonable. A collateral attack on an Order is an attempt to avoid its force and effect in a proceeding not provided by law. Black’s Law Dictionary 237 (5th Ed. 1979) (emphasis added). See also Order No. 23554. In this instance, the Public Utilities Law does allow the Commission to review the ESA. Specifically, Idaho Code § 61-624 provides the Commission with the authority to rescind, alter or amend a prior order or decision.
In this case the Commission notified the parties that it may issue a final Order in this case consistent with Idaho Code § 61-624 amongst other sections. Order Nos. 28928 and 28933. Moreover, an action initiated under Idaho Code §§ 61-502 and 61-503 should be treated similarly. If it were not it would render these provisions a nullity. There is no collateral attack on the prior Commission Order approving the Letter Agreement.
Astaris also argues that the Commission’s investigation is an unlawful collateral attack because the Company has already performed its obligations, acted in reliance on the earlier Order, and incurred substantial expenses. Astaris cites Cambridge Telephone Co., v. Pine Telephone System, 109 Idaho 875, 712 P.2d 576 (1985) as supporting this argument. The Company’s reliance on this case is misplaced as it clearly does not stand for this position. Rather, than supporting Astaris’ position this decision provides grounds for denial of this argument. The Supreme Court in this case states:
it was within the commission’s jurisdiction, as a condition of the certificate of convenience and necessity, to review the extension of service into an unserved area within an already certified area. The commission may ‘rescind, alter or amend,’ I.C. § 61-624, the certificate of convenience and necessity previously issued for an unserved area upon a showing that the ‘public convenience and necessity’ does not require the extension, and the commission may ‘make such order and prescribe such terms and conditions for the locating or type of the line, plant or system affected as to it may seem just and reasonable . . .,’ I.C. § 61-526. The applicable statutory law became a part of Cambridge’s certificate.

Cambridge Telephone, 109 Idaho at 879, 712 P.2d at 580.
Like the grant of a certificate, special contracts approved by the Commission, are regarded as entered into subject to the reserved authority of the State to modify the contract when necessary to protect the public interest. Idaho Const., Art. XI, § 8; Agricultural Products, 98 Idaho at 29, 557 P.2d at 623; Idaho Code §§ 61-502 and 61-503. Accordingly, Staff contends that Astaris’ collateral attack arguments are without merit.
D. Qualified Facilities.
Astaris next argues that the limits on the Commission’s authority to abrogate the load reduction rates in the ESA (as amended) are analogous to the limits applicable to its authority over executed contracts between utilities and qualifying facilities (“QF”). In other words, the Letter Agreement is like a QF contract and the Commission may not change the rates for either. Staff disagrees with both the predicate and the conclusion.
In 1978, Congress enacted the Pubic Utility Regulatory Act (“PURPA”). Specifically, 16 U.S.C. § 824a-3 and related regulations thereto that require utilities to purchase power from qualifying cogenerated small power producers at the utility’s avoided costs rates. 16 U.S.C. § 796 (17) and (18); 18 C.F.R. §§ 292.205 and 292.303. Astaris does not meet the requirements necessary to be given QF status, nor has the Company sought this status. Indeed, Astaris does not generate power for sale to regulated utilities as contemplated by PURPA. Thus, Astaris is not a QF and its arguments regarding QF authorities are not analogous.
In addition, Staff contends that the Commission has the authority to review and possibly abrogate the rates in a QF contract under the public interest standard as defined by Agricultural Products, 98 Idaho 23, 557 P.2d 617 (1976). In Afton Energy, Inc. v. Idaho Power Company, 107 Idaho 781, 693 P.2d 427 (1984) (Afton I/III) Idaho Power requested that its QF contract with Afton Energy be modified to provide that “rates, terms and conditions set forth in this agreement are subject to the continuing jurisdiction of the Idaho Public Utilities Commission. . . .” 107 Idaho at 786, 693 P.2d at 433.
The Court rejected this proposed amendment to the QF contract. The Court held that QFs:
should not be subjected to the pervasive utility-type regulation that would result if the Commission approved the contract language proposed by Idaho Power. In fact, one of Congress’ main objectives in enacting PURPA was to encourage cogeneration and small power production by exempting CSPPs from pervasive state rate regulation. Congress was aware that such regulation presented a strong disincentive for CSPPs to engage in power production where the financial risks were great and the returns were not guaranteed to be recoverable. The Commission, in refusing to adopt Idaho Power’s proffered language was merely carrying out the directives imposed by PURPA and the implementing FERC regulations.

