20110727reconsideration_order_no_32298.pdf

Office of the Secretary
Service Date
July 27,2011
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
IDAHO POWER COMPANY FOR A )CASE NO.IPC-E-lO-51
DETERMINATION REGARDING A FIRM )
ENERGY SALES AGREEMENT BETWEEN )
IDAHO POWER AND ALPHA WIND,LLC )
_____________________________________________________________________________________
)
IN THE MATTER OF THE APPLICATION OF )
IDAHO POWER COMPANY FOR A )CASE NO.IPC-E-IO-52
DETERMINATION REGARDING A FIRM )
ENERGY SALES AGREEMENT BETWEEN )
IDAHO POWER AND BRAVO WIND,LLC )
_____________________________________________________________________________________
)
IN THE MATTER OF THE APPLICATION OF )
IDAHO POWER COMPANY FOR A )CASE NO.IPC-E-1O-53
DETERMINATION REGARDING A FIRM )
ENERGY SALES AGREEMENT BETWEEN )
IDAHO POWER AND CHARLIE WIND,LLC )
_____________________________________________________________________________________
)
IN THE MATTER OF THE APPLICATION OF )
IDAHO POWER COMPANY FOR A )CASE NO.IPC-E-lO-54
DETERMINATION REGARDING A FIRM )
ENERGY SALES AGREEMENT BETWEEN )
IDAHO POWER AND DELTA WIND,LLC )
______________________________________________________________________________________
)
IN THE MATTER OF THE APPLICATION OF )
IDAHO POWER COMPANY FOR A )CASE NO.IPC-E-1O-55
DETERMINATION REGARDING A FIRM )
ENERGY SALES AGREEMENT BETWEEN )
IDAHO POWER AND ECHO WIND,LLC )ORDER NO.32298
_____________________________________________________________________________________
)
On December 16,2010,Idaho Power Company filed five Applications each
requesting acceptance or rejection of a 20-year Firm Energy Sales Agreement (“Agreements”)
between Idaho Power and Alpha Wind,LLC;Bravo Wind,LLC;Charlie Wind,LLC;Delta
Wind,LLC;and Echo Wind,LLC,respectively (collectively “the Projects”).On February 24,
2011,the Commission issued a consolidated Notice of Application and Notice of Modified
Procedure for the five Applications.Timely comments in response to the Notice of Modified
Procedure were filed by the Commission Staff and the Projects.On March 25,2011,Idaho
Power filed reply comments.On June 8,2011,the Commission issued a consolidated final
ORDER NO.32298 1
Order disapproving each of the five Agreements.Order No.32254 at 9.The Commission found
that the Agreements “were not fully executed (signed by both parties)prior to December 14,
2010”—the date that the Commission lowered the eligibility cap for the published avoided cost
rate from 10 MW to 100 kW.Thus,the Agreement contained an essential term that was no
longer available to the Projects.Id.
On June 29,2011,the Projects timely filed a Joint Petition for Reconsideration of the
Commission’s final Order.The Projects allege that the Commission’s final Order is arbitrary
and capricious,is not in conformity with controlling federal or Idaho state case law,and is a
violation of the rulemaking requirements of the Idaho Administrative Procedures Act.
Idaho Power filed an answer to the Projects’Petition on July 6,2011.Idaho Power
maintains that the Commission’s final Order is based on substantial and competent evidence.
Idaho Power argues that the Commission was acting within its discretion and,therefore,
reconsideration should be denied.
BACKGROUND
A.The Agreements
On December 15,2010,Idaho Power and the five wind projects entered into their
respective Agreements.Under the terms of the Agreements,each wind project agrees to sell
electric energy to Idaho Power for a 20-year term using the 10 aMW non-levelized published
avoided cost rates.Applications at 4.The Applications recite that Alpha,Bravo,Delta and Echo
will each have a maximum capacity amount of 29.9 MW,and Charlie will have a maximum
capacity of 27.6 MW.Id at ¶7.Under normal and/or average conditions,each QF will not
generate more than 10 aMW on a monthly basis.Idaho Power warrants that the Agreements
comport with the terms and conditions of the various Commission Orders applicable to PURPA
agreements for a wind resource.Id.at ¶6 citing Order Nos.30415,30488,30738 and 31025.
