20120323Answer and Motion to Dismiss.pdf

IHO
COPMER@ RECEIVED
An IDACORP Company
: 52
JASON B. WILLIAMS
Corporate Counsel I OAHO
iw,lIiamsidahopower corn UTIUTES r4,M
March 22, 2012
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83702
Re: Case No. IPC-E-12-11
IN THE MATTER OF THE PETITION OF RAINBOW RANCH WIND LLC
AND RAINBOW WEST WIND LLC TO MODIFY ORDER NO. 32300 OR
IN THE ALTERNATIVE APPLICATION FOR APPROVAL OF FIRM
ENERGY SALES AGREEMENT
Dear Ms. Jewell:
Enclosed for filing please find an original and seven (7) copies of Idaho Power
Company's Answer and Motion to Dismiss in the above matter.
Very truly yours,
JBW:csb
Enclosures
1221 W. Idaho St. (83702)
P.O. Box 70
Boise, ID 83707
JASON B. WILLIAMS (ISB No. 8718)
DONOVAN E. Walker (ISB No. 5921)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
iwilliamsidahopower.com
dwalkeridahoDower.com
L
W'
iEO FUBL
UTiLITIES OOMMSS3N
Attorneys for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE PETITION OF
RAINBOW RANCH WIND LLC AND
RAINBOW WEST WIND LLC TO
MODIFY ORDER NO. 32300 OR IN THE
ALTERNATIVE APPLICATION FOR
APPROVAL OF FIRM ENERGY SALES
AGREEMENT.
CASE NO. IPC-E-12-11
IDAHO POWER COMPANY'S
ANSWER AND MOTION TO
DISMISS
COMES NOW, Idaho Power Company ("Idaho Power' or "Company") and,
pursuant to RP 057 hereby answers the Petition and Application of Rainbow Ranch
Wind, LLC, and Rainbow Ranch West Wind, LLC ("Rainbow") to Modify Order No.
32300 ("Petition and Application") and to approve the previously disapproved Firm
Energy Sales Agreements ("FESA") between Rainbow and Idaho Power.
In addition, Idaho Power, pursuant to RP 56, hereby respectfully moves the
Idaho Public Utilities Commission ("Commission") to dismiss Rainbow's Petition and
Application.
I. ANSWER
Any allegation not specifically admitted herein shall be considered to be denied.
See RP 57.02.a.
IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS -1
1. Idaho Power admits that the Petition identifies Idaho Power Company as
the person petitioned against but denies all other allegations of paragraph I of the
Petition.
2.Idaho Power admits that the Commission issued Order No. 32300 and
that the Federal Energy Regulatory Commission ("FERC") issued an order on October
4, 2011, 137 FERC 131,006 ("Cedar Creek Order"), but does not agree with the the
Petition's characterization of those orders and therefore denies those allegations. Idaho
Power affirmatively asserts the orders speak for themselves.
3.Idaho Power admits that Order No. 32300 is a final, conclusive non-
appealable order of the Commission. Idaho Power denies the remaining allegation in
paragraph 3 of the Petition.
4.Idaho Power admits that Rainbow Ranch's Petition is alternatively styled
as an "Application." The first and second sentences of paragraph 4 of the Petition are
legal conclusions and require no response from Idaho Power. Idaho Power denies all
other allegations of paragraph 4 of the Petition.
5.Idaho Power has insufficient information or knowledge to admit or deny
the truth as to the allegations in paragraph 5 of the Petition and therefore denies those
allegations.
6.Idaho Power affirmatively asserts that it submitted Applications in Case
Nos. IPC-E-10-59 and IPC-E-10-60 related to the Rainbow Ranch projects and that
those Applications speak for themselves and require no further response by Idaho
Power herein.
IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS -2
7. Idaho Power affirmatively asserts that it submitted Applications in Case
Nos. IPC-E-10-59 and IPC-E-10-60 related to the Rainbow Ranch projects and that
those Applications speak for themselves and require no further response by Idaho
Power herein.
8.Idaho Power admits that the Commission issued Order Nos. 32256 and
32300 but does not agree with the Petition's characterization of those Orders and
therefore denies those allegations. Idaho Power affirmatively asserts that the Orders
speak for themselves and require no further response by Idaho Power herein.
9.Idaho Power admits that FERC issued the Cedar Creek Order but does
not agree with the Petition's characterization of that order and therefore denies those
allegations. The FERC Order speaks for itself and requires no further response by
Idaho Power herein.
10.Idaho Power admits that Rainbow Ranch filed a Petition for Enforcement
at FERC ("FERC Petition") but does not agree with the Petition's characterization of
such filing and therefore denies the remainder of the allegations in paragraph 10 of the
Petition. Idaho Power affirmatively asserts that the FERC Petition speaks for itself and
requires no further response by Idaho Power herein.
11.Idaho Power admits that Order No. 32300 is a final, conclusive, non-
appealable Commission Order and, pursuant to Idaho Code § 61-625, that Order is not
subject to collateral attack.
12.Paragraph 12 of the Petition is a legal conclusion and requires no
response from Idaho Power.
IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS -3
13. Paragraph 13 of the Petition is a legal conclusion and requires no
response from Idaho Power.
14.Paragraph 14 of the Petition is a legal conclusion and requires no
response from Idaho Power.
15.Paragraph 15 of the Petition is a legal conclusion and requires no
response from Idaho Power. Order No. 32300 speaks for itself.
16.Paragraph 16 of the Petition is a legal conclusion and requires no
response from Idaho Power
17.Idaho Power denies all of the allegations of paragraph 17 of the Petition.
18.Idaho Power admits the allegations of paragraph 18 of the Petition.
19.Idaho Power admits that a meeting took place on November 4, 2010, but
does not agree with the Petition's characterization of the discussion that occurred at the
meeting and therefore denies those allegations.
20.Idaho Power admits that it provided Rainbow Ranch with initial contracting
information on November 5, 2010. Idaho Power admits that it filed a Joint Petition with
the Commission in Case No. GNE-E-10-4 on November 5, 2010, but does not agree
with the Petition's characterization of that Joint Petition and therefore denies those
allegations. Idaho Power affirmatively asserts the Joint Petition speaks for itself. Idaho
Power denies the remaining allegations in paragraph 20 of the Petition.
21.Idaho Power admits that it received information from Rainbow Ranch on
November 9, 2010, but denies that Rainbow Ranch provided Idaho Power with
"finalized FESAs" as such documents were not final.
IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS -4
22. Idaho Power has insufficient knowledge or information related to the
actions of Brian Jackson on November 15, 2010, and therefore denies those
allegations. Idaho Power admits that Idaho Power's Randy Allphin exchanged e-mail
correspondence with Rainbow Ranch's Brian Jackson but does not agree with the
characterization of the correspondence that took place and therefore denies those
allegations.
23.Idaho Power admits that Brian Jackson sent an e-mail to Idaho Power's
Randy Allphin and Donovan Walker on November 17, 2010, and that Donovan Walker
spoke with Brian Jackson on November 17, 2010, but does not agree with the Petition's
characterization of that correspondence and discussion and therefore denies those
allegations.
24.Idaho Power admits that a meeting between representatives from Idaho
Power and Rainbow Ranch occurred on November 19, 2010, but does not agree with
the Petition's characterization of the discussion that occurred at the meeting and
therefore denies those allegations.
25.Idaho Power admits that on November 23, 2010, it provided Rainbow
Ranch with a draft FESA, but denies the Petition's characterization of those documents
and therefore denies those allegations.
26.Idaho Power admits that it received documents from Rainbow Ranch on
December 3, 2010, but denies the Petition's characterization of those documents and
therefore denies those allegations.
IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS -5
27.Idaho Power admits that the Commission issued Order No. 32313 on
December 3, 2010, but denies the Petition's characterization of that Order, and
affirmatively asserts that the Order speaks for itself.
28.Idaho Power has insufficient knowledge or information related to the first
sentence of paragraph 28 of the Petition and therefore denies that allegation. Idaho
Power admits that it provided draft FESAs to Rainbow Ranch on December 8, 2010, but
does not agree with the Petition's characterization that such FESA5 were
"final" and therefore denies such allegation.
29.Idaho Power admits that Brian Jackson of Rainbow Ranch sent an e-mail
to Idaho Power on December 9, 2010, but does not agree with the Petition's
characterization of the e-mail and therefore denies the allegation. Idaho Power
affirmatively asserts that the e-mail communication speaks for itself.
30.Idaho Power admits that it e-mailed representatives of Rainbow Ranch
with final, executable FESAs on December 13, 2010, but does not agree with the
Petition's characterization of that email and therefore denies that allegation. Idaho
Power affirmatively asserts that the e-mail speaks for itself. Idaho Power has
insufficient knowledge or information as to whether "Rainbow was puzzled" and
therefore denies that allegation.
31.Idaho Power admits that representatives of Rainbow Ranch came to Idaho
Power's corporate offices in downtown Boise to pick up copies of the FESAs on
December 13, 2010, but has insufficient knowledge or information as to which Rainbow
Representatives picked up copies of the FESA5 and therefore denies those allegations.
Idaho Power has insufficient knowledge or information as to where the "Rainbow team"
IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS -6
went to sign the FESA and therefore denies that allegation. Idaho Power admits
representatives from Rainbow Ranch returned to Idaho Power's offices late in the
afternoon of December 13, 2010, with signed copies of the FESAs.
32.Idaho Power admits that Rainbow returned documents to Idaho Power on
December 13, 2010, but denies the characterizations and remaining allegations in
paragraph 32.
33.Idaho Power admits that representatives from Rainbow spoke with
representatives from Idaho Power on December 14, 2010, but does not agree with the
Petition's characterization of those conversations and therefore denies the allegations in
paragraph 33 of the Petition. Idaho Power denies that the FESAs had been finalized on
December 9, 2010.
34.Idaho Power admits that it negotiated FESAs with Rainbow Ranch but
does not agree with the Petition's characterization of those negotiations and that
Rainbow Ranch had committed itself to sell electricity to Idaho Power through a legally
enforceable obligation or otherwise and therefore denies those allegations of paragraph
34 of the Petition.
35.Idaho Power denies the allegations of paragraph 35 of the Petition.
36.Idaho Power admits the allegations on paragraph 36 of the Petition.
37.For each allegation made in the Petition not specifically addressed above,
Idaho Power hereby denies each such allegation.
II. MOTION TO DISMISS
Rainbow Petitions the Commission to modify its final Orders in Case Nos. IPC-E-
10-59 and IPC-E-10-60, and alternatively Applies to the Commission for approval of the
IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS -7
FESA that the Commission denied in those final Orders. Rainbow states, "In Rainbow's
view, the procedural vehicle by which such approval is accomplished could either be
modification of prior Order No. 32300, or approval of a new Application for approval of
the Agreements." Rainbow's Petition and Application at 2-3.
Under either procedure, Rainbow's Petition and Application is an impermissible
collateral attack upon the final Orders of the Commission, is barred by the doctrines of
res judicata and collateral estoppel, is contrary to the public interest, and, therefore,
Idaho Power respectfully moves the Commission to dismiss Rainbow's Petition and
Application.
A. Rainbow's Petition Is an Impermissible Collateral Attack on Final Orders of
the Commission.
On June 8, 2011, the Commission determined that the Rainbow projects did not
create a legally enforceable obligation prior to December 14, 2010, and denied approval
of the FESAs. Order No. 32256 ("June 8 Rainbow Order"). On July 27, the
Commission denied Rainbow's Petition for Reconsideration. Order No. 32300 ("July 27
Rainbow Order"). Forty-two days later (September 8, 2011), because Rainbow chose
not to appeal the Commission's determinations, the June 8 Rainbow Order and the July
27 Rainbow Order became final and non-appealable. I.A.R. 14(b) ("An appeal as a
matter of right from an administrative agency may be made only by physically filing a
notice of appeal with the Public Utilities Commission within 42 days... from when an
application for rehearing is denied."); I.A.R. Rule 21 ("The failure to physically file a
notice of appeal... within the time limits prescribed by these rules shall be jurisdictional
and shall cause automatic dismissal of such appeal or petition.").
IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS -8
Commission Orders must be appealed within 42 days of the Commission's
action. I.A.R. 14(b). Rule 14(b) of the Idaho Appellate Rules reads:
An appeal as a matter of right from an administrative agency
may be made only by physically filing a notice of appeal with
the Public Utilities Commission or the Industrial Commission
within 42 days from the date evidenced by the filing stamp of
the clerk or secretary of the administrative agency on any
decision, order or award appealable as a matter of right.
The time for an appeal from such decision, order or award of
the public utilities commission begins to run when an
application for rehearing is denied, or, if the application is
granted, after the date evidenced by the filing stamp on the
decision on rehearing.
I.A.R. 14(b); see Neal v. Harris, 100 Idaho 348, 350 (1979) (noting that Rule 14 limits
time to appeal decisions of Commission). The Commission issued its order on
reconsideration of the June 8 Rainbow Order on July 27, 2011. Rainbow did not file a
Notice of Appeal to the Idaho Supreme Court within the required time, nor has Rainbow
otherwise challenged the Rainbow Orders in court. Consequently, under the applicable
state limitations period, the Rainbow Orders became finial and no longer subject to
review on September 8, 2011. I.A.R. 21 (2011) ("Effect of failure to comply with time
limits. The failure to physically file a notice of appeal . . . with the . . . administrative
agency... within the time limits prescribed by these rules, shall be jurisdictional and shall
cause automatic dismissal of such appeal or petition . . ."); Idaho Code § 61-625 (2011)
("All orders and decisions of the [Idaho Public Utilities C]ommission which have become
final and conclusive shall not be attacked collaterally."); see Welch v. Del Monte Corp.,
128 Idaho 513, 516 (1996) (applying I.A.R. 14(b) to un-appealed order of Idaho
Industrial Commission; holding that findings of fact and conclusions of law contained in
IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS -9
agency's order are conclusive and preclude further adjudication of those facts and
issues).