107 Idaho at 788, 693 P.2d at 788.

However, the Court also recognized that the Commission could modify the terms and or conditions of a QF contract if such was necessary in the public interest. In this regard the Court stated:
The contract approved by the Commission provided that the Commission could only modify the terms and/or conditions thereof if such was necessary in the public interest. The public interest test approved by the Commission is the standard set forth by this Court in Agricultural Products Corp. v. Utah Power & Light Co., 98 Idaho 23, 557 P.2d 617 (1976), pursuant to which contractually established rates may be superseded by the Commission. The Court in Agricultural Products held that although the Commission could supersede contract rates between utilities and their customers pursuant to the state's police power, such power was limited by the requirement that such be in the public interest. “To justify state interference with the utility contract, there must be a finding that the rate ‘is so low as to adversely affect the public interest--as where it might impair the financial ability of the public utility to continue its service, cast upon other consumers an excessive burden, or be unduly discriminatory.’” Id. at 29, 557 P.2d at 623 (quoting Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348, 76 S.Ct. 368, 100 L.Ed. 388 (1956)). The public interest standard approved by the Commission in this case is merely the standard pursuant to which any rate contract may be superseded by later Commission orders.

107 Idaho at 786, 693 P.2d at 432.
In Afton Energy, Inc. v. Idaho Power Company (Afton IV), 111 Idaho 925, 729 P.2d 400 (1986), the Idaho Supreme Court reaffirmed that the Commission may modify the terms of a QF contract under the public interest standard. In reaching this conclusion, the Court cited that the power to supervise and regulate rates or charges for services rendered by a public utility is an inherent function of the government that is within the police powers of the state. 111 Idaho at 404, 729 P.2d at 929 citing Sandpoint Water & Light Co., Ltd., v. City of Sandpoint, 31 Idaho 498, 501, 173 P. 972, 973 (1918); Agricultural Products, 98 Idaho at 29, 557 P.2d at 623. Although QF contracts are subject to review under the contract public interest standard, Staff is also mindful that QF rates are presumed to be maintained for the duration of the contract. This policy is consistent with not subjecting QFs to utility-type regulation and setting rates based upon avoided costs.
Based on the foregoing, the Staff contends that Astaris’ QF arguments in its Motion are without merit. Thus, these arguments do no warrant dismissal of this case.
E. The Commission’s abrogation of the buy-back rates of the Letter Agreement would not be an unconstitutional impairment of contract.