The projects have all selected October 31,2014,as the Scheduled First Energy Date
and December 31,2014,as the Scheduled Operation Date.Applications at 5.Idaho Power
asserts that various requirements have been placed upon the projects in order for Idaho Power to
accept the project’s energy deliveries.Idaho Power states that it will monitor each project’s
compliance with initial and ongoing requirements through the term of the Agreement.The
parties have agreed to liquidated damage and security provisions of $45 per kW of nameplate
capacity.Agreements ¶J 5.3.2,5.8.1.
ORDER NO.32298 2
Idaho Power asserts that it has advised each project of the project’s responsibility to
work with Idaho Power’s Delivery business unit to ensure that sufficient time and resources will
be available for the Delivery unit to construct the interconnection facilities,and transmission
upgrades if required,in time to allow the proj ects to achieve their December 31,2014,Scheduled
Operation Date.The Applications state that the projects have been advised that delays in the
interconnection or transmission process do not constitute excusable delays and if a project fails
to achieve its Scheduled Operation Date,delay damages will be assessed.Applications at 7.
The Applications further maintain that each project has acknowledged and accepted the risk
inherent in proceeding with its Agreement without knowledge of the requirements of
interconnection and possible transmission upgrades.Id.at 7.
Idaho Power also states that each project has been made aware of and accepted the
provisions in the Agreement and Idaho Power’s approved Schedule 72 regarding non-
compensated curtailment or disconnection of the project should certain operating conditions
develop on Idaho Power’s system.The Applications note that the parties’intent and
understanding is that “non-compensated curtailment would be exercised when the generation
being provided by the Facility in certain operating conditions exceeds or approaches the
minimum load levels of [Idaho Power’s]system such that it may have a detrimental effect upon
[Idaho Power’s]ability to manage its thermal,hydro,and other resources in order to meet its
obligation to reliably serve loads on its system.”Id.at 7-8.
By their own terms,the Agreements will not become effective until the Commission
has approved all of the terms and conditions and declares that all payments made by Idaho Power
to each project for purchases of energy will be allowed as prudently incurred expenses for
ratemaking purposes.Agreements ¶21.1.
B.The Utilities’Joint Petition
On November 5,2010,prior to the date that Idaho Power and the Projects entered
into their Agreements,Idaho Power,Avista Corporation,and PacifiCorp dba Rocky Mountain
Power filed a Joint Petition requesting that the Commission initiate an investigation to address
various avoided cost issues related to the Commission’s implementation of PURPA.Case No.
GNR-E-10-04.On December 3,2010,the Commission issued Order No.32131 declining a
motion made by the utilities to immediately reduce the published avoided cost rate eligibility cap
from 10 aMW to 100 kW.Order No.32131 at 5.However,the Order did notify parties that the
ORDER NO.32298 3
Commission’s decision regarding whether to reduce the published avoided cost eligibility cap
would become effective on December 14,2010.Id.at 5-6,9,
Section 210 of PURPA generally requires electric utilities to purchase power
produced by QFs at “avoided cost”rates set by the Commission.“Avoided costs”are those costs
which a public utility would otherwise incur for electric power,whether that power was
purchased from another source or generated by the utility itself.”18 C.F.R.§292.101 (b)(6).
Order No.32176 at 1.Under PURPA regulations issued by the Federal Energy Regulatory
Commission (FERC),the Commission must “publish”avoided cost rates for small QFs with a
design capacity of 100 kW or less.Order No.32176 at 1.However,the Commission has the
discretion to set eligibility for the published avoided cost rate at a higher capacity amount
commonly referred to as the “eligibility cap.”18 C.F.R.§292.304(c)(1-2).When a QF project
is larger than the Commission-established eligibility cap the avoided cost rate for the project
must be individually negotiated by the QF and the utility using the Integrated Resource Plan
(IRP)Methodology.Order No.32176.
The purpose of utilizing the IRP Methodology for large QF projects is to more
precisely value the energy being delivered.Id.at 10.The IRP Methodology recognizes the
individual generation characteristics of each project by assessing when the QF is capable of
delivering its resources against when the utility is most in need of such resources.The resultant
pricing is reflective of the value of QF energy to the utility.Utilization of the IRP Methodology
does not negate the requirement under PURPA that the utility purchase the QF energy.