The law of the case is now settled, and may not be attacked on appeal or
collaterally. This is true even if the Commission's application of the law later is
determined to be incorrect.
A final judgment on the merits of an action precludes the
parties or their privies from relitigating issues that were or
could have been raised in that action . . . . Nor are the res
judicata consequences of a final, unappealed judgment on
the merits altered by the fact that the judgment may have
been wrong or rested on a legal principle subsequently
overruled in another case . . . . As this Court explained in
Baltimore S.S. Co. v. Phillips, 274 U.S. 316, 325 (1927)
"A judgment merely voidable because based upon an
erroneous view of the law is not open to collateral attack, but
can be corrected only by a direct review and not by bringing
another action upon the same cause [of action]."
Federated Dept. Stores v. Moitie, 452 U.S. 394, 398 (1981); see also Idaho Code § 61-
625 ("All orders and decisions of the commission which have become final and
conclusive shall not be attacked collaterally.").
The legal proscriptions barring collateral attack are supported by strong policy
considerations, as explained by the Idaho Supreme Court:
The legislature has afforded the orders of the [Idaho Public
Utilities] Commission a degree of finality similar to that
possessed by judgments made by a court of law. I.C. § 61-
625 ... Final orders of the [Idaho Public Utilities] Commission
should ordinarily be challenged either by petition to the
[Idaho Public Utilities] Commission for rehearing or by
appeal to this Court as provided by I.C. § 61-626 and 627;
Id. Const. Art. 5, § 9. A different rule would lead to endless
consideration of matters previously presented to the
Commission and confusion about the effectiveness of
Commission orders.
IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS -10
Utah-Idaho Sugar Co. v. Intermountain Gas Co., 100 Idaho 368, 373-374 (1979)
(emphasis added). Such policy concerns are highly relevant here because, in addition
to Rainbow, there are three similarly situated developers whose power purchase
agreements the Commission rejected on June 8, 2011, and who chose not to appeal.
See supra note 3. The three other developers together with Rainbow represent eleven
projects with a combined capacity over 270 MW. Uncertainty regarding whether those
three developers and Rainbow remain eligible for standard rate power purchase
agreements would frustrate the ability of the Commission to ensure that published rates
are just and reasonable and would frustrate Idaho Power's ability to accurately plan how
it will serve its load. If the remaining parties could retain their right to appeal their June
8 Order for an indefinite future period, Idaho Power and the Commission would have to
plan as though the power purchase agreements do not exist and yet run the risk of
overabundance in the event they do materialize. Such a situation ultimately would
result in additional cost to Idaho Power's customers and is a good example of the kind
of harm prevented by Idaho's prohibition on collateral attacks of Commission orders.
Rainbow, without explanation, choose not to file an appeal of the Commission's
final Orders to the Idaho Supreme Court. The subsequent declaratory order issued by
FERC in the Cedar Creek cases does not entitle Rainbow to now, more than six months
after the deadline to appeal, and more than 5 months after the issuance of FERCs
Cedar Creek Order, challenge the final Commission Orders disapproving its FESAs.
IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS -11
Consequently, the Commission should dismiss Rainbow's Petition and Application as it
is an impermissible collateral attack upon the final orders of the Commission.'
B. Rainbow's Petition Is Barred By the Doctrines of Collateral Estoppel and
Res Judicata.
Rainbow's claims were fully considered by the Commission, a final judgment was
rendered on the merits, Rainbow failed to appeal such decision, and Rainbow's claims
rely upon the same operative facts that were before the Commission for the initial
determination. Rainbow's claims are barred by collateral estoppel (issue preclusion)
and res judicata (claim preclusion).
Idaho courts require five factors be met for collateral estoppel to bar re-litigation
of an issue decided in an earlier proceeding: (1) the party against whom the earlier
decision was asserted had a full and fair opportunity to litigate the issue decided in the
earlier case; (2) the issue decided in the prior litigation was identical to the issue
presented in the present action; (3) the issue sought to be precluded was actually
decided in the prior litigation; (4) there was a final judgment on the merits in the prior
litigation; and (5) the party against whom the issue is asserted was a party or in privity
with a party to the litigation. Ticor Title Co. V. Stanion, 144 Idaho 119, 124 (2007)
(internal citations omitted).
All five factors are satisfied by the Commission's June 8 and July 27 Rainbow
Orders. Rainbow had ample opportunity to make its case to the Commission prior to
1 Filed contemporaneously with the Petition and Application before this Commission, Rainbow
also filed a Petition for Enforcement Under the Public Utility Regulatory Policies Act of 1978, along with
an alternative request for a declaratory order, with the Federal Energy Regulatory Commission ('FERC").
Idaho Power has filed, contemporaneously with this Answer and Motion to Dismiss, a Motion to Intervene
and Protest in the FERC proceeding. Idaho Power, in its Motion to Intervene and Protest makes similar
arguments to FERC as those presented herein to this Commission, and states additional grounds as to
why Rainbow's requested relief at FERC is improper. Idaho Power's Motion to Intervene and Protest is
attached hereto as Attachment No. 1, and incorporated herein by this reference.
IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS -12
the June 8 Order, and in its petition for reconsideration. Rainbow's requested relief
seeks a determination that it is eligible for standard rates, and seeks approval of the
identical FESAs previously disapproved by the Commission—the identical issue the
Commission ruled on in the June 8 and July 27 Rainbow Orders. Rainbow Petition
Application at 1. The Commission reached a final judgment on Rainbow's eligibility in
the June 8 and July 27 Rainbow Orders. And Rainbow is the same party as, or has
privity with, the party bound by the June 8 and July 28 Rainbow Orders. Rainbow,
therefore, is collaterally estopped from being heard on the same issues again before
this Commission.
Rainbow's petition also is barred by claim preclusion, or res judicata. In Idaho,
"resjudicata means that in an action between the same parties upon the same claim or
demand, the former adjudication concludes parties and privies not only as to every
matter offered and received to sustain or defeat the claim but also every matter which
might and should have been litigated in the first suit." Magee v. Thompson Creek
Mining Co., 268 P.3d 464, 470 (Idaho 2012) (internal citations and quotations omitted).
Resjudicata applies to decisions of administrative agencies. Id.; see Idaho Code § 61-
625 ("All orders and decisions of the [Commission] which have become final and
conclusive shall not be attacked collaterally.").
"The "sameness" of a cause of action for purposes of application of the doctrine
of res judicata is determined by examining the operative fact underlying the two
lawsuits." Farmers Nat'! Bank v. Shirey, 126 Idaho 63, 69 (1994) (internal citations and
quotation marks omitted). In its petition, Rainbow essentially seeks a determination
from the Commission that it formed a legally enforceable obligation to sell output from
IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS -13
its two QFs prior to December 14, 2010. This is the same claim by Rainbow that the
Commission considered and rejected, in the June 8 Rainbow Order and the July 27
Rainbow Order, and which Rainbow elected not to appeal to the Idaho Supreme Court.
Because Rainbow already brought an identical claim before the Commission, and that
claim resulted in a final judgment, Rainbow is barred by res judicata from bringing that
same claim to this Commission again. The existence of FERC's Cedar Creek
declaratory Order does not constitute authority to, nor require the Commission to set
aside Idaho Code §§ 61-625, 61-627 and I.A.R. 14(b) and 21, and resuscitate a
conclusive order in a closed docket.
C. Rainbow's Suggestions That Idaho Power Draaed Out or Delayed
Negotiations of the Power Purchase Agreements Are False.
Notwithstanding, and without waiving Idaho Power's arguments above that
Rainbow's Petition and Application is barred as an impermissible collateral attack on a
final Commission Order, and that it is barred by res judicata and collateral estoppels,
Assuming arguendo that the Commission were to consider Rainbow's claims, they do
not prevail. In its Petition and Application, Rainbow implies through its presentation of
facts that Idaho Power delays in contract negotiations and final signature of the FESAs
prevented Rainbow from obtaining a legally enforceable obligation prior to December
14, 2010. Rainbow's insinuation is unfounded. Rainbow did not request FESAs from
Idaho Power until November 5, 2010, and in spite of the very high volume of QF
requests Idaho Power had to process during that same period, it completed contract
negotiations and due diligence for Rainbow's two 20-MW, new 20-year contracts in less
than six weeks.
IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS -14
Idaho Power records indicate that initial contact with Rainbow (where Idaho
Power sent Rainbow a set of initial contracting information requests) occurred on
November 5, 2010. Idaho Power Reply Comments at 6 (March 25, 2011) Case Nos.
IPC-E-10-59 and IPC-E-10-60. Idaho Power received the requested information from
Rainbow on November 9, 2010. Id. Multiple discussions commenced with Rainbow,
and first draft contracts were provided to Rainbow on November 23, 2010. Id. Idaho
Power continued to receive e-mail and communications from Rainbow as late as
December 9, 2010, that Rainbow was still attempting to determine the project sizes and
finalize the agreements. Id.
Idaho Power began its required internal Sarbanes-Oxley Act review process on
December 8, 2010. Id. On December 13, 2010, the unsigned, final execution versions
of the contracts were delivered to Rainbow. Id. Rainbow signed the agreements and
returned them to Idaho Power later that afternoon on December 13, 2010. Id. at 6-7.
Idaho Power signed the agreements on December 14, 2010, and filed them with the
Commission for review on December 16, 2010. Id. at 7. Idaho Power had no
opportunity to execute the contracts prior to December 14, 2010 because the contracts
were not returned to Idaho Power by Rainbow until late in the afternoon on December
13, 2010. Id. Idaho Power did sign the agreements the next day at the first opportunity
it had with the appropriate Company executive. Id.
IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS -15
Idaho Power negotiated and executed two 20-year PPAs with an estimated value
of $209 million in only 38 days. 38 days is rapid processing for two contracts of this
size during normal times; during November and December of 2010 when Idaho Power
was handling an unusually large number of QF applications totaling 315 MW of
capacity, it was exceptionally fast. Finally, any assertion that Idaho Power
unreasonably refused to sign the FESAs it tendered on December 13, 2010 goes
against common sense. To imply that PURPA requires Idaho Powers Vice-President to
sign contracts valued at $209 million within minutes of being tendered is patently
unreasonable. Signing and returning the contracts one day later, as Idaho Power did,
was diligent and timely.
D. The Commission Found Rainbow's Contracts to Be Contrary to the Public
Interest.
The Commission, in its review of the executed Rainbow FESAs, found that
approval of the contracts would be contrary to the public interest and refused to approve
them. See June 8 Rainbow Order at 8; July 27 Rainbow Order at 12 ("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."). Under PURPA's regulatory scheme, "state regulatory agencies
have the authority to implement PURPA in reviewing and approving contracts for the
sale of electricity." Wheelabrator Lisbon, Inc. v. State of Conn. Dept. of Pub. Util.
Control, 531 F.3d 183, 188 (2d. Cir. 2008) (citing Freehold Cogeneration Assocs., L.P.
2 See Comments of the Commission Staff at 3-4 (March 17, 2011) in In the Matter of the
Application of Idaho Power Co. for a Determination of Regarding Firm Energy Sales Agreement Between
Idaho Power and Rainbow Ranch Wind, LLC; In the Matter of the Application of Idaho Power Co. for a
Determination of Regarding Firm Energy Sales Agreement Between Idaho Power and Rainbow West
Wind, LLC, IPUC Case Nos. IPC-E-10-59-60 (stating that over the 20 year period of the two FESAs, the
total combined amount paid by Idaho Power would be $200.8 million).
IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS -16
v. Bd. Of Reg. Comm'rs of State of N.J., 44 F.3d 1178, 1192 (3d. Cir. 1995)); see also
A.W. Brown, 121 Idaho at 816 ("The Commission, as part of its statutory duties,
determines reasonable rates and investigates and reviews contracts. I.C. §§ 61-502, -
503." (quoting Empire Lumber Co. v. Wash. Water Power Co., 114 Idaho 191, 193
(1988))). The Commission, in its role as the regulatory authority for implementing
PURPA in the state of Idaho, has an independent obligation and duty to assure that all
PURPA contracts entered by Idaho Power are in the public interest. See Rosebud
Enters, Inc. v. Idaho PUC, 128 Idaho 609, 613-14 (1996) (The Commission, in acting
pursuant to PURPA, must strike a balance between "the local public interest of a utility's
electric consumers and the national public interest in development of alternative energy
resources."); see also Agric. Prods. Corp. v. Utah Power & Light Co., 98 Idaho 23, 29
(1976) ("Private contracts with utilities are regarded as entered into subject to reserved
authority of the state to modify the contract in the public interest." (Emphasis added)).
The duty to ensure the public interest even supersedes the State Constitution of
Idaho's protection of private contracts. In the State of Idaho, contracts are afforded
constitutional protection against interference from the state. Idaho Const. Art. I § 16
(2011). However, despite this constitutional protection, the Commission may annul,
supersede, or reform the contracts of the public utilities it regulates in the public interest.
Agric. Prods. Corp., 98 Idaho at 29 ("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.").
The Commission may interfere with the contracts of a public utility and disregard Idaho
IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS -17
Constitutional protections of contract only to prevent an adverse affect to the public
interest. Agric. Prods. Corp., 98 Idaho at 29.