Astaris argues that should the Commission abrogate the buy-back rates of the Letter Agreement this action would constitute an unconstitutional impairment of contract under the Contract Clauses of the United States Constitution and the Idaho Constitution. However, as previously mentioned, the Commission can supersede rates previously established by a private contract when it is in the public interest to do so. Idaho Const., Art. XI, § 8; Agricultural Products Corporation v. Utah Power & Light Company, 98 Idaho 23, 28, 557 P.2d 617, 622 (1976).
This continuing authority over private utility contracts and their rates is a valid exercise of the police powers of the State and is not a violation of the constitutional prohibition against the impairment of contractual obligations. Agricultural Products, 98 Idaho at 29, 557 P.2d at 623; City of Hayden v. Washington Water Power Co., 108 Idaho 467, 469, 700 P.2d 89, 91 (1985). See also Energy Reserves Group, Inc. v. Kansas Power and Light Company, 459 U.S. 400, 410, 103 S.Ct. 697, 704, 74 L.Ed.2d 569 (1983) (“[a]lthough the language of the Contract Clause is facially absolute, its prohibition must be accommodated to the inherent police power of the State to safeguard the vital interests of its people.”). As the Supreme Court noted, the Contract Clause does not operate to obliterate the police power of the States to exercise such powers for the public good even if this exercise affects existing contracts. Allied Structural Steel Company v. Spannaus, 438 U.S. 234, 241, 98 S.Ct. 2716, 2721, 57 L.Ed.2d 727 (1978).
To justify state interference with a utility contract, there must be a finding that the rate “is so low as to adversely affect the public interest-as where it might impair the financial ability of the public utility to continue its service, cast upon other consumers an excessive burden, or be unduly discriminatory.” Agricultural Products Corporation, 98 Idaho at 29. See also Federal Power Comm'n v. Sierra Pac. Power Co., 350 U.S. 348, 76 S.Ct. 368, 100 L.Ed. 388 (1956). Based on these authorities Astaris’ Contracts Clause argument is without merit.
In the alternative, even if additional limits are imposed on the State’s police power by the Contracts Clause, Commission abrogation of the load reduction rate still does not amount to a constitutional violation. The Contract Clause may impose some limits upon the power of a State to modify the contractual relationships. Allied Structural Steel Company, 438 U.S. at 242, 98 S.Ct. at 2721.
The threshold inquiry in this instance is whether a Commission Order that would modify the load reduction rates in the ESA would impair substantially Astaris’ contractual rights. Allied Structural Steel Co., 438 U.S. at 244, 98 S.Ct. at 2722. In determining the extent of the impairment, it is relevant to consider whether the particular contract or the industry has been regulated in the past. Allied Structural Steel Co., 438 U.S. at 242, n. 13, 98 S.Ct. at 2721, n. 13, citing Veix v. Sixth Ward Bldg. & Loan Ass'n, 310 U.S. 32, 38, 60 S.Ct. 792, 794-795, 84 L.Ed. 1061 (1940). In this case the delivery of utility service, the ESA and the load reduction rates are matters that have historically been regulated in Idaho. See Veix v. Sixth Ward Bldg. & Loan Ass'n, 310 U.S. at 38, 60 S.Ct. at 794-795. See also Energy Reserves Group, Inc. v. Kansas Power & Light Co., 459 U.S. 400, 103 S.Ct. 697, 74 L.Ed.2d 569 (1983) (the heavily regulated nature of an industry is grounds to discount the severity of impairments resulting from subsequent regulations).
If state regulation constitutes a substantial impairment, the State must have a significant and legitimate public purpose behind the regulation. United States Trust Co. v. New Jersey, 431 U.S. 1, 22, 97 S.Ct. 1505, 1517, 52 L.Ed.2d 92 (1977). One such justification is to remedy a broad and general economic problem. Allied Structural Steel Co., 438 U.S. at 247, 249, 98 S.Ct. at 2723-2725. Another legitimate state interest is the elimination of unforeseen windfall profits. United States Trust Co., 431 U.S. at 31, n. 30, 97 S.Ct. at 1522, n. 30. The Supreme Court has also indicated that the public purpose need not be addressed to an emergency or temporary situation. United States Trust Co., 431 U.S. at 22, n. 19, 97 S.Ct. at 1518, n. 19; Veix v. Sixth Ward Bldg. & Loan Ass'n, 310 U.S. at 39-40, 60 S.Ct. at 795-796. The requirement of a legitimate public purpose guarantees that the State is exercising its police power, rather than providing a benefit to special interests.