Based upon the record in the GNR-E-l0-04 case,the Commission subsequently
found that a “convincing case has been made to temporarily reduce the eligibility cap for
published avoided cost rates from 10 aMW to 100 kW for wind and solar only while the
Commission further investigates”other avoided cost issues.Order No.32176 at 9 (emphasis
original).On reconsideration,the Commission affirmed its decision to temporarily reduce the
eligibility cap for published avoided cost rates from 10 aMW to 100 kW.Order No.32212.
Thus,the eligibility cap for the published avoided cost rate for wind and solar QF projects was
set at 100 kW effective December 14,2010.No party appealed from the Orders in Case No.
GNR-E-10-04.
ORDER NO.32298 4
C.The Prior Final Order in this Case
On June 8,2011,the Commission issued Order No,32254 disapproving the
Agreements between Idaho Power and each of the five wind projects —Alpha,Bravo,Charlie,
Delta and Echo)The Commission determined that the Agreements were not fully executed
(signed by both parties)prior to December 14,2010,the date upon which the eligibility for
published avoided cost rates changed from 10 aMW to 100 kW for wind and solar projects.
Consequently,the Commission found that the rates contained in the Agreements did not comply
with Order No.32176 because each of the projects requesting published avoided cost rates are in
excess of 100 kW.Order No.32254 at 10.The “old”10 aMW published rate is available only
to non-wind and non-solar QFs.
The Projects signed the Agreements on December 13,2010,and Idaho Power signed
on December 15,2010.The Commission noted that the Agreements contain language regarding
the effective date.The terms of the Agreements unequivocally state that the “Effective Date”of
the Agreements is “The date stated in the opening paragraph of this ...Agreement representing
the date upon which this [Agreementj was fully executed by both Parties.”Agreements ¶1.10
(emphasis added).The opening paragraph is dated “this 15 day of December,2010.”We stated
that “{tjhe Commission does not consider a utility and its ratepayers obligated until both parties
have completed their final reviews and signed the agreement.”Order No.32254 at 9.We found
that “a thorough review is appropriate and necessary prior to signing Agreements that obligate
ratepayers to payments in excess of $700 million”over the 20-year term of the Agreements.Id.
at 8.The Commission established a bright line rule that for a wind or solar QF larger than 100
kW to be eligible for published avoided cost rates,a Firm Energy Sales Agreement/Power
Purchase Agreement must have been executed,i.e.,signed by both parties,prior to the December
14,2010,effective date of the change in eligibility criteria.kL at 10.The Commission
additionally found that it was “not in the public interest to allow parties with contracts executed
on or after December 14,2010,to avail themselves of an eligibility cap that is no longer
applicable.”Id.at 9.
The five projects had previously filed consolidated comments maintaining that the “relevant facts for each of these
five projects are substantially similar.”Project Comments at ni.Consequently,the Commission found it
reasonable and appropriate to consolidate the cases and issue a consolidated final Order.Order No.32254 n.1.
ORDER NO.32298 5
PETITION FOR RECONSIDERATION
On June 29,2011,the Projects filed a timely Joint Petition for Reconsideration.
Idaho Code §61-626.The Projects allege that the Commission’s Order is arbitrary and
capricious and not in conformity with state or federal law.Specifically,the Projects raise four
arguments:(1)a QF is entitled to the rates that are in effect on the date the QF incurred a legally
enforceable obligation;(2)the Commission’s bright line rule is contrary to controlling Idaho
case law regarding contract formation;(3)the Commission erroneously failed to apply
“grandfather tests”to determine the Projects’eligibility for published rates;and (4)the
Commission’s bright line rule is in violation of the rulemaking requirements of the Idaho
Administrative Procedures Act.The Projects request that the Commission reconsider its
decision and allow “written briefing submitted by the parties,and evidentiary proceedings.”
Reconsideration at 7.
Idaho Power filed an answer to the Projects’Petition for Reconsideration.Idaho
Power states that the Commission’s Order is based on substantial and competent evidence.
Idaho Power further maintains that the Commission regularly pursued its authority and was
acting within its discretion in choosing to disapprove the Agreements.Answer at 2.
