20120816Answer and Motion.pdf

IDAHO
r PNER® ECE Jr.. AnIDACORPCompany
20I2AUG `M4: 43
JULIA A. HILTON
Corporate Counsel UTILITIES JOMMiSS1C
jhilton(idahopower.com
August 16, 2012
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83702
Re: Case No. IPC-E-12-18
Hidden Hollow Energy 2, LLC, - Idaho Power Company's Answer and
Motion to Dismiss
Dear Ms. Jewell:
Enclosed for filing in the above matter are an original and seven (7) copies of Idaho
Power Company's Answer and Motion to Dismiss.
Very truly yours,
Julia A. Hilton
JAH :evp
Enclosures
1221 W. Idaho St. (83702)
P.O. Box 70
Boise, ID 83707
DONOVAN E. WALKER (ISB No. 5921)
JULIA A. HILTON (ISB No. 7740)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
dwaIker(idahopower.com
jhiItoncidahopower.com
20I2AUG 16 PM 4: 43
DAHOPUiU
UTILITIES CO S5iC
Attorneys for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
HIDDEN HOLLOW ENERGY 2, LLC
Complainant,
V.
IDAHO POWER COMPANY,
Respondent.
CASE NO. IPC-E-12-18
IDAHO POWER COMPANY'S
ANSWER AND MOTION TO
DISMISS
COMES NOW, Idaho Power Company ("Idaho Power" or "Company") and
pursuant to Rule 57 hereby answers the Complaint of Hidden Hollow Energy 2, LLC
("Hidden Hollow") as follows:
I. INTRODUCTION
On December 8, 2010, Idaho Power and Hidden Hollow entered into a Firm
Energy Sales Agreement ("FESA") pursuant to the terms and conditions of the various
Idaho Public Utilities Commission ("Commission") Orders applicable to such
agreements entered into pursuant to the Public Utility Regulatory Policies Act of 1978
("PURPA"). See IPUC Case No. IPC-E-10-44. On December 10, 2010, Idaho Power
IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS -1
filed an Application with the Commission for approval of said agreement. On February
II, 2011, the Commission issued Order No. 32180 approving the FESA. Hidden
Hollow selected February 28, 2012, as both its Scheduled First Energy Date and
Scheduled Operation Date in the FESA. See Appendix B to the FESA, Application to
Approve FESA, Attachment No. 1, Case No. IPC-E-1 0-44.
On February 7, 2012, Hidden Hollow sent a letter to Idaho Power claiming an
event of force majeure had occurred pursuant to the December 2010 FESA, based
upon its fuel supply of landfill gas and upon issues related to air quality permitting.
Hidden Hollow sent another letter to Idaho Power on May 16, 2012, claiming an
additional, separate, and distinct event of force majeure related to both Ada County's
and Idaho Power's separate contracts with Dynamis Energy, LLC, for a power
generation facility utilizing trash from the landfill as its fuel source.
On May 3, 2012, Idaho Power sent a letter to Hidden Hollow advising that
disruptions in fuel supply do not constitute events of force majeure pursuant to the
FESA, and further advising and providing notice that Hidden Hollow had missed its
Scheduled Operation Date of February 28, 2012, and must achieve its Operation Date
by June 1, 2012, (within 90 days of the Scheduled Operation Date) or it would be in
material breach of the FESA and subject to termination and damages. On June 14,
2012, Idaho Power sent a letter to Hidden Hollow providing Notice of Termination of the
FESA and seeking payment of the Delay Liquidated Damages provided for in the FESA.
On July 13, 2012, Hidden Hollow filed a Complaint with the Petition against Idaho
Power. Hidden Hollow's Complaint requests that the Commission: (1) "rescind and
retract" the termination of the FESA; (2) require Idaho Power to "return the $144,000
IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS -2
Delay Liquidated Damages" to Hidden Hollow; and (3) and determine that Hidden
Hollow is not in material breach of the FESA and that its two claimed incidents of force
majeure are valid events of force majeure under the FESA.
Force majeure is intended to address unforeseeable events or events that are
outside of the control of the parties. Hidden Hollow's failure to adequately plan for
potential disruptions in its fuel supply, specifically excluded as grounds for a claim of
force majeure in the FESA, does not constitute a valid event of force majeure pursuant
to the FESA. Hidden Hollow's failure to maintain the proper permits necessary to
construct and operate its facility are not valid events of force majeure pursuant to the
FESA. Idaho Power's contract with Dynamis Energy, LLC, does not constitute a valid
event of forece majeure pursuant to the FESA.