Once a legitimate public purpose has been identified, the next inquiry is whether the adjustment of “the rights and responsibilities of contracting parties [is based] upon reasonable conditions and [is] of a character appropriate to the public purpose justifying” the contract modification. United States Trust Co., 431 U.S. at 22, 97 S.Ct. at 1518. “In reviewing economic regulation, . . . courts properly defer to legislative judgment as to the necessity and reasonableness of a particular measure.” Id. at 22-23, 97 S.Ct. at 1518.
State ratemaking authority is well established. Idaho Power & Light Company v. Blomquist, 26 Idaho 222, 141 p. 1083 (1914). Pursuant to this authority the Commission is empowered by the Agricultural Products Doctrine and Idaho Code §§ 61-502 and 61-503 to investigate and should it find the rates unreasonable, enter an order modifying the load reduction rates of the ESA. The ESA and the Letter Agreement Amendment were submitted to the Commission for approval in recognition of the Commission’s authority over contracts that affect rates. Astaris should have been aware that its contractual rights were subject the Commission’s authority to abrogate the contract should the right circumstances present themselves. Thus, Astaris’ reasonable expectations would not be impaired should the Commission find the load reduction rates unreasonable and unjust. It is in this context that this matter should be analyzed.
Astaris’ Motion to Dismiss only makes an argument concerning impairment of its contract but it has not provided substantial and competent evidence that substantial impairment of its contractual rights has actually occurred. The hearing is Astaris’ opportunity to present evidence of alleged impairment.
Even if abrogation of the load reduction rates did constitute a substantial impairment on Astaris’ contractual rights, adjusting the rates would still serve a significant and legitimate public purpose. In opening its investigation in this matter, the Commission acted on behalf of the public interest to insure that the load reduction rates of the Letter Agreement Amendment are not unjust and unreasonable and are not so high as to impose an excessive burden on all consumers. In acting in the public interest the Commission also stated that it would investigate whether Astaris is receiving a preferential windfall as a result of these rates.
Based on the drastic fall in prices for power in combination with the unprecedented increases in power bills for all Idaho Power customers, Staff contends that the rates in the Letter Agreement are 437% higher than current forward market projections. By adjusting the rates to reasonable levels, the Commission would also be serving a significant and legitimate public purpose. See Energy Reserves Group, Inc., v. Kansas Power and Light Company, 459 U.S. 400, 103 S.Ct. 697, 74 L.Ed.2d 569 (1983). (Although the Kansas Act impairs ERG’s contractual interests, the Act is prompted by significant and legitimate state interests because Kansas has exercised its police power to protect consumers from the escalation of natural gas prices caused by deregulation.); Exxon Corp. v. Eagerton, 462 U.S. 176, 191, 103 S.Ct. 2296, 2306, 76 L.Ed.2d 497 (1983) (shielding consumers from the pass-through of increased taxes on oil and gas producers.)
Because the Commission would be acting in the public interest on behalf of all ratepayers, its action would not be narrow in focus and limited. In other words, the abrogation of the load reduction rates is incidental to the main effect of shielding all Idaho Power ratepayers from further unreasonable rates. Id., 462 U.S. at 191-92, 103 S.Ct. at 2306. Furthermore, an action of this nature could be opened at any time that the Commission or any party raises the question that rates or contracts affecting rates appear to be unjust and unreasonable. Therefore, Astaris’ argument that it has been singled out is without merit.
Staff also contends that Astaris is receiving a preferential windfall because it is expected to receive revenue 437% greater than the revenue that would occur if the load reduction rates were based on the current, forward market price for the remainder of the buy-back term, January 2002 through March 2003. Astaris is receiving these exorbitant payments under the ESA to reduce its consumption of power at the expense of all other ratepayers. Astaris is the only ratepayer in Idaho that is receiving this treatment. Because Astaris has closed its operations in Pocatello, it is receiving payment for an energy reduction that Idaho Power would have received without the Letter Agreement. One legitimate state interest is the elimination of unforeseen windfall profits. United States Trust Co., 431 U.S. at 31, n. 30, 97 S.Ct., at 1522, n. 30.
By acting in the public interest pursuant to its statutory authority and the Agricultural Products Doctrine, the Commission may find the load reduction rates unreasonable and unjust. Doing so would ultimately provide relief to all ratepayers. Therefore, any impairment of Astaris’ right to receive payment under the ESA load reduction rates is amply justified by the public purposes.