Consequently,Idaho Power asks that the Projects’Petition for Reconsideration be denied.
ISSUES ON RECONSIDERATION
A.Legal Standards
Reconsideration provides an opportunity for a party to bring to the Commission’s
attention any question previously determined and thereby affords the Commission an opportunity
to rectify any mistake or omission.Washington Water Power Co.v.Kootenai Environmental
Alliance,99 Idaho 875,879,591 P.2d 122,126 (1979).The Commission may grant
reconsideration by reviewing the existing record,by written briefs,or by evidentiary hearing.
IDAPA 3 1.01.01.311.03.If reconsideration is granted,the Commission must complete its
reconsideration within 13 weeks after the deadline for filing petitions for reconsideration.Idaho
Code §6 1-626(2).
Consistent with the purpose of reconsideration,the Commission’s Procedural Rules
require that petitions for reconsideration “set forth specifically the ground or grounds why the
petitioner contends that the order or any issue decided in the order is unreasonable,unlawful,
erroneous or not in conformity with the law.”Rule 331.01,IDAPA 31.01.01.331.01.Rule 331
ORDER NO.32298 6
further requires that the petitioner provide a “statement of the nature and quantity of evidence or
argument the petitioner will offer if reconsideration is granted.”Id.
B.Legally Enforceable Obligation —Federal Law
The Projects argue that,pursuant to 18 C.F.R.§292.304(d)(2)(ii),a QF is entitled to
the rates that are in effect on the date the QF incurred a legally enforceable obligation to provide
energy.The Projects maintain that the “obligation to purchase a QF’s output is created by the
QF committing itself to sell to an electric utility,which also commits the electric utility to buy
from the QF.”Reconsideration Petition at 5.Based on this premise,the Projects argue that the
Commission’s Order is arbitrary and capricious and not in conformity with controlling federal
law because it requires a utility’s signature to establish a legally enforceable obligation.
Commission Findings:The Idaho Supreme Court has held that “[t]he
implementation of PURPA as it relates to cogeneration and small power producers,and the
regulations promulgated by FERC,have been largely left to the regulatory authorities of the
individual states.”A.W.Brown Company,Inc.v.Idaho Power Company,121 Idaho 812,816,
828 P.2d 841,845 (1992).“FERC regulations grant the states latitude in implementing the
regulation of sales and purchases between QFs and electric utilities.”Order No.32262 citing
Federal Energy Regulatory Commission v.Mississippi,456 U.S.742,102 S.Ct.2126,72
L.Ed.2d 532 (1982).As we stated in our final Order,“[a]ccording to the FERC,‘it is up to the
States,not [FERCI to determine the specific parameters of individual QF power purchase
agreements,including the date at which a legally enforceable obligation is incurred under State
law.”Order No.32254 at 9 citing Rosebud Enterprises v.Idaho PUC,128 Idaho 609,623-624,
917 P.2d 766,780-781 (1996)citing West Penn Power Co.,71 FERC ¶61,153 (1995).
The premise of the Projects’argument is correct:QFs have the right to choose to
have rates calculated at the time that a legally enforceable obligation is incurred.
Reconsideration at 5.However,this Commission determined that the parties entered into a
legally enforceable obligation at the time that both parties executed the power purchase
agreement.We find that,for each of these five projects,a legally enforceable obligation was
incurred on December 15,2010.By their very terms the Agreements were not effective until
December 15,2010.Agreement ¶1.10.On that date,wind projects larger than 100 kW were no
longer entitled to the 10 MW published avoided cost rate.In determining when the parties
incurred a legally enforceable obligation,we properly exercised the authority granted us by
ORDER NO.32298 7
FERC.“For purposes of [FERC]regulations,the critical date is the date on which a legally
enforceable obligation is incurred,and choosing that date for a specific QF is the responsibility
of the States,not of [FERC].”Wes,Penn Power Co..71 FERC ¶61153.61495 (1995).