While the Commission may not annul, supersede, or revise a PURPA contract
during its term because such action would constitute utility-type regulation of a QF in
violation of 18 C.F.R. § 292.602(c)(1), the Commission may review and approve a
PURPA contract at the time it is submitted by the parties for final approval, in
furtherance of its state duty to ensure that the agreement is consistent with the public
interest. Crossroads Cogeneration Corp., 159 F.3d at 138 ("In other words, while
PURPA allows the appropriate state regulatory agency to approved a power purchasing
agreement, once such an agreement is approved, the state agency is not permitted to
modify the terms of the agreement.").
The Rainbow FESAs were subject to the Commission's public interest review of
PURPA contracts upon submission to the Commission for approval. Each Rainbow
FESA specifically states:
This Agreement shall become finally effective upon the
Commission's approval of all terms and provisions hereof
without change or condition and declaration that all
payments to be made to Seller hereunder shall be allowed
as prudently incurred expenses for ratemaking purposes.
Idaho Power's Application, Attachment No. I "Firm Energy Sales Agreement" at 27,
Case Nos. IPC-E-10-59 and IPC-E-10-60. Upon the parties' submittal and Commission
review, the Commission specifically found that approval of the Rainbow FESA5 would
be contrary to the public interests of the citizens of Idaho, even when weighed against
the national public interest in developing alternative energy resources. June 8 Rainbow
Order at 8; July 27 Rainbow Order at 13 (citing Rosebud, 128 Idaho at 613). The
IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS -18
Commission acted pursuant to its discretion and obligation to protect the public interest
of Idaho by denying the Rainbow FESAs. Rainbow's request to disturb and to
collaterally attack the Commission's findings and final Orders is contrary to the public
interest, should be denied, and its Petition and Application be dismissed.
III. CONCLUSION
For the reasons set forth above, Idaho Power respectfully requests that the
Commission dismiss Rainbow's Petition and Application. Rainbow's petition is an
impermissible collateral attack on the June 8 and July 27 Rainbow Orders. Rainbow's
petition is barred by collateral estoppel and res judicata. Additionally, Rainbow's FESAs
were found to be contrary to the public interest, and their request now to impermissibly
attack those final Orders, when they have failed to pursue an appeal of the same to the
Idaho Supreme Court is likewise contrary to the public interest. Idaho Power
respectfully requests that Rainbow's Petition and Application be dismissed.
Respectfully submitted this 22nd day of March 2012. \
,JASON B. WILLIAMS
(-.Attorney for Idaho Power Company
IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS -19
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 22 nd day of March 2012 I served a true and
correct copy of IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS
upon the following named parties by the method indicated below, and addressed to the
following:
Commission Staff
Kristine A. Sasser
Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, Idaho 83720-0074
Rainbow Ranch Wind, LLC, and
Rainbow West Wind, LLC
Dean J. Miller
Chas. F. McDevitt
McDEVITT & MILLER LLP
420 West Bannock Street (83702)
P.O. Box 2564
Boise, Idaho 83701
X Hand Delivered
U.S. Mail
Overnight Mail
FAX
X Email Kristine.Sasser(puc. idaho.Qov
Hand Delivered
X U.S. Mail
Overnight Mail
FAX
X Email ioemcdevitt-miller.com
chascmcdevift-miIler.com
• ,-• C- L-
B. Williams
IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS -20
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-12-11
IDAHO POWER COMPANY
ATTACHMENT NO. I
UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
Rainbow Ranch Wind, LLC ) Docket Nos. EL12-41-000
Rainbow West Wind, LLC ) QF 11-44-001
) QFI1-45-001
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY
Pursuant to Rules 211, 212, and 214 of the Federal Energy Regulatory Commission's
("FERC" or "Commission") Rules of Practice and Procedure, 18 C.F.R. §§ 385.211, 212, and
214, and the Commission's March 2, 2012, Notice of Petition for Enforcement in the above-
captioned docket, Idaho Power Company ("Idaho Power") hereby moves to intervene in this
proceeding, as well as to submit comments and to protest Rainbow Ranch Wind, LLC, and
Rainbow West Wind, LLC's ("Petitioners" or "Rainbow") request to institute an enforcement
action against the Idaho Public Utilities Commission ("Idaho PUC" or "IPUC") under the Public
Utility Regulatory Policies Act of 1978 ("PURPA").
I. SUMMARY
Idaho Power protests Rainbow's requested relief because: (1) Commission enforcement
in this matter is time-barred; (2) "as-applied" challenges to the Idaho PUC's implementation of
PURPA alleged by Rainbow in its petition are beyond the Commission's jurisdiction to decide;
(3) Rainbow's petition is an impermissible collateral attack on final orders of the IPUC; and (4)
Rainbow's petition is barred by collateral estoppel and res judicata. Additionally, a declaratory
order is improper in this instance as the Commission has spoken with regard to Rainbow's
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -1
requested relief in Cedar Creek Wind, LLC, 137 FERC ¶ 61,006 (2011) (the "Cedar Creek
Order"), and the Idaho PUC has recognized the Commission's guidance regarding the
implementation of PURPA set forth in the Cedar Creek Order. Therefore, an enforcement
action, or a further declaratory order, is unnecessary, and Rainbow's petition should be denied.
Alternatively, should the Commission decide to declare its position on the issues
presented by Petitioners, Idaho Power submits that it is properly within the state commission's
authority to implement rules regarding, and to administer, the creation of legally enforceable
obligations under PURPA and pursuant to the Commission's rules implementing PURPA. Idaho
Power also responds to and rebuts Rainbow's implication that Idaho Power was anything but
diligent and timely in its negotiations with Rainbow. Finally, Idaho Power submits that the
Idaho PUC denied approval of Rainbow's contracts because it specifically found those contracts
to be contrary to the public interest of the citizens of the state of Idaho, a determination soundly
within its discretion and duty, and supported by the record before it.
II. CORRESPONDENCE AND COMMUNICATIONS
Communications regarding this Motion should be addressed to the following:'
Donovan E. Walker
Lead Counsel
Jason B. Williams
Corporate Counsel
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
[phone]
[phone]
d%valker)idahopower.corn
jwi lliarns)idahopower.com
Lisa A. Grow
Senior Vice President, Power Supply
Randy Allphin
Senior Energy Contract Coordinator
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
[phone]
[phone]
lgrowidahopower.com
ral lphin(idahopower.corn
Idaho Power respectfully requests that the Commission allow more than two persons to receive service on
behalf of Idaho Power. 18 CFR § 185.203(b)(3) (2011). In the event the Commission does not permit all four
persons to be on the official service list, Idaho Power's preference is for Jason Williams and Donovan Walker.
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -2
III. BASES FOR INTERVENTION
Idaho Power, an Idaho corporation, is a vertically integrated electric utility engaged in the
business of generating, purchasing, transmitting, and distributing electrical energy. Idaho Power
uses an interconnected grid to provide wholesale and retail electric service throughout
approximately 24,000 square miles of service territory in southern Idaho and eastern Oregon. As
a public utility providing retail electric distribution and supply service, Idaho Power is regulated
by the Idaho PUC and the Public Utility Commission of Oregon. As a public utility under Part II
of the Federal Power Act, Idaho Power has market-based rate authority for wholesale energy
sales under its Commission tariff and provides transmission services under its Commission-
approved Open Access Transmission Tariff.
Idaho Power is subject to the provisions of PURPA as implemented by the rules and
regulations of the Idaho PUC and the Commission. Pursuant to its PURPA obligations, Idaho
Power has entered into Idaho PUC-approved power purchase agreements with numerous
qualifying facilities ("QFs") for the output from those projects at published avoided costs rates.
As a utility that purchases a sizeable amount of energy from QFs pursuant to PURPA, and in
particular as Rainbow's counterparty to the agreements at issue in this docket, Idaho Power has a
direct interest in the outcome of this proceeding that cannot be adequately represented by any
other party. Further, Idaho Power's intervention is in the public interest and the information
provided herein will aid the Commission in reaching an informed resolution of this matter. For
these reasons, Idaho Power respectfully moves to intervene in this proceeding.
IV. BACKGROUND
The Idaho PUC has long exercised its prerogative under PURPA to provide standard
avoided cost ("published") rates to QFs with capacity greater than 100 kilowatt ("kW").
18 C.F.R. § 292.304(c)(2) (2011) ("There may be put into effect standard rates for purchases
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -3
from qualifying facilities with a design capacity of more than 100 kilowatts."). Since 2004, QFs
that show they are likely to generate no more than ten average megawatts ("WW"), measured
on a monthly basis, have been eligible for published rates in Idaho. US. Geothermal, Inc. v.
Idaho Power Co., Idaho PUC Order No. 29632, 14, Case Nos. IPC-E-04-08, IPC-E-04-10
(2005). QFs that meet the published rate eligibility criteria may sell to an Idaho electric utility at
the published avoided cost rate. A QF with an output capacity that exceeds the published
avoided cost rate eligibility cap (currently 100 kW for wind and solar QFs, and 10 aMW for all
other QF resource types) is only eligible for a project specific, negotiated avoided cost rate based
upon the Idaho PUC approved Integrated Resource Plan ("IRP") methodology. Alternatively,
any QF may request a project specific rate that the utility then determines using its Idaho PUC-
approved IRP methodology. In the Matter of the Joint Petition of Idaho Power Co., A vista
Corp., and PacflCorp dba Rocky Mountain Power to Address Avoided Cost Issues and Adjust
the Published Avoided Cost Rate Eligibility Cap, Idaho PUC Order No. 32176, Case No. GNR-
E- 10-04, 10 (2011). A QF and the utility also may negotiate non-standard, non-IRP rates. 18
C.F.R. 292.301(b) (2011) ("Negotiated rates or terms. Nothing in this subpart: (1) Limits the
authority of any electric utility or any qualifying facility to agree to a rate for any purchase, or
terms or conditions relating to any purchase, which differ from the rate or terms or conditions
which would otherwise be required by this subpart.").
In 2010, QF interest in published rate contracts in Idaho increased dramatically. A large
majority of the QFs (in terms of capacity) seeking published rate PURPA contracts were large-
scale wind projects that developers were disaggregating 2 into 10 aMW projects in order to
2 In the context of what is occurring in Idaho, "disaggregation" occurs when a large-scale QF project
intentionally divides itself into smaller subsidiaries in order to qualify for published avoided cost rates reserved for
smaller projects, rather than using the IRP-based avoided cost methodology authorized by the Idaho PUC for larger
QF projects.
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -4
qualify for published avoided cost rates. Joint Petition to Address Avoided Cost Issues and
Joint Motion to Adjust the Published Avoided Cost Rate Eligibility Cap at 3-5, Idaho PUC Case
No. GNR-E- 10-04 (Nov. 5, 2010). The electric utilities regulated by the Idaho PUC—Idaho
Power, Avista Corporation, and PacifiCorp dba Rocky Mountain Power (collectively, the
"Utilities")—became concerned that the rapid addition of so much new QF power so quickly had
rendered, or was about to render, the published avoided cost rates unjust and unreasonable. On
November 5, 2010, the Utilities filed a joint petition requesting that the Idaho PUC initiate an
investigation to address various avoided cost issues related to the Idaho PUC's implementation
of PURPA. At the same time, the Utilities moved for an immediate reduction in the published
avoided cost rate eligibility cap, from 10 aMW down to 100 kW.
The Idaho PUC did not immediately lower its eligibility cap for published rates, but, on
December 3, 2010, gave notice that it would investigate the Utilities' allegations that the
standard rates were not just and reasonable for QFs over 100 kW and that its decision on the
matter would become effective as of December 14, 2010. In the Matter of the Joint Petition of
Idaho Power Co., Avista Corp., and Rocky Mountain Power, Idaho PUC Order No. 32131, 9,
Case No. GNR-E- 10-04 (2010). On February 7, 2011, the Idaho PUC found that the Utilities
had made a convincing case that the eligibility cap for standard rates should be reduced from 10
aMW down to 100 kW for wind and solar QF projects. Idaho PUC Order No. 32176. As it said
it would do in the December 3 notice, the Idaho PUC made that change effective December 14,
2010. Id. atll-12.
The December 3 notice precipitated a rush of QFs seeking to lock in their eligibility for
published rates prior to the December 14, 2010, deadline. Between December 16, 2010, and
January 10, 2011, Idaho Power filed with the Idaho PUC thirteen published avoided cost rate
firm energy sales agreements ("FESA5") comprising 315 megawatts ("MW") of new generation,
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -5
all of which were fully executed after the reduced eligibility cap took effect. Under Idaho's
implementation of PURPA, those signed contracts do not become effective, and the rates therein
do not lock in, until the Idaho PUC approves them. See A. W. Brown Co. v. Idaho Power Co.,
121 Idaho 812, 814, 828 P.2d 841, 843 (1992) ("The [Idaho PUC] established a rule that power
purchase contracts, once negotiated, be presented to the [Idaho PUC] for approval.").
On June 8, 2011, the Idaho PUC rejected all thirteen FESAs. Idaho PUC Order No.
