20110727reconsideration_order_no_32300.pdf

Office ofthe 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-.59DETERMINATIONREGARDINGAFIRM)
ENERGY SALES AGREEMENT BETWEEN )
IDAHO POWER AND RAINBOW RANCH )WIND,LLC )
____________________________________________________________________________________________
)IN THE MATTER OF THE APPLICATION OF )IDAHO POWER COMPANY FOR A )CASE NO.IPC-E-10-60
DETERMINATION REGARDING A FIRM )
ENERGY SALES AGREEMENT BETWEEN )IDAHO POWER AND RAINBOW WEST WIND,)ORDER NO.32300
LLC )
On December 16,2010.Idaho Power Company filed two Applications each
requesting acceptance or rejection of a 20-year Firm Energy Sales Agreement (“Agreements”)
between Idaho Power and Rainbow Ranch Wind,LLC and Rainbow West Wind,LLC
(collectively “the Projects”).Both projects are located near Declo,Idaho,and are managed by
American Wind Group,LLC (American Wind).On February 24,2011,the Commission issued a
consolidated Notice of Application and Notice of Modified Procedure for the two Applications.
Timely comments in response to the Notice of Modified Procedure were filed by the
Commission Staff,the Projects,and the public.On March 24,2011,Idaho Power filed reply
comments.
On June 8,2011,the Commission issued a consolidated final Order disapproving the
two Agreements.Order No.32256 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 unlawful,
erroneous,and not in conformity with the law.Additionally,they allege that the Order is a
violation of the rulemaking requirements of the Idaho Administrative Procedures Act.
ORDER NO.32300 1
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 in the public
interest and,therefore,reconsideration should be denied.
BACKGROUND
A.The Agreements
On December 14.2010,Idaho Power and the two 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 nameplate rating of each project is 23 MW.Under
normal andior average conditions,each QF will not exceed 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.
Each project has selected December 31,2011,as the Scheduled First Energy Date and
December 31,2012,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.
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 projects to achieve their December 31,2012,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.
ORDER NO.32300 2
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.
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-l0-04.On December 3,2010,the Commission issued Order o.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
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.lOl(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 —
ORDER NO.32300 3
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-10-04 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-1 0-04.
C.The Prior Final Order in this Case
On June 8,2011,the Commission issued Order No.32256 disapproving the
Agreements between Idaho Power and each of the wind projects —Rainbow Ranch Wind and
Rainbow West Wind.’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
l The two projects had previously filed consolidated comments because the relevant facts for each of these projectsaresubstantiallysimilar.Consequently,the Commission found it reasonable and appropriate to consolidate thecasesandissueaconsolidatedfinalOrder.Order No.32256 n.1.
ORDER NO.32300 4
excess of 100 kW.Order No.32256 at 9.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 14,2010.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 FAgreementi was fully executed by both Parties.”Agreements ¶1.10
(emphasis added).The opening paragraph is dated “this 14th day of December,2010.”We
stated that “[t]he Commission does not consider a utility and its ratepayers obligated until both
parties have completed their final reviews and signed the agreement.”Order No.32256 at 8.
We found that “a thorough review is appropriate and necessary prior to signing Agreements that
obligate ratepayers to payments in excess of $200 million”over the 20-year term of the
Agreements.Id.at 7.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.Id.at 8.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.
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 unreasonable,
erroneous,and not in conformance with the law.Specifically,the Projects argue that the
Agreements became legally binding between the parties on December 14,2010;that these
projects would have been eligible for “grandfathering”under traditional criteria;that application
of a bright line rule may constitute an improper governmental interference with contractual
rights;and that a bright line rule generally results in manifest injustice.Alternatively,the
Projects purport to adopt the “more general objections”asserted by “other parties in companion
ORDER NO.32300 5
cases.”2 Reconsideration at 7.The Projects request reconsideration in the form of written briefs
or comments.
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 argues that the Commission,“in its role as the regulatory authority for all investor-
owned,public utilities in the state of Idaho,has an independent obligation and duty to assure that
all contracts entered into by the public utilities it regulates are ultimately in the public interest.”
Answer at 4.Idaho Power further maintains that the Commission regularly pursued its authority
and was acting within its discretion in choosing to disapprove the Agreements.Id.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 31.01.01.311.03.If reconsideration is granted,the Commission must complete its
reconsideration within 13 weeks after the deadline for filing petitions for reconsideration.Idaho
Code §61-626(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
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.
2 The Projects do not elaborate on these objections.However,they included in their Petition a bulleted list:(I)the
bright line rule is inconsistent with federal law;(2)the Commission’s bright line rule is in violation of the
rulemaking requirements of the Idaho Administrative Procedures Act;(3)“the retroactivity feature of the Order is
suspect”;and (4)adoption of a bright line rule is an unexplained departure from past precedent.