The Projects cite JD Wind 1,LLC,129 FERC ¶61,148,in support of their
proposition that a legally enforceable obligation is incurred at the time the QF commits itself to
sell to an electric utility.In that case,six separate QFs developed by John Deere Renewables
petitioned FERC to overturn a Texas PUC decision denying the projects long-term contracts at
avoided cost rates calculated at the beginning of the contract.The Texas PUC found that wind
QFs were not entitled to long-term legally enforceable obligations because of the intermittent,or
non-firm,nature of the resource.FERC concluded that the Texas PUC’s Order,limiting the
award of a legally enforceable obligation to only those QFs that provide firm power,was
inconsistent with FERC regulations implementing PURPA.JD Wind does not consider or
analyze when a legally enforceable obligation is incurred under PURPA.The Projects’effort to
argue that this case is controlling on the issues of contract formation and timing of a legally
enforceable obligation is misleading and without merit.
Nothing cited by the Projects demonstrates that the Commission’s Order is arbitrary
or capricious or inconsistent with federal law.On the contrary,FERC specifically delegated
authority to the States to determine when and how a legally enforceable obligation is created.
We find that a legally enforceable obligation is incurred and a contract is fully executed upon
obtaining the signature of both parties.This finding is based on substantial and competent
evidence.The Commission’s finding is also in the public interest and strikes a balance between
“the local public interest of a utility’s electric consumers and the national public interest in
development of alternative energy sources.”Rosebud Enterprises,128 Idaho at 613,917 P.2d at
770.Allowing a project to avail itself of an eligibility cap (and therefore published rates)that is
no longer applicable could cause ratepayers to pay more than the utility’s avoided cost which
“would be in direct violation of PURPA policies.”A.W.Brown Company v.Idaho Power
Company,121 Idaho 812,818,828 P.2d 841,847 (1992).Based on the foregoing,the Projects’
request for reconsideration on this issue is denied.
C.Bright Line Test —Contrary to Idaho Contract Formation case Law
The Projects argue that the Commission’s bright line rule that a firm energy sales
agreement/power purchase agreement is not enforceable until it is executed by both parties is
ORDER NO.32298 8
erroneous because it is not in conformity with controlling Idaho case law regarding contract
formation.Reconsideration at 5.The Projects maintain that the parties satisfied the
requirements of contract formation before December 14,2010,despite the lack of Idaho Power’s
signature.The Projects cite Evco Sound &Electronics,148 Idaho 357,365,223 P.3d 740,748
(2009),for the proposition that contracts can be enforceable “regardless of whether signed by
either party.”Reconsideration at 5.
Commission Findings:As a threshold matter,we note that a firm energy sales
agreement/power purchase agreement differs from a standard offer and acceptance contract.
Unlike standard offer and acceptance contracts,PURPA agreements are subject to review and
approval by this Commission pursuant to Idaho statutes.Idaho Code §61-502 and 61-503.
“The Commission,as part of its statutory duties,determines reasonable rates and investigates
and reviews contracts.”A.W Brown Company v.Idaho Power Company,121 Idaho 812,816,
828 P.2d 841,845 (1992).Thus,QF power purchase agreements are different from typical or
standard contracts.Furthermore,the Court’s analysis supports our decision in this case.In
Evco Sound,the Idaho Supreme Court stated that a meeting of the minds “is evidenced by a
manifestation of intent to contract which takes the form of an offer and acceptance.”Evco Sound
&Electronics,Inc.v.Seaboard Surely Conpany.148 Idaho 357,365,223 P.3d 740,748 (2009)
(emphasis added).Here we find that Idaho Power did not accept the Projects’offer to sell power
until after it completed a final review of the contract terms and conditions and signed the
Agreement.
Prior to signing,Idaho Power performs a thorough review of the terms of the
contract.As we stated in our final Order,a comprehensive review of a power purchase
agreement is consistent with this Commission’s directive to utilities that they assist the
Commission in its gatekeeper role when reviewing QF contracts.Order No.32254 at 9.We find
that it is reasonable and consistent with the authority granted us under PURPA.and that the
public interest requires that each party have a full and final review of the contract before signing
and obligating the utility and its ratepayers to hundreds of millions of dollars in energy payments
over the 20-year life of the agreement.The Projects were given unrestricted time to adequately
review the contracts before signing.Idaho Power is obligated to be as diligent in its review prior
to asking the Commission to commit ratepayer dollars.