F. Abrogation of the buy-back rates would not violate Astaris’ substantive due process rights.
In Idaho it is clear that parties to a contract have a property interest in the subject matter of the contract that is protectable under the Due Process Clause of the United States Constitution. Curr v. Industrial, 124 Idaho 686, 691-692, 864 P.2d 132, 137-138 (1993) citing Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 546, 105 S.Ct. 1487, 1495, 84 L.Ed.2d 494 (1985). Substantive due process is “the right to be free from arbitrary deprivations of life, liberty or property.” State v. Reed, 107 Idaho 162, 167, 686 P.2d 842, 847 (Ct. App. 1984). A state action may deprive someone of life, liberty, or property only if it has a rational basis for doing so. In other words, “the reason for the deprivation may not be so inadequate that the judiciary will characterize it as ‘arbitrary.’” Pace v. Hymas, 111 Idaho 581, 586, 726 P.2d 693, 698 (1986); see also In re McNeeley, 119 Idaho 182, 189, 804 P.2d 911, 918 (1990); Bradbury v. Idaho Judicial Council, 136 Idaho 63, 69, 28 P.3d 1006, 1012 (2001).
In order to prove a substantive due process claim, the moving party must plead that the government’s action was “clearly arbitrary and unreasonable, having no substantial relation to the public health, safety, morals or general welfare. Lebbos v. Judges of Superior Court, 883 F.2d 810, 818 (9th Cir. 1989) citing Village of Euclid v. Ambler Realty Co., 272 U.S. 365, 395, 47 S.Ct. 114, 121, 71 L.Ed. 303 (1926). Furthermore, Commission Orders or legislation readjusting rights and burdens is not unlawful solely because it upsets otherwise settled expectations. Usery v. Turner Elkhorn Mining Company, 428 U.S. 1, 16, 96 S.Ct. 2882, 2893, 49 L.Ed.2d 752 (1976).
Astaris contends that the Commission’s abrogation of the load reduction rates in the Letter Agreement Amendment would be irrational and arbitrary first because it alleges that the Commission is without statutory authority to do so. As demonstrated above, this argument is completely without merit. The Commission has jurisdiction over this matter pursuant to Idaho Code §§ 61-502 and 61-503, the Agricultural Products Doctrine and the Commission’s reservation of authority over the ESA. The Commission has authority to abrogate the rates of the load reduction program of the ESA should sufficient evidence exist that these rates are unjust and unreasonable and impose an excessive burden on ratepayers.
Astaris also argues that the completely unjustified reversal of the Commission’s previous position would be irrational and arbitrary and thus would constitute a violation of substantive due process guarantees. First, the Commission has not yet held its hearing to examine the load reduction rates of the Letter Agreement. Thus, this argument is not yet ripe. Second, should the Commission ultimately take this action, Astaris completely ignores whether it would bear a reasonable relationship to a permissible legislative objective. Pursuant to the Idaho Code § 61-502, the Commission may investigate on its own motion and ultimately abrogate rates or contracts affecting rates. In utilizing its authority under this statutory grant, the Commission acts in the public interest by making sure these rates or contracts affecting rates are not unjust and unreasonable. Finally, the Commission is not bound by the doctrine of Stare decisis so long as it explains the reasons for changing a prior decision or deviating from a prior decision, it is not arbitrary or capricious. Rosebud v. Idaho Public Utilities Com’n, 128 Idaho 609, 618, 917 P.2d 766, 775 (1996).
Staff contends these authorities are clearly designed to promote the public welfare or interest. Based on the foregoing, Staff contends that the Commission’s authority is reasonably related to a permissible legislative objective and does not violate substantive due process guarantees.
G. Takings.
Astaris next urges the Commission to dismiss its investigation because if the contract were modified, it would be an unconstitutional taking. The Takings Clause of the Fifth Amendment of the United States Constitution provides: “[N]or shall private property be taken for public use, without just compensation.” One of the principal purposes of the Takings Clause is “to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.” Armstrong v. United States, 364 U.S. 40, 49, 80 S.Ct. 1563, 1569, 4 L.Ed.2d 1554 (1960).