32256 rejected the two Rainbow FESAs ("June 8 Rainbow Order"). Exhibit A to Rainbow
Petition. The Idaho PUC issued four other orders rejecting eleven other FESAs executed by
Idaho Power ,3 and one order rejecting five FESAs executed by PacifiCorp 4 (collectively, the
"June 8 Orders")
The Idaho PUC's basis for rejecting the FESAs in the June 8 Orders was generally the
same. The Idaho PUC found that since the contracts were not fully executed until after the 100
kW eligibility cap went into effect, the QFs were not eligible for published rates, and therefore it
found the rates to be unjust and unreasonable and not in the public interest. See, e.g., June 8
3 1n the Mailer of the Application of Idaho Power Co. for a Determination regarding a Firm Energy Sales
Agreement, Idaho PUC Order No. 32254, Case Nos. IPC-E-10-51 to -55 (2011) (disapproving Idaho Power's FESAs
with Alpha Wind, LLC (29.9 MW), Bravo Wind, LLC (29.9 MW), Charlie Wind, LLC (27.6 MW), Delta wind,
LLC (29.9 MW), and Echo Wind, LLC (29.9 MW)); In the Matter of the Application of Idaho Power Co. for a
Determination regarding a Firm Energy Sales Agreement, Idaho PUC Order No. 32255, Case Nos. IPC-E-10-56 to
-58 (2011) (disapproving Idaho Power's FESAs with Murphy Flat Mesa, LLC (25 MW), Murphy Flat Energy, LLC
(25 MW), and Murphy Flat Wind, LLC (25 MW)); In the Matter of the Application of Idaho Power Co. for a
Determination regarding a Firm Energy Sales Agreement, Idaho PUC Order No. 32256, Case Nos. IPC-E-10-59
and -60 (2011) (disapproving Idaho Power's power purchase agreements with Rainbow Ranch Wind, LLC (23 MW)
and Rainbow West Wind, LLC (23 MW)); In the Matter of the Application of Idaho Power Co. for a Determination
regarding a Firm Energy Sales Agreement, Idaho PUC Order No. 32257, Case Nos. IPC-E-10-5 1 and -62 (2011)
(disapproving Idaho Power's power purchase agreements with Grouse Creek Wind Park, LLC (21 MW) and Grouse
Creek Wind Park II, LLC (21 MW)); In the Matter of the Application of Idaho Power Co. for a Determination
regarding a Firm Energy Sales Agreement, Idaho PUC Order No. 32258, Case No. IPC-E-1 1-01 (disapproving
Idaho Power's power purchase agreements with Western Desert Energy, LLC (5 MW)).
In the Matter of the Application of PacJICorp, dba Rocky Mountain Power for a Determination
Regarding a Firm Energy Sales Agreement, Idaho PUC Order No. 32260, Case Nos. PAC-E-1 1-01 to -05, (2011)
(disapproving Rocky Mountain Power's power purchase agreement with Cedar Creek Wind's Rattlesnake Canyon
Project (27.6 MW), Coyote Hill Project (27.6 MW), North Point Project (27.6 MW), Steep Ridge Project (25.2
MW), and Five Pine Project (25.2 MW)).
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -6
Rainbow Order at 8-9. Several of the QFs sought reconsideration of the June 8 Orders, but in
each case the Idaho PUC reaffirmed the June 8 Order.5 The order denying reconsideration of the
June 8 Rainbow Order, Idaho PUC Order No. 32300, is referred to as the "July 27 Rainbow
Order." Exhibit A to Rainbow Petition. Under Idaho law, final orders of the Idaho PUC must be
appealed to the Supreme Court of Idaho within 42 days after the Idaho PUC's final order on
reconsideration. Idaho Appellate Rule, Rule 14. Rainbow did not timely appeal the June 8
Rainbow Order or the July 27 Rainbow Order.
On August 5, 2011, Cedar Creek petitioned the Commission for relief from the June 8
Orders, in the form of enforcement or declaratory relief under Section 210(h) of PURPA
("Section 210(h)"). FERC Docket No. ELI 1-59-000. Cedar Creek also filed a timely Notice of
Appeal of the Idaho PUC's orders with the Idaho Supreme Court on August 31, 2011. The
Commission declined Cedar Creek's request to initiate an enforcement action pursuant to Section
210(h), but concluded that the Idaho PUCs order rejecting the Cedar Creek FESAs was
inconsistent with PURPA because a state commission could not limit a legally enforceable
obligation to incur only upon a fully executed contract:
In conclusion, we find that the Idaho PUC's June 8 Order, limiting
the methods by which a legally enforceable obligation may be
incurred to only a fully-executed contract, is inconsistent with our
regulations implementing PURPA.
5 1n the Matter of the Application of Idaho Power Co. for a Determination regarding a Firm Energy Sales
Agreement, Idaho PUC Order No. 32298, Case Nos. IPC-E-10-5 1 to -55 (2011); In the Matter of the Application of
Idaho Power Co. for a Determination regarding a Firm Energy Sales Agreement, Idaho PUC Order No. 32300,
Case Nos. IPC-E-1 0-59 and -60 (2011); In the Matter of the Application of Idaho Power Co. for a Determination
regarding a Firm Energy Sales Agreement, Idaho PUC Order No. 32298, Case Nos. IPC-E-10-61 and -62 (2011); In
the Matter of the Application of Pacj/ICorp, dba Rocky Mountain Power for a Determination Regarding a Firm
Energy Sales Agreement, Idaho PUC Order No. 32302, Case Nos. PAC-E-1 1-01 to -05, (2011).
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -7
Cedar Creek Order, 137 FERC ¶ 61,006, P 41. The Commission also noted that the question of
whether the conduct of Cedar Creek and Rocky Mountain Power (the utility counterparty to the
FESA5) constituted a legally enforceable obligation was not before it. Id. at P 38.
Rainbow's facts are similar to those in the petition filed by Cedar Creek in that both
involve the Idaho PUC's rejection of FESAs that were signed and delivered to the utility before
December 14, 2010, but executed by the utility after December 14, 2010. But the similarities
between Rainbow and Cedar Creek end there. Whereas Cedar Creek timely appealed to the
Idaho Supreme Court for review of its June 8 Order, Rainbow did not. And, whereas Cedar
Creek promptly petitioned the Commission to take enforcement action against the Idaho PUC
after its petition for reconsideration of the June 8 Order was denied, Rainbow did not file its
petition with the Commission until March 2012, nearly eight months after the Idaho PUC 's order
on reconsideration denying Rainbow's FESAs.
Idaho Power urges the Commission to deny Rainbow's requested relief for the reasons
set forth below.
V. ARGUMENT
A. Rainbow's Reguested Relief is Procedurally Barred.
Rainbow's petition is not properly before the Commission and is impermissible for
several reasons. First, Rainbow did not file its petition within the applicable limitation period for
appealing the Idaho PUC's action under state law. Second, Rainbow impermissibly seeks an "as
applied" claim with the Commission, which is the sole province of the Idaho PUC and Idaho
courts. Third, Rainbow's petition is an impermissible collateral attack upon final IPUC orders.
Fourth, a declaratory order is improper in this instance as the Commission has spoken with
regard to Rainbow's requested relief in the Cedar Creek Order, and the Idaho PUC has
recognized the Commission's guidance regarding the implementation of PURPA set forth in the
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -8
Cedar Creek Order. Therefore, an enforcement action, or a further declaratory order is
unnecessary, and Rainbow's petition should be denied.6
1. Rainbow's ReQuest for Enforcement is Barred Because it Was Not Brought
Within the Applicable Limitations Period.
A petition for enforcement under Section 210(h) of PURPA against a state administrative
action is barred unless commenced within the limitations period for appealing the administrative
action under state law. NY. State Elec. & Gas Corp. v. Saranac Power Partners, LP, 117 F.
Supp. 2d 211, 246-47 (N.D. N.Y. 2000) ("NYSEG"), aff'd 267 F.3d 128 (2d Cir. 2001). For
matters that come before the Idaho PUC that applicable limitations period is 42 days. Idaho
Appellate Rules, Rule 14(b) (2011) ("I.A.R. 14(b)").
In NYSEG, the District Court for the Northern District of New York found that a Section
210(h) enforcement action against the New York Public Service Commission ("NY P SC") was
barred by the New York State limitations period for challenging the NY PSC's actions, which
was four months. In 1995, NYSEG petitioned FERC for, among other things, an order pursuant
to Section 210(h) directing the NY PSC to relieve NYSEG from PURPA contracts approved by
the NY PSC in 1989. NYSEG, 117 F. Supp. 2d at 220. After the Commission denied NYSEG's
petition, NYSEG sought enforcement in court. In considering whether NYSEG's petition for
Section 210(h) enforcement was time-barred, the NYSEG court found no directly applicable
federal statute of limitations. Id. at 247. The court therefore applied the "well-settled" rule that
"if Congress fails to include a statute of limitations in a statute, courts should - with few
exceptions - impose a state limitations 'most closely analogous' to the federal act in need." Id.
at 246 (noting that Section 210(h) falls squarely inside the rule; quoting Reed v. United Transp.
6 Rainbow filed a corresponding Petition/Application with the Idaho PUC on March 1, 2012, to modify the
Idaho PUC's final orders in the underlying case. Idaho Power filed a Answer and Motion to Dismiss with the Idaho
PUC based upon the same procedural bars outlined in this Intervention and Protest.
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -9
Union, 488 U.S. 319, 323 (1989)). The court then found that the most closely analogous state
limitations statute was the New York law governing time for appeal of final agency action.
NYSEG, 117 F. Supp. 2d at 247. Because NYSEG commenced its Section 210(h) proceeding
before the Commission after the state statutory four-month window to appeal a final agency act,
the court found NYSEG's action to be time-barred. Id.
In Idaho, Idaho PUC actions must be appealed within 42 days of the agency action.
I.A.R. 14(b). Rule 14(b) of the Idaho Appellate Rules reads:
An appeal as a matter of right from an administrative agency may
be made only by physically filing a notice of appeal with the
Public Utilities Commission or the Industrial Commission within
42 days from the date evidenced by the filing stamp of the clerk or
secretary of the administrative agency on any decision, order or
award appealable as a matter of right. * * * The time for an appeal
from such decision, order or award of the public utilities
commission begins to run when an application for rehearing is
denied, or, if the application is granted, after the date evidenced by
the filing stamp on the decision on rehearing.
I.A.R. 14(b); see Neal v. Harris, 100 Idaho 348, 350 (1979) (noting that Rule 14 limits time to
appeal decisions of Idaho PUC). The Idaho PUC issued its order on reconsideration of the June
8 Rainbow Order on July 27, 2011. Rainbow did not file a Notice of Appeal to the Idaho
Supreme Court within the required time, nor has Rainbow otherwise challenged the Rainbow
Orders in court. Consequently, under the applicable state limitations period, the Rainbow Orders
became finial and no longer subject to review on September 8, 2011. I.A.R. 21 (2011) ("Effect
offailure to comply with time limits. The failure to physically file a notice of appeal. . . with the
administrative agency . . . within the time limits prescribed by these rules, shall be
jurisdictional and shall cause automatic dismissal of such appeal or petition. . ."); Idaho Code §
61-625 (2011) ("All orders and decisions of the [Idaho Public Utilities C]ommission which have
become final and conclusive shall not be attacked collaterally."); see Welch v. Del Monte Corp.,
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -10
128 Idaho 513, 516 (1996) (applying I.A.R. 14(b) to un-appealed order of Idaho Industrial
Commission; holding that findings of fact and conclusions of law contained in agency's order are
conclusive and preclude further adjudication of those facts and issues).
Rainbow filed its petition for Section 210(h) enforcement with the Commission seeking
reversal of the Rainbow Orders on March 1, 2012, which was 218 days after the IPUC issued its
order on reconsideration. Because Rainbow did not commence its petition for enforcement
within the 42-day limitations period, Rainbow's petition for enforcement against the Rainbow
Orders is now time-barred. NYSEG, 117 F. Supp. 2d at 246-47 (Section 210(h) enforcement
time-barred against agency decision approving PURPA contracts because not brought within
state limitations period for challenging agency decision); see Appalachian Power Co., 96 FERC
¶ 61,074, 61,326 n.7 (2001) ("[A]s a general matter, we do not entertain pleadings, however
styled, that in fact are untimely appeals or requests for rehearing."). Consequently, Rainbow's
requested relief in time barred and the Commission should dismiss Rainbow's Petition.
2. Rainbow's Requested Relief Should be Denied Because This Commission
Lacks Jurisdiction to Decide State As-Applied Claims Under PURPA.
Rainbow's requested relief must be denied because it asks the Commission to decide
matters committed to the exclusive jurisdiction of the state. Rainbow asks the Commission to
find that:
the extensive negotiations between [Rainbow] and [Idaho Power]
point to the reasonable conclusion that Petitioners committed
themselves to sell electricity to [Idaho Power] on December 9,
2010, but in no event later than December 13, 2010, when
[Rainbow] signed the FESAs on behalf of Petitioners.
Rainbow Petition at 16. Essentially, Rainbow asks the Commission to declare that, on the facts
of the case, Petitioners established a legally enforceable obligation no later than December 13,
2010. The Commission has no jurisdiction to answer this "as applied" question. PURPA §
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -11
210(g), 16 U.S.C. § 824a-3(g) (2011); Power Res. Group, Inc. v. Pub. Util. Comm 'n of Tex., 422
F.3d 231, 235 (5th Cir. 2005); Mass. Inst. of Tech. v. Mass. Dept of Pub. Utils., 941 F. Supp.
233, 236-37 (D. Mass. 1996); Greensboro Lumber Co. v. Ga. Power Co., 643 F. Supp. 1345,
1374 (N.D. Ga. 1986), aff'd 844 F.2d 1538 (11th Cir. 1988); Policy Statement Regarding the
Commission's Enforcement Role Under Section 210 of the Public Utility Regulatory Policies Act
of 1978, 23 FERC 161,304, 61,645 (1983), ("FERC Policy Statement") (Federal jurisdiction is
"limited regarding questions of the proper application of [state rules made pursuant to PURPA]
on a case-by-case basis."). Federal entities are barred by PURPA from intruding on state
authority to determine whether a particular QF established a legally enforceable obligation under
state rules. Power Res. Group, 422 F.3d at 235; FERC Policy Statement, 23 FERC ¶ 61,304,
61,645.
The Commission tacitly confirmed this conclusion in its Cedar Creek Order when it
noted that "[w]hether the conduct of Cedar Creek and Rocky Mountain Power constituted a
legally enforceable obligation subject to the Commission's PURPA regulations is not before us."