ORDER NO.32298 9
The Projects also argue that their Agreements were effective prior to December 14,
2010,because of the Projects’offer to sell their energy to Idaho Power.However,this argument
has no basis given the very terms of the Agreements themselves.Each Agreement states that the
“effective date’of the Agreement is represented by the date upon which the Agreement was
fully executed by both parties.Agreements ¶1.10.It is not disputed that December 15,2010,is
the date upon which the Agreements were fully executed by both parties.It is clear and
unambiguous that the Agreements became effective and a legally enforceable obligation
occurred when both parties signed the Agreements.
We also recognize that the Agreements also provide that the Agreement will not
become effective until the Commission has approved all of the terms and conditions and declares
that all payments made by Idaho Power to each project for purchases of energy will be allowed
as prudently incurred expenses for ratemaking purposes.Agreements ¶21.1 (emphasis added).
An effective date based on Commission approval of the Agreement has been supported on Idaho
Supreme Court review.2 No one has argued that the legally enforceable obligation arises only
when the Commission has approved the Agreements.Based upon this record,we find that the
legally enforceable obligation is the date that the parties executed the Agreements and agreed to
be bound by the terms contained therein.The considerations made by this Commission are
authorized by PURPA and FERC regulations.The Projects have failed to demonstrate that we
were not regularly pursuing our authority.Consequently,reconsideration of this issue is denied.
D.Grandfather Tests
The Projects next argue that the Commission’s decision to not consider the
application of grandfathering criteria is arbitrary and capricious.The Projects claim that they
have “satisfied all of the Commission’s prior tests for establishing grandfathered rights to
previously available avoided cost rates,including a prior test used the other time rates became
unavailable because the Commission reduced the eligibility cap for published rates.”
Reconsideration at 6 citing In the Matter of Petition of Cassia Wind to Determine Exemption
Status,IPC-E-05-35,Order No.29954.The Projects contend that they satisfied the requirements
2 “Rosebud is not entitled to a lock-in of an avoided cost rate until it has entered into a legally enforceable and
IFUC approved obligation for the delivery of energy and capacity.”Rosebud Enterprises,128 Idaho at 620,917
P.2d at 777 (emphasis added).
ORDER NO.32298 10
of the Commission’s grandfathering precedent before the effective date of the eligibility cap
reduction.
Commission Findings:The Projects’reliance on Order No.29954 is misplaced.
First,the Commission explicitly stated that ‘we look at the totality of the facts”in assessing
entitlement to grandfathering status.Order No.29954 at 2.In these Agreements,the “effective
date”of each Agreement is the Commission lowered the eligibility cap for the published
avoided cost rate to 100 kW.Thus,the parties’own Agreement does not support that use of
grandfathering.Second,the Idaho Supreme Court has stated that “[clonferment of grandfathered
status on [a]qualifying facility is essentially an 1PUC finding that a legally enforceable
obligation to sell power existed by a given date.Such a finding is within the discretion of the
state regulatoiy agency.”Rosebud Enteiprises,128 Idaho 624,917 P.2d at 781 (emphasis
added).In this consolidated case,we found that each of the five projects incurred a legally
enforceable obligation on December 15,2010.Thus,there is no occasion to resort to the use of
grandfathering criteria.Based upon this record,we find that the two days time Idaho Power took
to complete its final review of the Agreements was reasonable.This finding is consistent with
our authority under federal and state law.
Third,our Supreme Court has noted,“Because regulatory bodies perform legislative
as well as judicial functions in their proceedings,they are not so rigorously bound by the
doctrine of stare decisis that they must decide all future cases in the same way as they have
decided similar cases in the past.”Rosebud Enterprises v.Idaho PUC,128 Idaho 609,618,917
P.2d 766,775 (1996)citing Intermountain Gas Co.v.Idaho PUC,97 Idaho 113,119,540 P.2d
775,781 (1975).“So long as the Commission enters sufficient findings to show that its action is
not arbitrary and capricious,the Commission can alter its decisions.”Washington Water Power
v.Idaho PUC,101 Idaho 567,579,617 P.2d 1242,1254 (1980).Therefore,simply because
grandfathering criteria have been used in consideration of QF eligibility to published rates in the
past does not mean that this Commission must decide all future QF eligibility cases in the same
manner.