The party challenging governmental action as an unconstitutional taking bears a substantial burden. See United States v. Sperry Corp., 493 U.S. 52, 60, 110 S.Ct. 387, 393-394, 107 L.Ed.2d 290 (1989). The Supreme Court has recognized, in a wide variety of contexts, that government may execute laws or programs that adversely affect recognized economic values. Penn Central Transp. Co., 438 U.S. at 124, 98 S.Ct. at 2660. In light of that understanding, the process for evaluating a regulation’s constitutionality involves an examination of the “justice and fairness” of the governmental action. Andrus v. Allard, 444 U.S. 51, 65, 100 S.Ct. 318, 326, 62 L.Ed.2d 210 (1979). That inquiry, by its nature, does not lend itself to any set formula, and the determination whether “‘justice and fairness’ require that economic injuries caused by public action [must] be compensated by the government, rather than remain disproportionately concentrated on a few persons,” is essentially ad hoc and fact intensive, Kaiser Aetna v. United States, 444 U.S. 164, 175, 100 S.Ct. 383, 390, 62 L.Ed.2d 332 (1979).
It is of course settled beyond dispute that regulation of rates chargeable for the employment of private property devoted to public uses is constitutionally permissible. See Munn v. Illinois, 94 U.S. [4 Otto] 113, 133-134, 24 L.Ed. 77 (1877); Permian Basin Area Rate Cases, 390 U.S. 747, 768-769, 88 S.Ct. 1344, 1360-1361, 20 L.Ed.2d 312 (1968). Such regulation of maximum rates or prices “may, consistently with the Constitution, limit stringently the return recovered on investment, for investors’ interests provide only one of the variables in the constitutional calculus of reasonableness.” Id. at 769, 88 S.Ct. at 1361. So long as the rates set are not confiscatory, the Fifth Amendment does not bar their imposition. St. Joseph Stock Yards Co. v. United States, 298 U.S. 38, 53, 56 S.Ct. 720, 726, 80 L.Ed. 1033 (1936); see Permian Basin, supra, 390 U.S. at 770, 88 S.Ct. at 1361.
Staff does not contend that abrogation of the load reduction rate will not have an economic impact on the Astaris. It is obvious that if the Commission abrogates the rates and sets new ones, that Astaris will receive less in payment for the 50 MW load reduction. However, even if abrogation of the rates was confiscatory, Astaris will receive fair compensation when the Commission sets new just and reasonable load reduction rates. Astaris now is receiving payment for its load reduction at a price that is 437% higher than current forward market prices, thus Staff contends that the rates are unjust and unreasonable and Astaris is receiving far more than just compensation from the load reduction payment. New just and reasonable rates would provide the proper just compensation to Astaris.
Staff also does not agree that abrogation would substantially interfere with Astaris’ reasonable investment backed expectations. A reasonable investment-backed expectation must be more than a unilateral expectation or an abstract need. Webb’s Fabulous Pharmacies v. Beckwith, 449 U.S. 155, 161, 101 S.Ct. 446, 451, 66 L.Ed.2d 358 (1980). Those who do business in the regulated field cannot object if the legislative scheme is buttressed by subsequent amendments to achieve the legislative end. FHA v. The Darlington, Inc. 358 U.S. 84, 91, 79 S.Ct. 141, 146, 3 L.Ed.2d 132 (1958). Thus, legislation readjusting rights and burdens is not unlawful solely because it upsets otherwise settled expectations . . . even though the effect of the legislation is to impose a new duty or liability based on past acts. Turner Elkhorn, 428 U.S. at 16.
The ESA and the Letter Agreement Amendment as they affect rates are clearly within scope of the Commission’s regulatory authority. Furthermore, the Commission’s authority to investigate and ultimately abrogate rates or contracts affecting rates that are unjust and unreasonable is well established. See Idaho Code §§ 61-502 and 61-503. Astaris had more than sufficient notice that the ESA and Letter Agreement were in a regulated area and that abrogation could occur under certain circumstances. Accordingly, it cannot be said that its reasonable investment backed expectations were interfered with.
The character of the governmental action is also appropriate. Pursuant to the State’s police power, statutory authority and case law the Commission is acting in the public’s interest to insure that ratepayers in this case are not burdened with unjust and unreasonable rates.
Finally, when an intangible property right such as a contract is modified or revoked according to its terms, no taking of property has occurred. Cambridge Telephone Co., Inc., v. Pine Telephone System, Inc., 109 Idaho 875, 880, 712 P.2d 576, 581 (1985). This case is analogous as the contract was approved but was subject to the Commission’s authority to abrogate the contract should the right circumstances arise.
Based on the foregoing Astaris’ Takings Clause argument is without merit.
H. Non-Dispositive Issues or Issues for Evidentiary Hearing.