ORDER NO.32300 6
B.Legally Binding Agreement on December 14,2010
The Projects argue that,“by their express terms,the Agreements define the date upon
which they become a binding contract on the parties.”Reconsideration at 3.The Projects assert
that their Agreements became effective on December 14,2010.The Projects contend that Idaho
Power acknowledges that the Agreements were binding legal obligations as of December 14,
2010.The Projects maintain that the Commission’s intent behind a December 14 effective date
is “vaguely written”and “a reasonable person could believe that FESAs effective December 14,
2010,qualified for published avoided cost rates.”Id.at 4.Specifically,the Projects argue that a
reasonable person could understand the Commission’s Order to mean that agreements executed
on or before December 14,2010,are eligible for the 10 aMW eligibility cap.
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 [FERC]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 Commission’s change in eligibility cap became effective on December 14,2010.
The new 100 kW threshold for wind and solar projects’access to published avoided cost rates
began on December 14,2010.There is no other reasonable interpretation but that the new rates
were in effect on the day that the Commission declared they become effective —December 14,
2010.Idaho Code §61-618.There is nothing ambiguous or vague about when the new
eligibility cap took effect.The Projects’argument to the contrary is without merit.If the
Projects’argument regarding an effective date were applied to its own contract,December 14
could not be relied upon as the execution date of the Agreements —the self-proclaimed “effective
date”upon which the Agreement was fully executed by both parties.It is inconsistent and
ORDER NO.32300 7
insincere for the Projects to declare that the Commission’s assertion of an effective date is
ambiguous only to subsequently rely on an effective date declaration in their Agreements to
support approval of the contracts.
Moreover,the final Order disapproving the Projects’Agreements was abundantly
clear:“in order for the 10 aMW eligibility cap to be available to wind and solar QFs,the
agreement must have been effective prior to December 14,2010.”Order No.32256 at 8
(emphasis added).We find that,for each of these two projects,a legally enforceable obligation
was incurred on December 14,2010.By the Projects’own admission and the very terms of the
contracts,the Agreements were not effective until December 14,2010.Agreements ¶1.10.We
further find that,on that date,wind projects larger than 100 kW were no longer entitled to
published avoided cost rates.However,as QFs,the Projects remain entitled to PURPA contracts
with avoided cost rate terms calculated using the IRP Methodology.This finding is based on
substantial and competent evidence and supported by the record in this case.
Although no party has argued this position on the matter,we recognize that the
contracts 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.3
However,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.On
that date,wind projects with a capacity of greater than 100 kW were not eligible to receive
published rate contracts.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.
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
“Rosebud is not entitled to a lock-in of an avoided cost rate until it has entered into a legally enforceable and
IPUC approved obligation for the delivery of energy and capacity.”Rosebud Enterprises,128 Idaho at 620,917
P.2d at 777 (emphasis added).
ORDER NO.32300 8
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.Grandfathering Treatment
The Projects next argue that the Commission’s “long history of grappling with claims
eligibility for higher rates following a reduction in rates or change in methodology is well known
and will not be repeated here.”Reconsideration at 5.The Projects maintain that they would be
eligible for grandfathering treatment under “traditional criteria”because contract negotiations
between Idaho Power and the Projects were materially complete prior to December 14,2010.Id.
citing Order Nos.29389,29954,and 30109.
Commission Findings:The Projects’reliance on prior Commission Orders that
permit projects to be grandfathered 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 same day that the
Commission’s 100 kW eligibility cap for wind and solar projects’access to published rates
became effective.Thus,the Projects’Agreements do not support that use of grandfathering.
Second,the Idaho Supreme Court has stated that “[c]onferment of grandfathered status on [a]
qualifying facility is essentially an IPUC finding that a legally enforceable obligation to sell
power existed by a given date.Such a finding is within the discretion of the stale regulatory
agency.”Rosebud Enterprises,128 Idaho 624,917 P.2d at 781 (emphasis added).In this
consolidated case,we found that each of the two projects incurred a legally enforceable
obligation on December 14,2010.Thus,there is no occasion to resort to the use of
grandfathering criteria.The Commission’s decision to not utilize grandfathering criteria and,
instead,adhere to the stated effective date of the reduced eligibility cap is within the
Commission’s discretion.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
ORDER NO.32300 9
decided similar cases in the past.”Rosebud Enterprises v.Idaho PUC,128 Idaho 609,618,917
P.2d 766,775 (1996)citing Intermountain Gas o.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.
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 timely contracts to avail themselves of an eligibility cap that is no longer in
place.Order No.32256 at 8.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
‘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.32300 10
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-lO-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.Based upon the
foregoing,we deny reconsideration of this issue.