The criteria considered in Order No.29954 for determining project eligibility to
published avoided cost rates following a change in the eligibility cap are substantially different
than the grandfathering criteria that these five projects initially presented and argued as
ORDERNO.32298 11
precedent in their comments.3 Regardless of whether it is a change in the eligibility cap for
access to published rates or a change in the rates themselves,the Commission is not bound by
prior grandfathering treatment decisions so long as our decision is based on substantial and
competent evidence in the record and we enter sufficient findings to demonstrate that is the case.
In contrast to the change in eligibility for published rates in 2005,no criteria were enunciated or
established by this Commission to determine project eligibility through the use of grandfathering
for QF agreements executed on or after December 14,2010.Because the Commission’s decision
to not utilize grandfathering criteria was not arbitrary and/or capricious,we deny reconsideration
on this issue.As stated in our final Order,it is adverse to the public interest to allow parties who
have not executed contracts to avail themselves of an eligibility cap that is no longer in place.Id.
at 9.Grandfathering contracts that were executed on or after December 14,2010,and allowing
them to utilize an eligibility cap that is no longer applicable would be contrary to our
determination regarding what the public interest requires.This finding is supported by
substantial and competent evidence in the record and as explained in our orders.
Moreover,no appeal was taken from the Commission’s Order to lower the eligibility
cap.Idaho Code §61-625 prohibits collateral attacks of Commission Orders that are final and
conclusive.“A different rule would lead to endless consideration of matters previously
presented to the Commission and confusion about the effectiveness of Commission orders.”
Utah-Idaho Sugar Co.v.Intermountain Gas Co.,100 Idaho 368,373,597 P.2d 1028,1063
(1979).The Projects are,in essence,collaterally attacking the Commission’s prior Order
reducing the eligibility cap by arguing that grandfathering criteria should apply.However,no
party timely appealed the Commission’s decision in that case.Case No.GNR-E-10-04;Order
Nos.32176 and 32212.Therefore,the Commission’s decision to lower the eligibility cap from
10 aMW to 100 kW for wind and solar projects effective December 14,2010,is a final and
conclusive Order of the Commission that is not subject to collateral attack.
The Projects initially argued that,“[wjhen the published rates change,or become otherwise unavailable to a QF
before the QF can obtain a contract,the QF is entitled to grandfathered rates if it can ‘demonstrate that ‘but for’the
actions of [the utility,the QFj was otherwise entitled to a power purchase contract.”Comments at 7.The Projects
also alleged that they satisfied the “pre-filed complaint”test.These criteria have been utilized by this Commission
for rate changes,not changes in the eligibility cap.
The Commission outlined criteria that it would consider in determining whether a project was eligible for the
previous,no longer applicable,eligibility cap for published avoided cost rates,i.e.,whether a project would be
“grandfathered”and permitted to utilize the old eligibility cap.Order No.29839.
ORDER NO.32298 12
E.Rulemaking and the Idaho Administrative Procedures Act
Finally,the Projects argue that the Commission’s bright line rule is in violation of the
rulemaking requirements of the Idaho Administrative Procedures Act and is,therefore,void.
The Projects contend that because the Commission explicitly stated that it was not implementing
a rate change,the APA is applicable to the Commission’s non-ratemaking act of establishing a
new rule.Reconsideration at 7 citingA.W.Brown,121 Idaho 812,828 P.2d 841.
Commission Findings:The Projects mischaracterize the nature of the Commission’s
actions and misconstrue the APA analysis of the Court in A.W.Brown.“The Commission,as
part of its statutory duties,determines reasonable rates and investigates and reviews contracts.”
A.W.Brown Company v.Idaho Power Company,121 Idaho 812,816,828 P.2d 841,845 (1992)
(emphasis added).These duties are legislative,not adjudicative,in nature.The Projects’attempt
to void the Commission’s findings and its basis for disapproval of the Agreements by arguing a
violation of the APA is without merit.The Commission,as an agency of the legislative branch
of government,exercises delegated legislative powers to make rates.Id.idaho Code §61-502
defines “Determination of rates”as
Whenever the commission,after a hearing had upon its own motion or upon
complaint,shall find that ...the rules,regulations,practices,or contracts [by
any public utility]affecting such rates ...are unjust,unreasonable,
discriminatory or preferential,or in any wise in violation of any provision of
law ...the commission shall determine the just,reasonable or sufficient rates,
fares,tolls,rentals,charges,classifications,rules,regulations,practices or
contracts to be thereafter observed and in force ..