1. Sufficient evidence has been provided so that the Commission may investigate and ultimately abrogate the buy-back rates of the Letter Agreement Amendment.

Astaris argues that if the Commission has the legal authority to abrogate the load reduction rates in the ESA, the Staff has the burden of going forward and the burden of proof to present the substantial and competent evidence required by the Agricultural Products decision to support a decision to abrogate the buy-back contract. Based on this standard Astaris argues that Staff has not provided the evidence necessary to allow for abrogation of these rates in the buy-back portion of the letter agreement.
Staff objects to this argument as it rests entirely on matters of fact and not law. The hearing is the appropriate place to present evidence. The appropriate time for the Commission to consider whether sufficient evidence has been presented to allow for abrogation of the load reduction rates is at the conclusion of the evidentiary hearing.
Staff argues that the information presented in its Petition is sufficient evidence to initiate an investigation of the load reduction rates. Further, the Commission on its own motion initiated this case. Idaho Code § 61-502. The existing Agreement is unjust and unreasonable, imposes an excessive burden on ratepayers and provides a preferential windfall to Astaris at the expense of other ratepayers.
2. Retroactive Ratemaking
Astaris argues that any contract abrogation made effective by Commission Order on January 8, 2002, would violate the prohibition against retroactive ratemaking. In Order No. 27463, Staff Exhibit 110 the Commission retains jurisdiction over the ESA and its amendment. When the Commission initiated this investigation, Astaris was put on notice that its load reduction rates were subject to review. The Commission specifically approved the ESA based upon its retained jurisdiction to insure ratepayers are not harmed by the ESA. The parties were clearly given notice of the retained jurisdiction. Accordingly, Staff argues that any Commission Order abrogating the load reduction rates as of January 8, 2002 would not constitute retroactive ratemaking.
Public Policy
Astaris contends that a Commission Order abrogating the rates of the load reduction portion of the Letter Agreement Amendment to the ESA would constitute bad public policy. Although Staff believes that in the abstract the substance of Astaris’ argument has merit. However, public policy considerations in this case do not support the dismissal of this investigation. Rather, Staff contends that in this case it would be bad public policy for the Commission to not investigate and determine whether the rates in the load reduction portion of the Letter Agreement are still just and reasonable. To not do so would abdicate its responsibilities under Idaho law. Furthermore, if the Commission determines that the rates are unjust and unreasonable and impose an excessive burden on ratepayers it would be bad public policy to not abrogate the rates on behalf of the public interest and set new ones.
CONCLUSION
Based on the arguments made above the Commission Staff respectfully requests that the Commission deny all dispositive arguments Astaris makes in its Motion to Dismiss. Furthermore, Staff requests that the Commission deny the non-dispositive arguments Astaris has made with regard to the sufficiency of evidence, retroactive ratemaking and public policy.