Cedar Creek Order, 137 FERC ¶ 61,006, P 38, and "we are not ruling on the issue of whether a
legally enforceable obligation was incurred" Id. at P 39. However, the problems inherent in the
Commission opining on matters beyond its jurisdiction are evident in the Cedar Creek Order.
There, the Commission, after noting that it is not ruling on whether a legally obligation was
incurred, stated that the "extensive negotiations between the parties are persuasive and point to
the reasonable conclusion that Cedar Creek did commit itself to sell electricity to Rocky
Mountain Power." Cedar Creek Order, 137 FERC ¶ 61,006, P 39 n.73. This statement creates
confusion because it is not evident in the order that the Commission made any attempt to
ascertain whether Cedar Creek properly followed procedures for establishing a legally
enforceable obligation pursuant to Idaho state law. See ID. Wind I, 129 FERC ¶ 61,148, P 26
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -12
(noting that J.D. Wind sought a legally enforceable obligation "pursuant to the procedures set
forth in Texas law."). The Cedar Creek Order also states, "it is highly probable that Cedar
Creek and Rocky Mountain Power are bound by a contract that specifies the use of published
avoided cost rates." Cedar Creek Order, 137 FERC 161,006, P 39 n.74. This statement also
creates confusion because it is not evident that the Commission considered: (1) that the Cedar
Creek FESAs included a provision that they were not affective until the rates were approved by
the Idaho PUC and (2) that under Idaho's implementation of PURPA, rates in standard rate
contracts are contingent on final approval by the Idaho PUC. The Commission should deny
Rainbow's requested relief because it is a question properly left to the Idaho PUC.
Rainbow's "as applied" petition mirrors the "as applied" claims sought by the QF in
1996. Mass. Inst. of Tech., 941 F. Supp. 233. There, the United States District Court of
Massachusetts found that it lacked jurisdiction to hear a QF's complaint concerning stranded-
cost recovery charges ("CTC"). Id. at 234. The court reasoned that because the QF argued that
the CTC violated PURPA as it applied to the QF, the QF's challenge was "as applied." Id. at
238 ("In other words, MIT's claim is that the CTC, as applied to MIT, violates PURPA."
(Emphasis in original)). The court held that it lacked jurisdiction under the PURPA enforcement
scheme and dismissed the QF's complaint. Id. (citing PURPA § 21 0(h), 16 U.S.C. § 824a-3(h)).
Applying a legally enforceable obligation rule to a particular QF's circumstance and deciding
whether a legally enforceable obligation arose is an "as applied" finding, just as a finding
whether a particular QF may recover stranded costs is an "as applied" finding. Mass. Inst. of
Tech., 941 F. Supp. 233. Therefore, the decision of whether or not Rainbow obtained a legally
enforceable obligation is reserved to the state of Idaho. The Commission should deny
Rainbow's requested relief because it seeks an impermissible "as applied" analysis from the
Commission.
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -13
3. Rainbow's Petition is an Impermissible Collateral Attack on Final Orders of
the IPUC.
On June 8, 2011, the Idaho PUC determined that the Rainbow projects did not create a
legally enforceable obligation prior to December 14, 2010. June 8 Rainbow Order. On July 27,
the Idaho PUC denied Rainbow's Petition for Reconsideration. July 27 Rainbow Order. Forty-
two days later (September 8, 2011), because Rainbow chose not to appeal the Idaho PUC's
determinations, the June 8 Rainbow Order and the July 27 Rainbow Order became final and non-
appealable. I.A.R. 14(b) ("An appeal as a matter of right from an administrative agency may be
made only by physically filing a notice of appeal with the Public Utilities Commission within 42
days . . . from when an application for rehearing is denied."); I.A.R. Rule 21 ("The failure to
physically file a notice of appeal . . . within the time limits prescribed by these rules shall be
jurisdictional and shall cause automatic dismissal of such appeal or petition.").
The law of the case is now settled, and may not be attacked on appeal or collaterally.
This is true even if the Idaho PUC's application of the law later is determined to be incorrect.
A final judgment on the merits of an action precludes the parties or
their privies from relitigating issues that were or could have been
raised in that action. .. . Nor are the resfudicata consequences of
a final, unappealed judgment on the merits altered by the fact that
the judgment may have been wrong or rested on a legal principle
subsequently overruled in another case . . . . As this Court
explained in Baltimore S.S. Co. v. Phillips, 274 U.S. 316, 325
(1927).... "A judgment merely voidable because based upon an
erroneous view of the law is not open to collateral attack, but can
be corrected only by a direct review and not by bringing another
action upon the same cause [of action]."
Federated Dept. Stores v. Moitie, 452 U.S. 394, 398 (1981); see also Idaho Code § 61-625 ("All
orders and decisions of the commission which have become final and conclusive shall not be
attacked collaterally.").
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -14
The legal proscriptions barring collateral attack are supported by strong policy
considerations, as explained by the Idaho Supreme Court:
The legislature has afforded the orders of the [Idaho Public
Utilities] Commission a degree of finality similar to that possessed
by judgments made by a court of law. I.C. § 6 1-625. . . . Final
orders of the [Idaho Public Utilities] Commission should ordinarily
be challenged either by petition to the [Idaho Public Utilities]
Commission for rehearing or by appeal to this Court as provided
by I.C. § 61-626 and 627; Id. Const. Art. 5, § 9. 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, 373-374 (1979) (emphasis
added). Such policy concerns are highly relevant here because, in addition to Rainbow, there are
three similarly situated developers whose power purchase agreements the Idaho PUC rejected on
June 8, 2011, and who chose not to appeal. See supra note 3. The three other developers
together with Rainbow represent eleven projects with a combined capacity over 270 MW.
Uncertainty regarding whether those three developers and Rainbow remain eligible for standard
rate power purchase agreements would frustrate the ability of the Idaho PUC to ensure that
published rates are just and reasonable and would frustrate Idaho Power's ability to accurately
plan how it will serve its load. If the remaining parties could retain their right to appeal their
June 8 Order for an indefinite future period, Idaho Power and the Idaho PUC would have to plan
as though the power purchase agreements do not exist and yet run the risk of overabundance in
the event they do materialize. Such a situation ultimately would result in additional cost to Idaho
Power's customers and is a good example of the kind of harm prevented by Idaho's prohibition
on collateral attacks of Idaho PUC orders.
The Third Circuit found that federal common-law rules of preclusion may give preclusive
effect to the factual findings and legal conclusions in an un-reviewed final decision by the New
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -15
York Public Service Commission ("NYPSC") rendered pursuant to the NYPSC's delegated
authority under PURPA. Crossroads Cogeneration Corp. v. Orange & Rockland Utils., Inc.,
159 F.3d 129, 135 (1998). Importantly, the Court found "no provision of PURPA that seeks to
limit common law rules of preclusions from applying to state agency decisions relating to utility
regulation" and concluded that "in enacting PURPA, . . . Congress did not intend to prevent
application of common law rules of preclusion." Id. The Court then went on to give preclusive
effect to the NYPSC decision "to the same extent as would the New York courts." Id.
Under the Third Circuit's analysis in Crossroads, the factual findings and legal
conclusions of the Idaho PUC's June 8 Order are entitled to preclusive effect before the federal
court to the same extent that they would be in an Idaho state court. Under Idaho law, the orders
of the Idaho PUC receives a degree of finality similar to that possessed by judgments made by a
court of law. Utah-Idaho Sugar Co., 100 Idaho at 373-374 (discussed supra). Consequently, the
Commission should deny Rainbow's requested relief as it is an impermissible collateral attack
upon the final orders of the Idaho PUC.
4. Rainbow's Petition is Barred by the Doctrines of Collateral Estoppel and Res
Judicata.
Rainbow's claims with the Commission were fully considered by the Idaho PUC, a final
judgment was rendered on the merits, Rainbow failed to appeal such decision, and Rainbow's
claims with the Commission rely upon the same operative facts that were before the Idaho PUC.
Rainbow's claims with the Commission are barred by collateral estoppels (issue preclusion) and
res judicata (claim preclusion).
Idaho courts require five factors be met for collateral estoppel to bar re-litigation of an
issue decided in an earlier proceeding: (1) the party against whom the earlier decision was
asserted had a full and fair opportunity to litigate the issue decided in the earlier case; (2) the
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -16
issue decided in the prior litigation was identical to the issue presented in the present action; (3)
the issue sought to be precluded was actually decided in the prior litigation; (4) there was a final
judgment on the merits in the prior litigation; and (5) the party against whom the issue is
asserted was a party or in privity with a party to the litigation. Ticor Title Co. v. Stanion, 144
Idaho 119, 124 (2007) (internal citations omitted).
All five factors are satisfied by the Idaho PUC's June 8 and July 27 Orders. Rainbow
had ample opportunity to make its case to the Idaho PUC prior to the June 8 Order, and in its
petition for rehearing. Rainbow's requested relief seeks a determination that it is eligible for
standard rates—the identical issue the Idaho PUC ruled on in the June 8 and July 27 Rainbow
Orders. Rainbow Petition at 1. The Idaho PUC reached a final judgment on Rainbow's
eligibility in the June 8 and July 27 Rainbow Orders. And Rainbow is the same party as, or has
privity with, the party bound by the June 8 and July 28 Rainbow Orders. Rainbow, therefore, is
collaterally estopped from being heard on the same issues again before this Commission.
Rainbow's Petition also is barred by claim preclusion, or res judicata. In Idaho, "res
judicata means that in an action between the same parties upon the same claim or demand, the
former adjudication concludes parties and privies not only as to every matter offered and
received to sustain or defeat the claim but also every matter which might and should have been
litigated in the first suit." Magee v. Thompson Creek Mining Co., 268 P.3d 464, 470 (Idaho
2012) (internal citations and quotations omitted). Res judicata applies to decisions of
administrative agencies. Id.; see Idaho Code § 61-625 ("All orders and decisions of the [Idaho
PUC] which have become final and conclusive shall not be attacked collaterally.").
"The 'sameness' of a cause of action for purposes of application of the doctrine of res
judicata is determined by examining the operative fact underlying the two lawsuits." Farmers
Nat'! Bank v. Shirey, 126 Idaho 63, 69 (1994) (internal citations and quotation marks omitted).
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -17
In its petition, Rainbow essentially seeks a determination from the Commission that it formed a
legally enforceable obligation to sell output from its two QFs prior to December 14, 2010. This
is the same claim by Rainbow that the Idaho PUC considered and rejected, in the June 8
Rainbow Order and the July 27 Rainbow Order, and which Rainbow elected not to appeal to the
Idaho Supreme Court. Whether a legally enforceable obligation arose prior to December 14,
2010, was a matter squarely within the Idaho PUC ' s jurisdiction. See West Penn Power Co., 71
FERC 1 61,153, 61,495 (1995) ("It is up to the States, not this Commission, to determine.., the
date at which a legally enforceable obligation is incurred under State law."). The June 8 and July
27 Rainbow Orders conclusively resolved Rainbow's claims that a legally enforceable obligation
arose before December 14, 2010. Rainbow's petition relies entirely on the record before the
Idaho PUC when it entered those orders. Because Rainbow already brought an identical claim
before the Idaho PUC, and that claim resulted in a final judgment, Rainbow is barred by res
judicata from bringing that same claim to this Commission. Section 210(h) of PURPA does not
permit the Commission or the Federal courts to use Section 210(h) enforcement authority to
order the Idaho PUC to set aside Idaho Code §§ 61-625, 61-627 and I.A.R. 14(b) and 21, and
resuscitate a conclusive order in a closed docket.
5. Rainbow's Reguest for a Declaratory Order is Improper as the Cedar Creek
Order has already Addressed the Issues Raised in Rainbow's Petition.
There is no need for a declaratory order because there is no controversy or uncertainty
regarding whether a state commission can limit a legally enforceable obligation to exist only
when both parties have executed a FESA. Moreover, such an additional declaratory order as that
requested by Rainbow would be an unnecessary duplication of effort leading to an inefficient and
unnecessary allocation of limited agency resources. See Midwestern Gas Users Asso 'n v.
Northwest Cent. Pipeline Corp., 34 FERC ¶ 61,301, 61,552 n.57 (1986) (where Commission has
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -18
already issued a declaratory order on issue within its special expertise, Commission refuses to
engage in duplicative proceedings on the grounds that it would be an unneeded allocation of
agency resources).7
The purpose of a declaratory order is to "terminate a controversy or remove uncertainty."
18 C.F.R. § 385 .207(a)(2) (2011). Petitioners' request for declaratory order seeks, among other
things, a declaration that "a state commission is prohibited under PURPA and the Commission's
regulations from holding that a legally enforceable obligation arises only when a QF and utility
have entered into a fully-executed contract." Rainbow Petition at 16 (emphasis added). Neither
Idaho Power nor the Idaho PUC have disputed this point. In the case of Cedar Creek, after a
stipulated remand from the Idaho Supreme Court, the Idaho PUC recognized that "FERC
determined that the [Idaho PUC's Cedar Creek Order] is inconsistent with FERC's regulations
implementing PURPA." In the Matter of the Application of PacfICorp DBA Rocky Mountain
Power for a Determination regarding a Firm Energy Sales Agreement between Rocky Mountain
Power and Cedar Creek Wind, LLC, Idaho PUC Order No. 32419, 5, Case Nos. PAC-E-1 1-01
through -05 (2011). The Idaho PUC then reviewed the facts of the case for evidence regarding
the existence of a legally enforceable obligation outside the express terms of the agreements and
found, despite that the agreements were not fully executed until December 22, 2010, that a
legally enforceable obligation arose no later than December 13, 2010. Id. at 8 ("Based upon the
Parties' assertions in the Settlement Stipulation and our review of the record, we find that the
record reveals that Cedar Creek had perfected a legally enforceable obligation no later than
December 13, 2010.").
