20090126Reply to Brief in Opposition.pdf

Peter Richardson
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P.D.Box 7218 Boise.ID 83707 - 515 N. 27th St. Boise, ID 83702
26 January 2009
Ms. Jean Jewell
Commission Secretary
Idaho Public Utiities Commission
472 W. Washington
Boise, 10 83702
Hand Delivered
RE: IPC-E-08-20
Dear Ms. Jewell:
We are enclosing an original and seven (7) copies of GLENNS FERRY
COGENERATION PARTNERS, L TS.'S REPLY TO BRIEF IN OPPOSITION TO
MOTION TO DISMISS in the above-cited case.
An additional copy is included for stamping and returning to our office.
Sincerely,~Cvt\
Richardson & O'Leary PLLC
Enclosure
PETER J. RICAHRDSON (ISB # 3195)
MOLLY O'LEARY (ISB # 4996)
Richardson & O'Leary PLLC
515 North 27th Street
P.O. Box 7218
Boise, Idaho 83707
Telephone: [phone]
Fax: [phone]
RECEIVED
2009 JAN 26 PM 3: 54
Attorneys for Glenns Ferry Cogeneration Partners, Ltd.
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
IDAHO POWER COMPANY,
Complainant
)
) CASE NO. IPC-E-08-20
)
) GLENNS FERRY COGENERATION
)) PARTNERS, L TD.'S REPLY TO
IDAHO POWER'S BRIEF IN
)) OPPOSITION TO MOTION TO
) DISMISS
vs.
GLENNS FERRY COGENERATION
PARTNERS, LTD., a Colorado limited
partnership
COMES NOW, Glenns Ferry Cogeneration Partners, Ltd. ("Respondent"I"Glenns
Ferry Cogeneration"), by and through undersigned counsel, and. files this Reply to Idaho
Power's Brief in Opposition pursuant to the procedural schedule established by this
Commission.
IDAHO POWER FUNDAMENTALLY MISCONSTRUES THIS COMMISSION'S ROLE
IN THE PURPA CONTRACT CONTEXT
Idaho Power wrongly asserts that PURPA requires utilities regulated by this
Commission to purchase power generated by QFs by "means of fixed term contracts".
GLENNS FERRY COGENERATION
MOTION TO DISMISS
Brief at 2. The Company cites Section 210 of PURPA for authority supporting its
contention that it is required to offer "fixed term contracts.1 While that Section requires
utilties to "purchase electric energy from such facilities (QFs)" it does not specify that
said purchases be made by "means of fixed term contracts." The Commission's role in
PURPA implementation is not as contract administrator, but rather it sets the terms and
conditions under which the utilities it regulates purchase the electric energy from QFs.
Indeed, the Commission in Idaho approves the contracts only as a courtesy to its
regulated utilities in order for them to have some comfort that the costs incurred in
making those purchases wil be recovered from the ratepayers. The Commission has
no legally mandated role in approving the PURPA contracts entered into by Idaho
Power let alone in interpreting and implementing the terms of those contracts. Indeed,
in some states, like Oregon, the PUC refuses to even approve the PURPA contracts for
ratemaking purposes.
Idaho Power cited the Commission to McNeal v. IPUC 142 Idaho 685,132 P.3rd
442 (2006) suggesting that it is an analogous case. McNeal actually supports Glenns
Ferry's position that this Commission has no jurisdiction over interpretation of PURPA
contracts. In McNeal the Commission was asked to interpret an interconnection
agreement between two telecommunications carriers. Interconnection agreements
between telecommunication carriers are, indeed, interpreted and administered by state
commissions by operation of federal law. The McNeal Court relies on Southwestern
Bell Telephone Co. v. Public Utility Commission of Texas 208 F. 3rd 475 (5th Cir. 2000)
for the proposition that:
1 16 U.S.C. § 824a-3(a).
GLENNS FERRY COGENERATION
MOTION TO DISMISS - 2
(T) Act's grant to the state commissions of plenary authority to approve or
disapprove theses interconnection agreements necessarily carries with it the
authority to interpret and enforce the provisions of agreements that state
commissions have approved
Id. at 479.
The Court in Southwestern Bell expanded on its findings in some detail explaining why it
is not just the fact that the PUC approved the contract that confers ongoing jurisdiction:
We believe that the FCC plainly expects state commissions to decide
intermediation and enforcement disputes that arise after the approval procedures
are complete. See, e.g., Reciprocal Compensation Ruling P 22 (noting that
parties are bound by their interconnection agreements "as interpreted and
enforced by the state commissions") (emphasis ours); id. P21 (referring to state
commission "findings" as to whether reciprocal compensation provisions of
interconnection agreements apply to ISP-bound traffc); id. P 24.
Id. at 480.
Idaho Power does not refer this Commission to any similar expectation by FERC
that state commissions decide intermediation and enforcement disputes under PURPA
- because there are none. If there were, then one would expect to find a case law
similar to the wealth of case law on telecommunication interconnection agreements.
Another important distinction is that in the telecommunications arena, both parties to the
contract are providing utilty-type service which makes ongoing jurisdiction of the
Commission reasonable. Here only Idaho Power is providing utility service.