Review of contracts or agreements that contain PURPA rates falls clearly within the
Commission’s ratesetting,i.e.,legislative,function.“The APA specifically does not apply to
‘those in the legislative or judicial branch.’I.C.§67-5201.”A.W.Brown Company v.Idaho
Power Company,121 Idaho 812,819,828 P.2d 841,848 (1992).Therefore,reconsideration of
this issue is denied.
CONCLUSION
The Commission has jurisdiction over Idaho Power,an electric utility,and the issues
raised in this matter pursuant to the authority and power granted it under Title 61 of the Idaho
Code and the Public Utility Regulatory Policies Act of 1978 (PURPA).The Commission has
authority under PURPA and the implementing regulations of the Federal Energy Regulatory
Commission (FERC)to set avoided cost rates,to order electric utilities to enter into fixed-term
ORDERNO.32298 13
obligations for the purchase of energy from qualified facilities (QFs)and to implement FERC
rules.Rosebud Enterprises,Inc.v.Idaho Public Utilities Commission,128 Idaho 609,612,917
P.2d 766,769 (1996).
Although FERC promulgated the general scheme and rules,it left the actual
implementation of PURPA to the state regulatory authorities.Id..128 Idaho at 614,917 P.2d
771.FERC rules insist that rates for purchases from QFs be just and reasonable to ratepayers,in
the public interest,and not discriminatory against QFs.18 C.F.R.§292.304(a)(l).Notably,
PURPA and the implementing regulations require only that published/standard avoided cost rates
be established and made available to QFs with a design capacity of 100 kW or less.18 C.F.R.§
292.304(c).When this Commission reduced wind and solar projects’eligibility to published
avoided cost rates we unequivocally stated that continuing to allow large wind and solar projects
access to published avoided cost rates for projects greater than 100 kW was “clearly not in the
public interest.”Order No.32262.We reaffirmed that determination in the present case by
finding that “it is not in the public interest to allow parties with contracts executed on or after
December 14,2010,to avail themselves of an eligibility cap that is no longer applicable.”Order
No.32254 at 9.The Projects have failed to demonstrate that the Commission’s findings are
unreasonable,unlawful,erroneous,or not in conformity with the law.Rule of Procedure 331,
IDAPA 3 1.01.01.331.01.
The Firm Energy Sales Agreements between Idaho Power and the five projects were
executed on December 15,2010.The Agreements recite that each project will have a maximum
capacity amount of 29.9 MW (except Charlie —27.6 MW).Under normal and/or average
conditions,each project will not exceed 10 aMW on a monthly basis.Because the size of each
of these wind projects exceeds 100 kW,they are not eligible to receive the published avoided
cost rate.Nevertheless,the Projects are entitled to PURPA contracts with avoided cost rates
calculated using the IRP Methodology.
ORDER
IT IS HEREBY ORDERED that the Joint Petition for Reconsideration filed by
Alpha,Bravo,Charlie,Delta and Echo wind projects is denied.
THIS IS A FINAL ORDER ON RECONSIDERATION.Any party aggrieved by
this Order or other final or interlocutory Orders previously issued in this Case Nos.IPC-E-10-51,
ORDER NO.32298 14
10-52,10-53.10-54,or 10-55 may appeal to the Supreme Court of Idaho pursuant to the Public
Utilities Law and the Idaho Appellate Rules.See Idaho Code §6 1-627.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this 7’
day of July 2011.
PAUL K LLAN,PRESIDENT
MACK A,REDFORD,COMMISSIONER
4
IUVJ
MARSHA FT.SMITH,COMMISSIONER
ATTEST:
Jçh D Jewell ‘
Cbmmission Scretary
O:JPC-E-10-5 1 IPC-E-I 0-521PC-E-I 0-531PC-E-I O-541PC-E-1 0-55ks2
ORDERNO.32298 15