Moreover, if Petitioners are to be allowed to seek a declaratory order on the questions they raise,
notwithstanding that their questions were adequately addressed in the Cedar Creek Order, then Petitioners should be
required to pay the filing fee associated with petition for declaratory order. See 18 C.F.R. § 381.302(a) (2011)
(requiring a filing fee of $24,860 for petitions requesting a declaratory order).
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -19
The Idaho PUC also acknowledged the Cedar Creek Order after it requested that the
Idaho Supreme Court remand a pending appeal by Grouse Creek Wind Farm, LLC, a different
developer that, similar to Cedar Creek, had FESAs that were not executed by both parties, nor
effective, prior to December 14, 2010. In the Matter of the Application of Idaho Power
Company for a Determination regarding the Finn Energy Sales Agreement for the Sale and
Purchase of Electric Energy Between Idaho Power Company and Grouse Creek Wind Park,
LLC, Idaho PUC Order No. 32430, Case Nos. IPC-E-10-61, IPC-E-10-62 (2012). Idaho PUC
Order No. 32430 set a schedule for briefing to reconsider its denial of the Grouse Creek PPAs in
light of the Cedar Creek Order. Id.
The Idaho PUC's resolution of the Cedar Creek FESA applications and its actions in the
Grouse Creek proceeding demonstrate that the Idaho PUC has recognized the Commission's
guidance in the Cedar Creek Order and has taken action in its implementation of PURPA with
that guidance in mind. It is hard to see what purpose would be served by reiterating the holding
in the Cedar Creek Order. In considering whether there is an adequate case-in-controversy to
support a declaratory proceeding regarding a PURPA claim, the Court of Appeals for the Third
Circuit has applied a three part test considering: (1) the adversity of the parties' interests; (2) the
conclusiveness of the judicial judgment; and (3) the utility of that judgment. Cogeneration
Assocs., LP v. Bd. of Regulatory Comm 'rs of the State of New Jersey, 44 F.3d 1178, 1188 (3rd
Cir. 1995). Here, there is no adversity between the parties on the issue of whether a signed
contract is necessary to form a legally enforceable obligation; the Commission's declaratory
order is not conclusive with regard to an "as-applied" application of the Cedar Creek Order to
facts of any particular QF, and, therefore, the utility of a declaration is limited. Consequently,
the Commission should deny Rainbow's request for a declaratory order.
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -20
B. In the Alternative. Should the Commission Decide to Declare its Position on the
Issues Presented by Rainbow, the Facts Do Not Support Rainbow's Request.
Notwithstanding, and without waiving Idaho Power's arguments above that it is improper
for this Commission to consider the "as applied" facts of Rainbow's case pursuant to its
declaratory order in Cedar Creek, the requested findings by Rainbow are premised on an
inaccurate construction of Idaho state law concerning how legally enforceable obligations arise.
Furthermore, Rainbow's suggestion that Idaho Power was not sufficiently prompt in processing
Rainbow's FESA requests are unfounded. Idaho Power processed Rainbow's requests for power
sales agreements in a diligent and timely manner; the Idaho PUC did not find unreasonable delay
on the part of Idaho Power. Finally, the Idaho PUC properly rejected Rainbow's FESAs on the
independent ground that they were contrary to the public interest.
1. The Commission's Regulations Do Not Require the Conclusion that
Petitioners Established a Le2ally Enforceable Obli2ation On or Before
December 13, 2010.
Rainbow's petition asks the Commission to make findings nearly identical to the findings
the Commission made in the Cedar Creek Order.8 Rainbow apparently has interpreted the
Cedar Creek Order to require that the Idaho PUC find that a legally enforceable obligation arises
when a QF tenders a signed FESA to the utility. See Rainbow Petition at 9. ("At the very latest,
8 Rainbow Petition at 15-16. Compare Rainbow request (1) that "the Idaho PUC Orders denying
Petitioners a legally enforceable obligation, specifically the requirement in the June 8, 2010 order that a Firm Energy
Sales Agreement/Power Purchase Agreement must be executed by both parties to the agreement before a legally
enforceable obligation arises, is inconsistent with PURPA and the Commission's regulations implementing PURPA,
particularly section 292.304(d)(2)," with Cedar Creek Order, 137 FERC 161,006, P 30; compare Rainbow request
(2) that "the Idaho PUC's limitation of the methods through which a legally enforceable obligation may be created
to only a fully-executed contract is inconsistent with PURPA and the Commission's regulations implementing
PURPA," with Cedar Creek Order, 137 FERC 161,006, P 35; compare Rainbow request (3) that "the Idaho PUC's
June 8, 2010 order ignores the fact that a legally enforceable obligation may be incurred before the formal
memorialization of a contract in writing," with Cedar Creek Order, 137 FERC 161,006, P 36; compare Rainbow
request (4) that "the Idaho PUC's requirement that an executed contract was necessary to create a legally
enforceable obligation in the circumstances presented by Petitioners is inconsistent with PURPA and the
Commission's regulations," with Cedar Creek Order, 137 FERC 161,006, P 37); and compare Rainbow request (5)
that "the extensive negotiations between AWG and IPC point to the reasonable conclusion that Petitioners
committed themselves to sell electricity to IPC on December 9, 2010, but in no event later than December 13, 2010,
when AWG signed the FESAs on behalf of Petitioners," with Cedar Creek Order, 137 FERC ¶ 61,006, P 39.
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -21
Petitioners incurred legally enforceable obligations to sell electricity to IPC on December 13,
2010, when AWG executed the FESAs on behalf of Petitioners and delivered them to Michael
Darrington at IPC's offices."). Neither the Cedar Creek Order nor the Commission's regulations
mandate that regardless of state law a QF may create a legally enforceable obligation merely by
signing a power purchase agreement and tendering it to the utility.
Such a rule, if it existed, would make illegal, or invalidate, the PURPA implementation
schemes in several states—implementation schemes that have been approved by state and federal
courts as consistent with PURPA and the Commission's regulations. For example, the Court of
Appeals for the Fifth Circuit upheld a Texas law requiring that a QF be within 90 days of
commencing delivery of energy in order to create unilaterally a legally enforceable obligation.
Power Res. Group, Inc. v Pub. Util. Comm 'n of Tex., 422 F.3d 231 (5th Cir. 2005). The court
reasoned that neither PURPA nor 18 C.F.R. § 292.304(d) give QFs the right to create a legally
enforceable obligation "at any time." Power Res. Group, Inc., 422 F. 3d at 238-39. Further, the
court noted that, if FERC had determined that states must allow a QF to lock in rates prior to
construction of a facility, it could have said so in its rules. Id. at 239.
The New Hampshire Supreme Court upheld an implementation scheme where a QF may
unilaterally create a legally enforceable obligation by declaring its intent to obligate itself and
filing a rate petition accompanied by a signed interconnection agreement. Appeal of Pub. Serv.
of N.H., 539 A.2d 275, 279 (N.H. 1988). The Oklahoma Supreme Court held that no legally
enforceable obligation was created where a QF "did not . . . attempt to obtain a contract for
construction, operation and maintenance of the proposed project or a contract for the purchase of
natural gas." Public Serv. Co. v. State ex rel. Okla. Corp. Comm 'n, 2005 OK 47, P 14 (2005).
The Supreme Court of Idaho upheld the Idaho PUC's determination that before a QF can secure
a rate, there must be a signed contract to sell at that rate or a meritorious complaint alleging that
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -22
the project was mature and that the QF had attempted and failed to negotiate a contract with the
utility. A. W. Brown, 121 Idaho at 814.
The Commission has delegated to the states the responsibility to determine whether a QF
has unilaterally established a legally enforceable obligation and, if so, when the obligation arose.
W. Penn Power Co., 71 FERC ¶ 61,153, 61,495 (1995); accord Metropolitan Edison Co., 72
FERC 161,015, 61,050 (1995). The freedom of states to condition a QF's ability to unilaterally
create a legally enforceable obligation is not without limits. The preamble to FERC's
regulations state that "[u]se of the term 'legally enforceable obligation' is intended to prevent a
utility from circumventing the requirement that provides capacity credit for an eligible qualifying
facility merely by refusing to enter into a contract with the qualifying facility." Small Power
Production and Cogeneration Facilities; Regulations Implementing Section 210 of the Public
Utility Regulatory Policies Act of 1978, Order No. 69, FERC Stats. & Regs. ¶ 30,128, 45 Fed
Reg. 12,214, 12,224 (Feb. 25, 1980). It follows that implementation schemes (such as the one
disapproved by the Commission in the Cedar Creek Order) which may allow a utility to
circumvent buying QF capacity merely by refusing (or delaying) to sign a power purchase
agreement are preempted because they are inconsistent with PURPA and the Commission's
regulations implementing PURPA. But it does not follow that states cannot place other
preconditions on a QF's right to unilaterally establish a legally enforceable obligation, so long as
those conditions do not allow the utility to block the QF's attempts to form a legally enforceable
obligation. In fact, there are many existing and approved examples ofjust such preconditions.
A maturity test—e.g., a requirement that a QF must demonstrate certain indicia of project
maturity—is one example of a precondition that is consistent with PURPA or the Commission's
regulations. States have a legitimate interest in ensuring an orderly, efficient QF procurement
process. This interest may be furthered by requiring that a QF show it has achieved certain
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -23
objective milestones indicating that the QF is more than a mere speculative venture. For
example, the Idaho PUC has required that a QF, as a condition to a unilateral legally enforceable
obligation, demonstrate that it is "substantially mature." A. W. Brown, 121 Idaho at 814.
A filed complaint rule—e.g., a rule that a QF creates a legally enforceable obligation
unilaterally on the date it files a complaint with the state commission alleging that the utility is
dragging its feet—is another precondition that is consistent with PURPA and the Commission's
regulations. A state that has a maturity test might desire also to have a filed complaint rule, since
the state commission ultimately must decide disputes between the utility and a QF regarding
when the project achieved maturity. Equating the date a legally enforceable obligation arises to
the date a QF files a meritorious complaint serves legitimate interests of the state by creating a
bright line test for eligibility. Under such a scheme, a QF would create a legally enforceable
obligation by filing a complaint alleging that it intends to obligate itself and that it has satisfied
other preconditions (e.g., maturity) established by the state commission. Provided that the state
commission concurs that the QF has met the preconditions, a legally enforceable obligation is
deemed to have arisen on the date of the complaint. See e.g. Rosebud Enters., Inc. v. Idaho
PUG, 131 Idaho 1, 9 (1997); A. W. Brown, 121 Idaho at 816.
Negotiation timelines—e.g., state commission-determined deadlines for a utility to
respond to QF communications—are another precondition some states use that is consistent with
PURPA and the Commission's regulations. Oregon allows a utility to take up to fifteen days in
each instance to respond to requests for an initial draft FESA, to respond to requests for a final
draft FESA, and to execute and return a signed FESA tendered by the QF. See e.g. PacifiCorp's
Oregon Tariff Schedule 37, Avoided Cost Purchases from Qualifying Facilities 10,000 kW or
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -24
less (providing schedule for negotiation PURPA agreements).9 Such a rule recognizes that a
large volume of QF applications may slow down the turnaround time on QF requests, even if the
request itself may take little time to process. It also benefits the QF because it establishes a limit
on the amount of time that is reasonable for a utility to respond to the QF, regardless of the
volume of pending QF requests.
Final approval of standard rates—e.g., standard rates are not locked in until approved by
the state commission—is yet another precondition that is consistent with PURPA and the
Commission's regulations. PURPA regulations mandate that state commissions approve
standard rates for QFs under 100 kW but give states the discretion to approve standard rates for
QFs over 100 kW. 18 C.F.R. § 292.304(c). It has been said by the United States Supreme Court
that "the state, having power to deny a privilege altogether, may grant it upon conditions as it
sees fit to impose." Frost & Frost Trucking Co. v. Railroad Corn. of California, 271 U.S. 583,
593 (1926). The Court noted that the power is not unlimited—the state cannot impose conditions
that require the relinquishment of constitutional rights. Id at 593. However, QFs over 100 kW
have no right to standard rates of which they can be deprived. See 18 C.F.R. § 292.304(c)(2)
(states may approve standard rates for QFs over 100 kW). Therefore a state implementation that
offers QFs a choice of project-specific modeled rates, negotiated rates, or standard rates subject
to final state commission approval does not deprive QFs of a constitutional right. Accordingly, a
state commission may elect to provide QFs greater than 100 kW an option of standard rates
which the state commission may review and, if necessary disapprove, prior to a FESA becoming
final.
9 http://www.pacificorp.com/content/danilpacificj,ower/doc/About_Us!Rates_Regulation/OregonlApprove
d_Tariffs/Rate_Schedu1es/Avoided_Cost_Purchase_From_Qua1ifying_Faci1ities_ofjOOOO_KW_or_Less.pdf.
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -25
None of the preconditions discussed above necessarily allow the utility to prevent a QF
from creating a legally enforceable obligation. Nor do they necessarily expose the QF to lengthy
regulatory delays or uncertainty. To the contrary, by setting forth clear rules and expectations,
the above preconditions actually can facilitate a more efficient, less litigious negotiation process
for all QFs.
In the Cedar Creek Order, the Commission offered the following explanation of its
regulations regarding when a legally enforceable obligation arises:
Thus, under our regulations, a QF has the option to commit itself to
sell all or part of its electric output to an electric utility. While this
may be done through a contract, if the electric utility refuses to
sign a contract, the QF may seek state regulatory authority
assistance to enforce the PURPA-imposed obligation on the
electric utility to purchase from the QF, and a non-contractual, but
still legally enforceable, obligation will be created pursuant to the
state's implementation of PURPA. Accordingly, a QF, by
committing itself to sell to an electric utility, also commits the
electric utility to buy from the QF; these commitments result either
in contracts or in non-contractual, but binding, legally enforceable
obligations.