II. ANSWER
Idaho Power hereby answers Hidden Hollow's Complaint as follows. Idaho
Power denies any allegation not specifically admitted and reserves the right to
supplement and/or amend this Answer if Hidden Hollow amends its Complaint, or if
additional defenses are ascertained during the course of discovery or otherwise.
1.Paragraph I identifies counsel for Hidden Hollow and therefore requires
no response.
2.Idaho Power has insufficient information or knowledge regarding the truth
of the allegations in paragraph 2 of the Complaint, which relate to the identity, corporate
structure, and contractual agreements and entitlements of Hidden Hollow. The
Company acknowledges that Hidden Hollow has provided to it a certification of its
Qualifying Facility status.
IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS -3
3. Idaho Power admits that it is an Idaho corporation with its principal place
of business at 1221 West Idaho Street, Boise, Idaho 83702. Idaho Power also admits
that it is a public utility subject to the jurisdiction of this Commission, the Public Utility
Commission of Oregon, and the Federal Energy Regulatory Commission ("FERC")
4.Idaho Power admits the nature of the case as described in the first
sentence of paragraph 4. The remaining allegations are conclusions of law that require
no response.
5.While the allegations contained in paragraph 5 are legal conclusions and
require no response, Idaho Power acknowledges the Commission's authority to
implement PURPA and FERC rules.
6.Idaho Power admits the allegations contained in sentences I and 2 of
paragraph 6. The allegations in sentence 3 of paragraph 6 are legal conclusions and
require no response.
7.The allegations contained in paragraph 7 are legal conclusions and
require no response.
8.Idaho Power has insufficient information or knowledge regarding the truth
of the allegations in paragraph 8 of the Complaint and therefore denies the same.
9.Idaho Power admits that Idaho Power and Hidden Hollow entered into a
PURPA FESA as required by federal law on December 8, 2010, that Idaho Power filed
an Application with the Commission seeking approval of that FESA, and that the
Commission granted approval of the FESA on February 11, 2011. Idaho Power denies
other implications contained in paragraph 9 of the Complaint.
IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS -4
10. Idaho Power admits the allegations in paragraph 10 that Hidden Hollow
posted delay liquidated damages security required under the FESA.
11.Idaho Power acknowledges that Hidden Hollow failed to meet its
Scheduled Operation Date of February 28, 2012. Idaho Power denies assertions that
Hidden Hollow encountered events of force majeure, that said events occurred through
no fault of Hidden Hollow, that they were impossible to foresee, and that they are
impossible to overcome. Idaho Power has insufficient information or knowledge
regarding the truth of the remaining allegations in paragraph 11 of the Complaint and
therefore denies the same.
12.Idaho Power has insufficient information or knowledge regarding the truth
of the allegations in paragraph 12 of the Complaint and therefore denies the same.
13.Idaho Power admits that, due to Hidden Hollow's failure to achieve its
Scheduled Operation Date, Idaho Power sent Hidden Hollow a notice of failure to meet
Scheduled Operation Date on May 3, 2012. The letter advised Hidden Hollow that
delay liquidated damages would be due under the FESA if operation did not occur
within 90 days of the Scheduled Operation Date. This letter also explained that,
pursuant to Section 14.1 of the FESA, the force majeure clause did not apply to "short-
term disruptions or curtailment of the Facility's fuel supply" or other similar events that
are known or anticipated events in the operation of a landfill gas-supplied generation
facility.
14.Idaho Power admits that it received Hidden Hollow's letter dated May 16,
2012. Idaho Power denies that Hidden Hollow encountered an event of force majeure,
that the allegations constitute an event of force majeure, and that the events are such
IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS -5
that Hidden Hollow could have avoided by exercise of reasonable foresight and due
diligence. Idaho Power has insufficient information or knowledge regarding the truth of
the remaining allegations in paragraph 14 and therefore denies the same.
15.Idaho Power acknowledges that Hidden Hollow failed to meet its
Scheduled Operation Date of February 28, 2012. Idaho Power denies assertions that
Hidden Hollow encountered events of force majeure.
16.Idaho Power has insufficient information or knowledge regarding the truth
of the allegations in paragraph 16 of the Complaint and therefore denies the same.
17.Idaho Power admits that Hidden Hollow filed a letter dated June 11, 2012,
with the Commission purporting to have encountered events of force majeure.
18.Idaho Power admits that it filed a letter with the Commission regarding the
termination of the Hidden Hollow FESA due to its failure to achieve the Operation Date
and notifying the Commission that the associated Delay Liquidated Damages were due
and payable.