Respectfully submitted this 11th day of February 2002.

John R. Hammond
Deputy Attorney General

O:IPCE0143_brief

CERTIFICATE OF SERVICE

I HEREBY CERTIFY THAT I HAVE THIS 11th DAY OF FEBRUARY 2002, SERVED THE FOREGOING RESPONSE TO ASTARIS’ MOTION TO DISMISS AND BRIEF ON COMMISSION AUTHORITY, IN CASE NO.  IPC-E-01-43, BY ELECTRONICALLY FILING A COPY THEREOF, POSTAGE PREPAID, TO THE FOLLOWING:

LARRY D. RIPLEY
IDAHO POWER COMPANY
PO BOX 70
BOISE, ID 83707-0070
e-mail: [e-mail]
BARTON L KLINE
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
e-mail: [e-mail]
ROBERT M POMEROY JR
THORVALD A NELSON
HOLLAND & HART LLP
8390 E CRESCENT PKWY, STE 400
GREENWOOD VILLAGE CO 80111
e-mail: [e-mail]
MIQUEL F UGARTE
ASTARIS LLC
622 EMERSON RD
PO BOX 411160
ST LOUIS MO 63141
e-mail: [e-mail]
RICHARD PASQUIER
FMC CORPORATION
1735 MARKET ST
PHILADELPIA PA 19103
e-mail: [e-mail]
RANDALL C. BUDGE
RACINE OLSON NYE ET AL
PO BOX 1391
POCATELLO, ID 83204-1391
e-mail: [e-mail]
PETER J. RICHARDSON
RICHARDSON & O’LEARY
PO BOX 1849
EAGLE ID 83616
e-mail: [e-mail]
ANTHONY YANKEL
29814 LAKE RD.
BAY VILLAGE, OH 44140
e-mail: [e-mail]

/S/
SECRETARY

The Motion to Dismiss was collectively submitted by Astaris LLC, Astaris of Idaho LLC and FMC Corporation. Pursuant to Order No. 28933, these three parties shall be referred to as “Astaris.”
Furnace Nos. 1 and 4 have an attributable demand of 60,000 kW each. Staff Exh. 109, ESA at p. 8, § 4.5.
Based on the Letter Agreement Amendment Astaris argues that it has had to: arrange for alternative raw materials to substitute for the phosphorus produced by the idled furnace; establish a logistics network to accommodate importation of raw materials; reconfiguring downstream production facilities to accommodate substitute raw materials; incurring severance and other costs associated with laying off employees at numerous facilities; and, foregoing profit and revenue opportunities. Motion at p. 7.
In pertinent part, Idaho Code § 61-305 provides that “every public utility . . . shall file with the Commission . . . all rules, regulations, contracts, privileges and facilities which in any manner affect or relate to rates, tolls, rentals, classifications or service.” (Emphasis added).

Paragraph No. 2 to the Letter Agreement provides that “If after March 31, 2001 Astaris electrically reconnects furnaces No. 1 and No. 4 at the Pocatello Facility and begins using those furnaces, Astaris shall repay to Idaho Power the demand charges referenced in this paragraph [130,000 kW] as if the electric furnace had never been disconnected.” Staff Exh. 111 at p. 5, ¶ 2.
The Commission does approve PURPA contracts. See supra.
The power to fix rates, when exerted, is for the public welfare, to which private contracts must yield; but it is not an independent legislative function to vary or set aside such contracts, however unwise and unprofitable they may be. Indeed the exertion of legislative power solely to that end is precluded by the contract impairment clause of the Constitution. The power does not exist per se. It is the intervention of the public interest which justifies and, at the same time conditions its exercise. Arkansas Natural Gas Co., v. Arkansas R.R. Com’n, 261 U.S. 379, 383, 43 S.Ct. 387, 388, 67 L.Ed. 705 (1923).

RESPONSE TO ASTARIS’ MOTION
TO DISMISS AND
BRIEF ON COMMISSION AUTHORITY 25

CERTIFICATE OF SERVICE