D.Improper Governmental Interference with contractual Rights
The Projects claim that application of a bright line rule “renders the contracts a
nullity”and may constitute an improper governmental interference with contractual rights.
Reconsideration at 6.The Projects argue that the constitutional protection against governmental
interference requires a “quantity of proof’in order to justify altering a rate fixed by contract.Id.
citing Agricultural Products v.Utah Power,98 Idaho 23,557 P.2d 617 (1976).
Commission Findings:First,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.“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 contractual obligations.”Agricultural Products Coip.v.Utah Power &
Light Co.,98 Idaho 23,29,557 P.2d 617,623 (1976).Moreover,“[p]rivate contracts with
utilities are regarded as entered into subject to reserved authority of the state to modify the
contract in the public interest.”Id.(emphasis added).This Commission specifically stated that
it was not in the public interest to approve the Projects’Agreements because they were executed
after a new,lower eligibility to published rates became effective.Order No.32256 at 8.The
Projects have failed to prove that this finding is unreasonable,erroneous or not in conformance
with the law.
Second,this Commission is not modifying the Agreements between Idaho Power and
the Projects.We did not change the terms of the Agreements —we disapproved the contracts
ORDERNO.32300 11
because the terms did not comply with Order No.32176 requiring wind projects with a capacity
greater than 100 kW to utilize the IRP Methodology to determine avoided cost rates.Order No.
32256 at 9.It would be contrary to the public interest and a violation of Order No.32176 to
approve agreements executed on or after December 14,2010,that contain published avoided cost
rates for wind projects with a design capacity of more than 100 kW.The Projects have failed to
demonstrate that we were not regularly pursuing our authority in disapproving their Agreements.
Consequently,reconsideration of this issue is denied.
E.Remaining Assertions ofError
The Projects summarize their position by arguing that application of the
Commission’s bright line rule “offends fundamental conceptions ofjustice.”Reconsideration at
6.The Projects also reference “other parties in companion cases [who]intend to assert more
general objections to the Bright Line Rule.”Id at 7.The Projects do not elaborate on these
objections beyond a bulleted list:(1)the bright line rule is inconsistent with federal law;(2)the
Commission’s bright line rule is in violation of the rulemaking requirements of the Idaho
Administrative Procedures Act;(3)“the retroactivity feature of the Order is suspect”;and (4)
adoption of a bright line rule is an unexplained departure from past precedent.Id.The Projects
state that,if “the Commission is unable to reach the result herein requested,Rainbow will,of
necessity,join in the assertion of those other,more general objections.”Id.
Commission Findings:Commission Rule 331 requires that petitions for
reconsideration describe “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
conformance with the law,and [set forth]a statement of the nature and quantity of evidence or
argument the petitioner will offer if reconsideration is granted.”IDAPA 31.01.01.331.01.We
find that a notation regarding manifest injustice and a bulleted list of additional issues argued by
other parties in other cases fails to meet the requirements of Rule 331 for these issues.In
particular,the Projects have failed to identify the specific grounds upon which they contend the
Order is unlawful or erroneous in these regards.We further find that they have failed to provide
“the nature and quantity of evidence or argument.”5 Id.Accordingly,we deny reconsideration
of these issues.
In response to the Projects’bullet point regarding rulemaking under the APA,we note our finding in Order Nos.
32298 at 13 and 32299 at 12-13.
ORDER NO.32300 12
Nothing cited by the Projects demonstrates that the Commission’s Order is arbitrary
or capricious or inconsistent with federal or state 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.We further find that a legally enforceable
obligation was incurred by Idaho Power and these two projects on December 14,2010.On that
date,wind projects larger than 100 kW were no longer entitled to the 10 aMW published avoided
cost rate.In determining when the parties incurred a legally enforceable obligation,we properly
exercised the authority granted us by 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].”West Penn Power Co.,71 FERC
¶61153,61495 (1995).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.
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.6 Order No.32256 at 7.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 requesting Commission approval that will commit ratepayer dollars.
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
6 “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).
ORDERNO.32300 13
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
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)(1).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.32256 at 8.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 31.01.01.331.01.
The Firm Energy Sales Agreements between Idaho Power and the two projects were
executed on December 14,2010.The Agreements recite that each project will have a maximum
capacity amount of 23 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
1 00 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
Rainbow Ranch Wind and Rainbow West Wind is denied.
ORDER NO.32300 14
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-l0-59
or IPC-E-10-60 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
day of July 2011.
ATTEST:
PAUL K LLA i5,PRESIDENT
/1 /
MiRSHA H.SMITH,COMMISSIONER
//,i .
//[IJean D.Jeweli’
Cbmmission Secretary
O:IPC-E-1 O-591PC-E-I O-60ks3
MACK A.REDP [SSIONER
ORDER NO.32300 15