Cedar Creek Order, 137 FERC 161,006, P 32 (emphasis added). The passage is copied,
verbatim, from the Commission's J.D. Wind 1, LLC, decision. 129 FERC 161,148, P25 (2009).
The italicized language in the above block quote omits that the QF, in committing itself to sell to
an electric utility, must do so in accordance with the procedures set forth by the state. When the
Commission applied the above standard in J.D. Wind 1, its determination was premised on the
Commission's finding that "JD Wind sought a legally enforceable obligation, pursuant to the
procedures set forth in Texas law." Id. at P 26 (emphasis added). This requirement, when
combined with the language from the Cedar Creek Order in the above block quote, more
completely describes the law of legally enforceable obligations, as set forth in PURPA and the
Commission's regulations: A QF does not create a legally enforceable obligation merely by
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -26
tendering a signed power purchase agreement to the utility where a state has adopted other
preconditions to establishing a legally enforceable obligation, and those preconditions are not
inconsistent with PURPA or the Commission's regulations implementing PURPA.
PURPA and the Commission's regulations do not mandate that the Idaho PUC find a
legally enforceable obligation occurred on or before December 13, 2010. The details of Idaho's
legally enforceable obligation rule are to be established by the Idaho PUC within the bounds of
PURPA and the Commission's regulations, and thus Rainbow's petition seeking such
determination from the Commission should be denied.
2. Rainbow's Suggestions that Idaho Power Dragged Out or Delayed
Negotiations of the Power Purchase Agreements are False.
In its petition to the Commission, Rainbow implies through its presentation of facts that
Idaho Power delays in contract negotiations and final signature of the FESAs prevented Rainbow
from obtaining a legally enforceable obligation prior to December 14, 2010. Rainbow's
insinuation is unfounded. Rainbow did not request FESAs from Idaho Power until November 5,
2010, and in spite of the very high volume of QF requests Idaho Power had to process during
that same period, it completed contract negotiations and due diligence for Rainbow's two 20-
MW, new 20-year contracts in less than six weeks.
Idaho Power records indicate that initial contact with Rainbow (where Idaho Power sent
Rainbow a set of initial contracting information requests) occurred on November 5, 2010. Idaho
Power Company's Reply Comments at 6 (March 24, 2011) in In the Matter of the Application of
Idaho Power Co. for a Determination Regarding Firm Energy Sales Agreement Between Idaho
Power and Rainbow Ranch Wind, LLC and Rainbow Ranch West, LLC, Idaho PUC Case Nos.
IPC-E-10-59 and IPC-E-10-60. (Attached hereto as Idaho Power Exhibit 101). Idaho Power
received the requested information from Rainbow on November 9, 2010. Id. Multiple
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -27
discussions commenced with Rainbow, and first draft contracts were provided to Rainbow on
November 23, 2010. Id. Idaho Power continued to receive e-mail and communications from
Rainbow as late as December 9, 2010, that Rainbow was still attempting to determine the project
sizes and finalize the agreements. Id.
Idaho Power began its required internal Sarbanes-Oxley Act review process on December
8, 2010. Id. On December 13, 2010, the unsigned, final execution versions of the contracts were
delivered to Rainbow. Id. Rainbow signed the agreements and returned them to Idaho Power
later that afternoon on December 13, 2010. Id. at 6-7. Idaho Power signed the agreements on
December 14, 2010, and filed them with the Commission for review on December 16, 2010. Id.
at 7. Idaho Power had no opportunity to execute the contracts prior to December 14, 2010,
because the contracts were not returned to Idaho Power by Rainbow until late in the afternoon on
December 13, 2010. Id. Idaho Power did sign the agreements the next day at the first
opportunity it had with the appropriate Company executive. Id.
Idaho Power negotiated and executed two 20-year PPAs with an estimated value of $209
millio&° in only 38 days. Thirty-eight days is rapid processing for two contracts of this size
during normal times; during November and December of 2010 when Idaho Power was handling
an unusually large number of QF applications totaling 315 MW of capacity, it was exceptionally
fast. Finally, any assertion that Idaho Power unreasonably refused to sign the FESAs it tendered
on December 13, 2010, goes against common sense. To imply that PURPA requires Idaho
Power's Vice President to sign contracts valued at $209 million within minutes of being tendered
10 See Comments of the Commission Staff at 3-4 (March 17, 2011) in In the Matter of the Application of
Idaho Power Co. for a Determination of Regarding Firm Energy Sales Agreement Between Idaho Power and
Rainbow Ranch Wind, LLC; In the Matter of the Application of Idaho Power Co. for a Determination of Regarding
Firm Energy Sales Agreement Between Idaho Power and Rainbow West Wind, LLC, IPUC Case Nos. IPC-E-1 0-59-
60 (stating that over the 20 year period of the two FESAs, the total combined amount paid by Idaho Power would be
$200.8 million).
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -28
is patently unreasonable. Signing and returning the contracts one day later, as Idaho Power did,
was diligent and timely.
3. The Idaho PUC Found Rainbow's Contracts to be Contrary to the Public
Interest.
The Idaho PUC, in its review of the signed Rainbow FESAs, found that approval of the
contracts would be contrary to the public interest and refused to approve them. See June 8
Rainbow Order at 8; July 27 Rainbow Order at 12 ("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."). Under PURPA's regulatory
scheme, "state regulatory agencies have the authority to implement PURPA in reviewing and
approving contracts for the sale of electricity." Wheelabrator Lisbon, Inc. v. State of Conn.
Dept. of Pub. Util. Control, 531 F.3d 183, 188 (2d. Cir. 2008) (citing Freehold Cogeneration
Assocs., L.P. v. Bd. Of Reg. Comm 'rs of State of N.J., 44 F.3d 1178, 1192 (3d. Cir. 1995)); see
also A. W. Brown, 121 Idaho at 816 ("The Commission, as part of its statutory duties, determines
reasonable rates and investigates and reviews contracts. I.C. §§ 61-502, -503." (quoting Empire
Lumber Co. v. Wash. Water Power Co., 114 Idaho 191, 193 (1988))). The Idaho PUC, in its role
as the regulatory authority for implementing PURPA in the state of Idaho, has an independent
obligation and duty to assure that all PURPA contracts entered by Idaho Power are in the public
interest. See Rosebud Enters, Inc. v. Idaho PUC, 128 Idaho 609, 613-14 (1996) (The Idaho
PUC, in acting pursuant to PURPA, must strike a balance between "the local public interest of a
utility's electric consumers and the national public interest in development of alternative energy
resources."); see also Agric. Prods. Corp. v. Utah Power & Light Co., 98 Idaho 23, 29 (1976)
("Private contracts with utilities are regarded as entered into subject to reserved authority of the
state to modify the contract in the public interest." (Emphasis added)).
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -29
The duty to ensure the public interest even supersedes the State Constitution of Idaho's
protection of private contracts. In the State of Idaho, contracts are afforded constitutional
protection against interference from the state. Idaho Const. Art. I § 16 (2011). However, despite
this constitutional protection, the Idaho PUC may annul, supersede, or reform the contracts of the
public utilities it regulates in the public interest. Agric. Prods. Corp., 98 Idaho at 29
("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."). The Idaho PUC may interfere with the contracts of a
public utility and disregard Idaho Constitutional protections of contract only to prevent an
adverse affect to the public interest. Agric. Prods. Corp., 98 Idaho at 29.
While the Idaho PUC may not annul, supersede, or revise a PURPA contract during its
term because such action would constitute utility-type regulation of a QF in violation of 18
C.F.R. § 292.602(c)(1), the Idaho PUC may review and approve a PURPA contract at the time it
is submitted by the parties for final approval, in furtherance of its state duty to ensure that the
agreement is consistent with the public interest. Crossroads Cogeneration Corp., 159 F.3d at
138 ("In other words, while PURPA allows the appropriate state regulatory agency to approved a
power purchasing agreement, once such an agreement is approved, the state agency is not
permitted to modify the terms of the agreement.").
The Rainbow FESAs were subject to the Idaho PUC's public interest review of PURPA
contracts upon submission to the Idaho PUC for approval. Each Rainbow FESA specifically
states:
This Agreement shall become finally effective upon the
Commission's approval of all terms and provisions hereof without
change or condition and declaration that all payments to be made
to Seller hereunder shall be allowed as prudently incurred expenses
for ratemaking purposes.
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -30
Idaho Power's Application, Attachment No. 1 "Firm Energy Sales Agreement' ' at 27 (December
16, 2010) in In the Matter of the Application of Idaho Power Co. for a Determination Regarding
Firm Energy Sales Agreement Between Idaho Power and Rainbow Ranch Wind, LLC and
Rainbow Ranch West, LLC, Idaho PUC Case Nos. IPC-E-10-59 and IPC-E-10-60. Upon the
parties' submittal and Idaho PUC review, the Idaho PUC specifically found that approval of the
Rainbow FESAs would be contrary to the public interests of the rate-paying citizens of Idaho,
even when weighed against the national public interest in developing alternative energy
resources. June 8 Rainbow Order at 8; July 27 Rainbow Order at 13 (citing Rosebud, 128 Idaho
at 613). The Idaho PUC acted pursuant to its discretion and obligation to protect the public
interest of Idaho by denying the Rainbow FESAs. This Commission should not disturb or
collaterally attack the Idaho PUC's finding and intrude upon the public interests of Idaho by
either pursuing an enforcement action on behalf of Rainbow or granting a declaratory order
undermining the Idaho PUC's findings.
VI. CONCLUSION
For the reasons set forth above, Idaho Power respectfully requests that the Commission
deny Rainbow's requested relief because (1) Commission enforcement in this matter is time
barred; (2) "as-applied" challenges to the Idaho PUC's implementation of PURPA are beyond
the Commission's jurisdiction; (3) Rainbow's petition is an impermissible collateral attack on the
June 8 and July 27 Rainbow Orders; and (4) Rainbow's petition is barred by collateral estoppel
and res judicata. Additionally, a declaratory order is improper because the Commission has
spoken on Rainbow's requested relief in the Cedar Creek Order and the Idaho PUC has
recognized the Commission's guidance from that order.
MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -31
Respectfully submitted this 22" day of March 2012.
7L. jc'
6904.Williams
Corporate Counsel
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
[phone]
jwifliamscidahepow.com
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 22 d day of March 2012 a true and correct copy of the
within and foregoing MOTION TO INTERVENE AND PROTEST IDAHO POWER
COMPANY was served electronically upon the following named parties:
Rainbow Ranch Wind, LLC and
Rainbow West Wind, LLC
Robert Shapiro
1200 New Hampshire Avenue NW
Washington, DC 20036
Donna Bobbish
CHADBOURNE & PARKE LLP
1200 New Hampshire Avenue, NW
Washington, DC 20036
Dean J. Miller
McDEVITT & MILLER LLP
420 West Bannock Street (83702)
P.O. Box 2564
Boise, Idaho 83701
Brian D. Jackson, President
American Wind Group, LLC
2792 Desert Wind Road
Oasis, Idaho 83647-5020
Exelon Corporation
Karen Hill
Vice President Federal Regulatory
Exelon Corporation
101 Constitution Avenue, Suite 400 E
Washington, DC 20001
John A. Harvey
Manager Regulatory and Market
Exelon Generation Company, LLC
4601 Westown Parkway
West Des Moines, Iowa 50266
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MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -33
Idaho Public Utilities Commission
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street (83702)
P.O. Box 83720
Boise, Idaho 83720-0074
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MOTION TO INTERVENE AND PROTEST OF IDAHO POWER COMPANY -34
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
Docket Nos. ELI 2-41-000
QFI 1-44-001
QFI 1-45-001
Motion to Intervene and Protest
of
Idaho Power Company
EXHIBIT 101
Idaho Power Company's Reply Comments
(March 24, 2011)
21111 Hi1R 24 P17 li: 5 1
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(iT!L1Tr CQL; .3$IC)N
DONOVAN E. WALKER (ISB No. 5921)
LISA D. NORDSTROM (ISB No. 5733)
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
Telephone [phone]
Facsimile [phone]
dwalker@idahopower..com
Inordstromcidahopower corn
Attorneys for Idaho Power Company
Street Address for Express Mail:
1221 West Idaho Street
Boise, Idaho 83702
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR A
DETERMINATION REGARDING A FIRM
ENERGY SALES AGREEMENT
BETWEEN IDAHO POWER AND
RAINBOW RANCH WIND, LLC
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR A
DETERMINATION REGARDING A FIRM
ENERGY SALES AGREEMENT
BETWEEN IDAHO POWER AND
RAINBOW WEST WIND, LLC
CASE NO. IPC-E-10-59
IDAHO POWER COMPANY'S REPLY
COMMENTS
[•lSE*I*]
IDAHO POWER COMPANY'S REPLY
COMMENTS
Idaho Power Company ("Idaho Power"), in response to Order No. 32190 and the
Comments of the Idaho Public Utilities Commission ("IPUC" or "Commission") Staff,
hereby submits the following Reply Comments:
lII {,] it I ['1-1
On December 16, 2010, Idaho Power filed with the Commission an Application
for a determination regarding the Firm Energy Sales Agreements ("Agreement")
IDAHO POWER COMPANY'S REPLY COMMENTS -1
between Idaho Power and Rainbow Ranch Wind, LLC, and Rainbow West Wind, LLC
("Rainbow Wind" or "Projects"). On February 24, 2011, the Commission issued Notice
of those Applications and Notice of Modified Procedure, Order No. 32190, setting forth a
comment deadline of March 17, 2011, and a reply comment deadline of March 24,
2011.