19.Idaho Power admits that it issued a letter to Hidden Hollow terminating the
FESA on June 14, 2012. Idaho Power denies that the letter to the Commission
terminated the FESA, but that the letters to Hidden Hollow on May 3, 2012, and June
14, 2012, provided notice of possible termination and notice of termination, respectively.
Idaho Power denies implicit allegations that Hidden Hollow encountered events of force
majeure, that said events were timely noticed, that the Commission approval prevents
termination of a FESA, and that invoking jurisdiction of the Commission prevents
termination of a FESA.
IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS -6
20. Idaho Power has insufficient information or knowledge regarding the truth
of the allegations in paragraph 20 of the Complaint and therefore denies the same.
21.Idaho Power admits that upon Hidden Hollow's failure to pay the Delay
Liquidated Damages as provided for in the FESA, Idaho Power collected said amount
from the Delay Damage Security Hidden Hollow posted with Idaho Power pursuant to
the requirements of the FESA. Idaho Power denies that such action was wrongful.
22.In response to paragraph 22, Idaho Power admits and denies the
allegations in paragraphs 1-21 as set forth in paragraphs 1-21 above.
23.Idaho Power denies the allegations in paragraph 23 of the Complaint,
which assert that its actions constitute a breach of the FESA. Idaho Power denies that
it suspended performance. Idaho Power acknowledges that it terminated the FESA and
collected Delay Liquidated Damages after Hidden Hollow materially breached the FESA
by failing to achieve its Operation Date as required by the FESA.
24.Idaho Power denies the allegations in paragraph 24 of the Complaint.
25.Idaho Power denies the allegations in paragraph 25 of the Complaint.
Idaho Power specifically denies that the problems Hidden Hollow encountered were
unforeseeable for a project of this type.
26.Idaho Power admits that it rejected Hidden Hollow's professed claims of
force majeure. Idaho Power denies the remaining allegations in paragraph 26 of the
Complaint.
27.The allegations in paragraph 27 are legal conclusions and require no
response.
IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS -7
Ill. AFFIRMATIVE DEFENSES
28.Hidden Hollow's Complaint, and all allegations and requests for relief
therein, fails to state a claim upon which relief can be granted.
29.Disruptions or curtailment of a project's fuel supply are expressly stated in
the FESA as not constituting valid claims of force majeure.
30.Some or all of Hidden Hollow's claims are barred by the doctrines of
waiver and/or estoppel.
31.Some or all of Hidden Hollow's claims are barred by the doctrine of
unclean hands.
32.Some or all of Hidden Hollow's claims are barred by the doctrine of judicial
estoppel.
33.Any recovery on Hidden Hollow's Complaint, or any purported allegations
and requests for relief therein, is barred in whole or in part by Hidden Hollow's failure to
mitigate its damages. By alleging this affirmative defense, Idaho Power does not admit
that Hidden Hollow was damaged in any manner, or is entitled to any form of relief.
34.Complainant may not be the real party in interest and/or have the right to
bring a cause of action for some or all of the claims it alleges due to its sale or
assignment of rights, if any, under the FESA to a third party.
35.Some or all of Hidden Hollow's claims are barred, in whole or in part,
because Complainant has suffered no damages as a result of the matters alleged in its
Complaint.
IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS -8
36. Hidden Hollow's claims are barred, in whole or in part, because any
alleged damages suffered by it were caused by and were the result of its own conduct,
fault, responsibility, or failure to act.
37.Some or all of Hidden Hollow's claims are barred by the doctrine of
laches.
38.Idaho Power hereby reserves the right to assert any and all additional
defenses, ascertained during the course of discovery or otherwise, by amendment to
this answer as the Commission's rules, procedures, and/or Orders may allow and/or
withdraw or amend the above affirmative defenses.
WHEREFORE, having fully answered, Idaho Power respectfully requests:
1.That the Commission issue its Order denying the relief sought by
Hidden Hollow in its Prayer for Relief;
2.That Hidden Hollow's Complaint be dismissed with prejudice and
that it go hence without cost or delay; and
3.For such other relief as the Commission deems just and
reasonable.
Respectfully submitted this 16 th day of August 2012.
~1 W(- rl ~
JU A.HIL'TON
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS -9
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 16th day of August 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:
Hidden Hollow Energy 2, LLC
Stephen R. Thomas
MOFFATT, THOMAS, BARRETT
ROCK & FIELDS, CHARTERED
101 South Capitol Blvd., 10th Floor
P0 Box 829
Boise, Idaho 83701
Hand Delivered
X U.S. Mail
Overnight Mail
FAX
X Email [e-mail]
Efizabtf PaynterUeaI Secretary
IDAHO POWER COMPANY'S ANSWER AND MOTION TO DISMISS -10