In fact, if Idaho Power's claim that this Commission has jurisdiction over a
complaint for damages for violation of a PURPA contract is upheld, then this
Commission would have jurisdiction over the OF itself - a result that has been
thoroughly repudiated by the Idaho Supreme Court in the Afton decisions. In Afton
GLENNS FERRY COGENERATION
MOTION TO DISMISS - 3
Energy v. Idaho Power Company 107 Idaho 781, 693 P .2d 427 (1984),2 Idaho Power
sought to amend a PURPA contract by adding the following language:
The rates, terms and conditions set forth in this agreement are subject to the
continuing jurisdiction of the Idaho Public Utilities Commission. The rates, terms
and conditions under this agreement are subject to change and revision by order
of the Commission upon a finding, supported by substantial competent
evidence, that such rates, terms or conditions, change or revision is just, fair,
reasonable, sufficient, non-preferential and non-discriminatory.
Id. at 786.
The Court's resounding rebuke to Idaho Power's proposal may be instructive to
Idaho Power in assisting it to understand that it stil cannot confer jurisdiction over
PURPA contracts on the PUC:
(W)e reject Idaho Power's argument that the Commission does not have any
authority to establish an avoided cost rate which is fixed for the duration of the
contract and which is not subject to the Commission's continuing jurisdiction. It is
clear that both Congress and FERC, through its implementing regulations,
intended that CSPPs (OFs) should not be subjected to the pervasive utility-type
regulation which would result if the contract language proposed by Idaho Power
were approved by the Commission. In fact, one of Congress' main objectives in
enacting PURPA was to encourage cogeneration and small power production by
exempting CSPPs from pervasive state regulation. Congress was aware that
such regulation presented a strong disinæntive 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.
Id at 788. (Emphasis provided.)
Jurisdiction to interpret the terms of a PURPA contract and to award damages is
exactly the type of regulation the Idaho Supreme Court rejected in Afton.
In Afton II Idaho Power again sought PUC interpretation of a PURPA contract -
which the Court again rejected. The Court in Afton II identified the issue thusly:
2 The 1984 Afton case is referenced by the Court (and others) as Afton 1~i1
GLENNS FERRY COGENERATION
MOTION TO DISMISS - 4
The present proceeding was initiated by Idaho Power when it moved the
Commission to modify Orders Nos. 17478, 17495 and 17609 to conform to the
Afton 1/111 and declare the second payment option of the contract in effect... The
Commission, reading the motion as a contract interpretation request, dismissed
it, holding that the district court is the proper forum to interpret contracts.
Afton Energy v. Idaho Power 111 Idaho 925,928; 729 P.2d 400 (1986),
The Court unabiguously affrmed the Commission's finding that PURPA contract
disputes belong in district court:
It (Idaho Power) has simply asked the Commission, through a motion to modify a
previous order, to declare that one of two freely negotiated payments options is
in effect as selected by a legal determination of this Court. In other words, Idaho
Power has asked for an interpretation of its contract. The district court is the
proper forum for this action. We hold the Commission acted properly when it
dismissed Idaho Power's motion to modify pervious orders.
Id. at 930.
The Court in Afton II explained in some detail the exceptions to its general rule
that contract disputes do not belong at the PUC:
The Court has recognized exceptions to this rule. In Bunker Hil Co. v.
Washington Water Power, supra, we allowed the Commission to interpret an un-
precise contract because "the parties agreed to let the PUC settle this dispute
and since there is substantial evidence in the record to support the Commission's
decision. . . Additionally, the Commission can use its expertise and supply a
reasonable contract rate where the parties have an existing contract but are
unable to agree to the specific rate... Here however, the contract between Afton
and Idaho Power does not fall within any of these exceptions. Idaho Power and
Afton have not agreed to allow the Commission to interpret the contract. The
contract. while being complex. does not require any particular expertise in the
ratemaking area to interpret the disputed provision
Id. at 929. (Emphasis provided.)
While the instant parties do have language in their agreement to the effect that disputes
would be submitted to the Commission for resolution, the Commission has already
disavowed the ability of the parties to unilaterally confer jurisdiction on it. None of the
GLENNS FERRY COGENERATION
MOTION TO DISMISS - 5
other criteria used by the Afton II Court are applicable. And as that Court noted, these
contracts while complex, do not require any particular ratemaking expertise to interpret.
WHEREFORE, Respondent respectfully prays that the Commission dismiss
Idaho Power's Complaint for lack of subject matter jurisdiction. Respondent stands
ready for oral argument on its Motion if the Commission so desires.
DATED this 26th day of January, 2009.
ByflÆ~
Peter Richardson and Molly O'Leary
Attorneys for Respondent
Glenns Ferry Cogeneration Partners, Ltd.
~
LENNS FERRY COGENERATION
OTION TO DISMISS - 6
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 26th day of January, 2009, I caused a
true and correct copy of the REPLY TO IDAHO POWER'S BRIEF IN OPPOSITION TO
MOTION TO DISMISS to be served by the method indicated below, and addressed to
the following:
Jean Jewell
Secretary
Idaho Public Utilities Commission
472 W Washington Street
Boise 10 83702
( ) U.S. Mail, Postage Prepaid
(X) Hand Delivered
( ) Overnight Mail
( ) Facsimile
( ) Electronic Mail
Bruce C Jones
Jones & Schwart PLLC
1673 N Shoreline Dr Ste 200 (83702)
PO Box 7808
Boise 1083707-7808
bruceCëjonesandschwartlaw. com
(X) U.S. Mail, Postage Prepaid
( ) Hand Delivered
( ) Overnight Mail
( ) Facsimile
( ) Electronic Mail
Signed~ú.\
Nina urtis
GLENNS FERRY COGENERATION
MOTION TO DISMISS - 7