Commission Staff filed Comments on March 17, 2011, recommending that the
Commission not approve any of the Agreements between Idaho Power and the Projects
because Staff does not consider any of the Agreements to be effective prior to the
December 14, 2011, effective date of the Commission's Order No. 32176, which
lowered the published avoided cost rate eligibility cap for wind and solar Qualifying
Facilities ("QF") from 10 average megawatts ("aMW") to 100 kilowatts ("kW").
In these Reply Comments, Idaho Power submits factual information regarding
the Company's processes for receiving requests, negotiating, and executing power
purchase agreements pursuant to the Public Utility Regulatory Policies Act of 1978
("PURPA"); factual information regarding the processing of the Projects' PURPA power
purchase agreements; and contextual information regarding the review of the Projects'
power purchase agreements by the Commission.
II. SUMMARY OF IDAHO POWER'S PROCESSES
FOR PURPA AGREEMENTS
A. Initial Project Inquiries.
Idaho Power continuously receives numerous inquiries from various potential
generation projects. Upon this initial contact, typically, a general discussion is had with
each of the potential projects to explain the Power Purchase Agreement ("PPA") and
Generation Interconnection Agreement ("GIA") process, which are two separate and
IDAHO POWER COMPANY'S REPLY COMMENTS -2
required processes that must be completed in order to sell generation to Idaho Power.
The potential project is advised that to begin the official process of either the PPA or the
GIA, that written documents and Information will be required from the project.
In the case of the GIA process, a completed Generation Interconnection
Application is required. In the case of a PURPA PPA, a document specifying
information such as the location, contracting party, resource type, estimated nameplate
rating, general description of the project, estimated on-line date, and other pertinent
information is required so that a draft PPA may be created.
B. Generator Interconnection and Transmission Availability.
The GIA process is conducted by Idaho Power's Delivery business unit. Federal
Energy Regulatory Commission ("FERC") regulations require Idaho Power to maintain
separations between certain Idaho Power business units, in this case between Delivery,
or the Company's Transmission Provider function, and Power Supply, or the Company's
Merchant function. The first step in the interconnection process is the submission of a
Generator Interconnection Application. Submittal by the project and acceptance of this
application as complete establishes the proposed project's position in the
interconnection queue and begins the engineering process of determining the feasibility
and costs of interconnecting the proposed project to Idaho Power's electrical system.
Additionally, the potential upgrades and/or availability of transmission capacity to move
the projects energy from the point of interconnection within Idaho Power's system to
Idaho Power's customer loads must also be determined.
After receipt and acceptance of the Generator Interconnection Application from
the potential generation project Idaho Power Delivery works through a process of
IDAHO POWER COMPANY'S REPLY COMMENTS -3
inquires and meetings to obtain the required information to perform a Feasibility Study,
a System Impact Study, and a Facility Study. The interconnection and transmission
process is governed by Idaho Power's Tariff Schedule 72, filed with and approved by
the Commission, and provisions of its Open Access Transmission Tariff ("OATT") filed
with and approved by FERC. The potential project is informed of the progress of each
step in this process. In addition, the potential project has various decision points and
financial deposit requirements throughout this process. Failure by the potential
generation project to make these decisions or make the deposit payments in a timely
manner can lead to delays or termination of the interconnection process pursuant to
Idaho Powers Tariff Schedule 72 and OATT.
C. PURPA Power Purchase Agreement.
Once a potential generation project has submitted written information on their
proposed project that demonstrates the project is eligible for a PURPA purchase power
agreement and wishes to move forward with the development of the proposed project,
Idaho Power begins the process of drafting a PPA for the proposed project. Quite often
a proposed project will send in incomplete and/or non-definitive information, which
requires inquiries and exchanges between the Company and the project in order to
obtain the information necessary to prepare a draft agreement. In many cases the
potential projects never provide definitive information and never move forward with draft
purchase power agreement discussions.
The schedule for processing a PPA can be affected by multiple factors, including
the proposed project's responsiveness to Information requests, the proposed project's
provision of key decisions at key decision points, and the quantity of proposed projects
IDAHO POWER COMPANY'S REPLY COMMENTS -4
being processed by the Company. In the case of multiple PPA requests received by the
Company, Idaho Power processes the requests on a "first-come, first-served" basis.
This does not mean that multiple projects are not being processed at the same time.
Multiple requests and draft contracts are often being processed simultaneously and are
in various stages of the contract process.
Once the proposed project's draft PPA is agreed upon by the parties and in final
draft form, an internal Idaho Power Sarbanes Oxley ("SOX") review is required. This
review is required to achieve compliance with the SOX regulatory requirements. It
involves a review and approval of the draft agreement by Idaho Power management,
accounting, financial reporting (FASI 33, Fin 46, etc), legal, and confirmation of the
appropriate Idaho Power executive authorized to execute the agreement. As this
review requires the involvement of numerous areas within the Company an expected
completion time of this review is approximately 10 business days. Very rarely does this
review result in any material changes to the draft PPA. Instead, the review process
provides confirmation from all the necessary divisions within the Company that the
contract meets each area's SOX requirements to enable Idaho Power to execute the
PPA.
Upon completion of the internal SOX review, three executable copies of the PPA
are prepared and sent to the project for signature and execution. The project is notified
that the PURPA agreement must be executed within 10 days. In addition, the project is
also notified that if any rules or regulations applicable to the agreement are modified or
changed prior to both parties executing the agreement, that Idaho Power will be
required to modify the agreement accordingly.
IDAHO POWER COMPANY'S REPLY COMMENTS -5
Upon return of the three agreements, signed and executed by the project, Idaho
Power then schedules a time with the appropriate Idaho Power executive to sign and
execute the agreement. Generally this is accomplished within one to two business days
of when the executed agreement is received back from the project, but is dependent on
the limited availability of the required Company executive with the requisite authority to
execute contracts containing such large monetary obligations as those contained in the
typical 20-year PURPA PPA.
Upon execution of the agreement by both parties, the executed agreement Is
forwarded to Idaho Power's legal department for preparation of an application and filing
of the agreement with the Commission for its review. Generally, this application is
prepared and submitted within five business days of the date that the Agreement is fully
executed.
lii. RAINBOW WIND'S POWER PURCHASE AGREEMENT PROCESS
Idaho Power records indicate initial contacts with the Projects, where initial
contracting information requests were sent to the Projects, on November 5, 2010.
Requested information was received back from the Projects on November 9, 2010.
Multiple discussions commenced with the Projects, and first draft contracts were
provided to the Projects on November 23, 2010. Idaho Power continued to receive e-
mail and communications from the Projects as late as December 9, 2010, that the
Projects were still attempting to determine the project sizes and finalize the agreements.
Idaho Power began its internal SOX review process on December 8, 2010. On
December 13, 2010, the unsigned, final execution versions of the contracts were hand
delivered to the Projects. The Projects signed the agreements and returned them to
IDAHO POWER COMPANY'S REPLY COMMENTS -6
Idaho Power later that afternoon on December 13, 2010. Idaho Power signed the
agreements on December 14, 2010, and filed them with the Commission for review on
December 16, 2010. Idaho Power had no opportunity to execute the contracts prior to
the December 14, 2010, effective date of Order No. 32176 because the contracts were
not returned to Idaho Power by the Projects until late in the afternoon on December 13,
2010. Idaho Power did sign the agreements the next day at the first opportunity it had
with the appropriate Company executive.
IV. IDAHO POWER'S APPLICATION FOR REVIEW OF THE AGREEMENT
As the Company did with all PURPA contracts that were executed subsequent to
the filing of the Joint Petition of the three Idaho electric utilities in Case No. GNR-E-1 0-
04, Idaho Power filed the Projects' PURPA contracts for review with the Commission
specifically seeking the Commission's acceptance or rejection of the agreements.
Idaho Power specifically did not ask for the Commission's approval, nor did the
Company specifically ask for the Commission's rejection. Instead, the Company asked
for and seeks the Commission's independent review of the agreement. The
Commission's independent review of the agreement serves several functions including:
(1) Commission approval as required by the terms of the contract in order for it be
effective; (2) if accepted by the Commission, the Company seeks authorization that all
payments for purchases of energy under the agreement be allowed as prudently
incurred expenses for ratemaking purposes; and (3) a Commission determination as to
whether such agreement(s) is/are in the public interest.
As stated in its Application, Idaho Power clearly understands its obligation under
federal law, FERC regulations, and this Commission's Orders, that it has not been
IDAHO POWER COMPANY'S REPLY COMMENTS -7
relieved of, to enter into power purchase agreements with PURPA QFs. As stated in
the Joint Petition filing, Idaho Power has received a very large amount, in terms of both
number of projects and volume of MWs, of requests from PURPA QF developers in a
very short time frame demanding to enter into published avoided cost rate PURPA
contracts. The Company diligently and in good faith processed these requests, in the
ordinary course of business and on an expedited basis, and filed the same for review
with this Commission, as is its legal obligation. The Company executed these contracts
in good faith and if those contracts are approved by the Commission, will honor and
comply with the requirements therein.
However, the request for review of the Projects' Agreements, as well as several
other executed PURPA agreements that were filed subsequent to the November 5,
2010, Joint Petition in Case No. GNRE-10-04, were made with the specific reservation
of rights and incorporation of the averments set forth in that Joint Petition regarding the
possible negative effects to the both the utility and its customers of additional and
unfettered PURPA QF generation on system reliability, utility operations, the costs of
incorporating and integrating such a large penetration level of PURPA QF generation
into the utility's system, and, most importantly, the dramatic increase in costs that must
be borne by the Company's customers because of the disaggregation of large projects
into 10 aMW increments and the inflated avoided cost rates obtained thereby from the
use of the Surrogate Avoided Resource methodology.
Even though Idaho Power was legally obligated to continue to negotiate,
execute, and submit PURPA QF contracts for Commission review containing published
rates for projects at and below 10 aMW, the Company is also obligated to reiterate that
IDAHO POWER COMPANY'S REPLY COMMENTS -8
the continuing and unchecked requirement for the Company to acquire additional
intermittent and other OF generation regardless of its need for additional energy or
capacity on its system not only circumvents the Integrated Resource Plan (1RP")
planning process and creates system reliability and operational issues, but it also
increases the price its customers must pay for their energy needs above the Company's
actual avoided costs.
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. In the state of Idaho, contracts are afforded constitutional protection
against interference from the State. Idaho Const. Art. I, § 16. However, despite this
constitutional protection, the Commission may annul, supersede, or reform the contracts
of the public utilities it regulates in the public interest. Agricultural Products Corp. V.
Utah Power & Light Co., 98 Idaho 23, 29, 557 P.2d 617, 623 (1976) ("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."); see also Federal Power Comm's v. Sierra Pac. Power Co.,
350, U.S. 348, 76 S.Ct. 368, 100 L.Ed. 388 (1956); United Gas Pipe Line Co. v. Mobile
Gas Service Corp., 350 U.S. 332, 76 S.Ct. 373, 100 L.Ed. 373 (1956) (U.S. Supreme
Court finding that rates fixed by contract could be modified only "when necessary in the
public interest"). The Commission may interfere in such a way with the contracts of a
public utility only to prevent an adverse affect to the public interest. Agricultural
Products, 98 Idaho at 29. "Private contracts with utilities are regarded as entered into
IDAHO POWER COMPANY'S REPLY COMMENTS -9
subject to reserved authority of the state to modify the contract in the public interest."
Id.
Idaho Power proceeded reasonably and in good faith in the negotiation and
eventual signing and execution of a published rate, 10 aMW PURPA contracts with the
Projects as required by the then current applicable law, rules, and regulations. Idaho
Power will continue to meet its legal and regulatory requirements and obligations with
regard to the Commission's implementation of PURPA. However, as also required by
the Commission, Idaho Power has an additional obligation when contracting with QF
projects, recently reiterated to it by the Commission: "We intend for the Company to
assist the Commission in its gatekeeper role of assuring that utility customers are not
being asked to pay more than the Company's avoided cost for QF contracts. We
expect Idaho Power to rigorously review such contracts." Order No. 32104.
V. CONCLUSION
While meeting its legal obligations to contract with QF projects pursuant to the
Commission's implementation of PURPA, the Company also asks that the Commission
review such contracts to assure that they comport with the public interest. The public
interest implications raised in the GNR-E-10-04 proceeding are of similar magnitude as
those contemplated and required by the Sierra-Mobile doctrine and Agricultural
Products and its progeny, as to invoke and authorize the Commission - in the exercise
of its legislative, state police power and authority to protect the public in the contractual
rates that it sets and the public utility contracts that it reviews for the purchase of energy
from QF projects under PURPA. Idaho Power respectfully reiterates its request for the
IDAHO POWER COMPAN'(S REPLY COMMENTS -10
Commission to review the Projects' contracts as to whether they are in the public
interest and issue its Order either accepting or rejecting the same
DATED at Boise, Idaho, this 20 day of March 2011
--DONVAN E. WALKER
Attorney for Idaho Power Company
IDAHO POWER COMPAN'eS REPLY COMMENTS -11
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 24th day of March 2011 I served a true and
correct copy of the within and foregoing IDAHO POWER COMPANY'S REPLY
COMMENTS upon the following named parties by the method indicated below, and
addressed to the following:
Commission Staff
Kristine Sasser
Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington
P.O. Box 83720
Boise, Idaho 83720-0074
Rainbow Ranch Wind & Rainbow
West Wind, LLCs
Brian D. Jackson
American Wind Group LLC- Manager
2792 Desert Wind Road
Oasis, Idaho 83647-5020
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I
(
Donovan E. Walker
IDAHO POWER COMPANY'S REPLY COMMENTS -12