20110729Answer and Motion to Dismiss.pdf

Peter J. Richardson ISB# 3195
Gregory M. Adams ISB# 7454
Richardson & O'Lear, PLLC
515 N. 27th Street
P.O. Box 7218
Boise, Idaho 83702
Telephone: [phone]
Fax: [phone]
peter(ánchardsonandoleary.com
greg(árichardsonandolear .com
RECEIVED
201 l JUL 29 PM 12: 23
Attorneys for Tumbleweed Energy, LLC
And Western Desert Energy, LLC
BEFORETHE ¡
IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER
COMPANY'S PETITION FOR
DECLARATORY ORDER REGARING
PURP A JURISDICTION
)
) CASE NO. IPC-E-1l-14
)
~ ANSWER AND MOTION TO DISMISS
OF WESTERN DESERT ENERGY, LLC
~ AND tUMBLEWEED ENERGY, LLC
)
)
)
)
)
COMES NOW, Western Desert Energy, LLC and; Tumbleweed Energy, LLC ("Western
Desert" "Tumbleweed" or collectively "Respondents") and hereby file their collective Answer to
Idaho Power Company's ("Idaho Power") Petition for a Declaratory Order Regarding PURPA
Jursdiction ("Petition") and Motion to Dismiss the same. Ths Answer is filed pursuat to Rule
57(2) of the IPUC Rules of Procedure. This Motion to Dismiss is fied pursuant to Rule 56 of
the IPUC Rules of Procedure.
ANSWER AN MOTION TO DISMISS BY WESTERN DESSERT ENERGY AND TUMBLEWEED
ENERGY
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INTRODUCTION
Respondents are non-utility power producers known as "qualifying small power
production facilities" ("QFs"), see 16 U.S.C. Sec. 796(17)(C), (18)(B). QFs are a class of
facilities, defined by their size, fuel use, efficiency, and ownership, see FERC v. Mississippi,
456 U.S. 742, 750 & n. 11, 102 S.Ct. 2126, 2132 & n. 11, 72 L.Ed.2d 532 (1982).
Western Deseret is, as described in Idaho Power's Petition, developing a five megawatt
wind QF in Owyhee County, Idaho. It had a power purchase agreement ("PPA") with Idaho
Power Company that was rejected by the Idaho Public Utilities Commission ("Commission") on
June 8, 2011 in Order No. 32258. The PPA was rejected because the proposed project exceeds
the newly established ceilng of 100 kw for wind projects in Idaho to be entitled to published
avoided cost rates. Western Desert has spent considerable time and money developing its
proj ect. Western Desert has investigated the possibility of obtaining a PURP A contract in Idaho
under the IRP methodology. Although it has not asked Idaho Power to ru an IRP model of its
project, Western Desert understads th.at IRP modeling results are not favorable for the
development of wind projects in Idaho. It has decided not to sell the output from its QF wind
project to any utility that is operating under the jurisdiction of the Idaho Public Utilities
Commission.
Tumbleweed is, as described in Idao Power's Petition, developing a ten megawatt wind
QF in Elmore County, Idaho. It did not have a power purchase agreement ("PPA") with Idaho
Power Company but has been in negotiations with Idaho Power for a PP A. In light of the newly
established ceiling of 100 kw for wind projects in Idaho to be entitled to published avoided cost
rates, Tumbleweed has decided not to. sell the output from its QF wind project to any utility that
is operating under the jurisdiction of the Idaho Public Utilities Commission.
ANSWER AND MOTION TO DISMISS BY WESTERN DESSERT ENERGY AND TUMBLEWEED
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Your Respondents' Answer and Motion to Dismiss is based on the following arguments
showing that Idaho Power's Petition is fatally flawed. Idaho Power fails to cite to any order, law
or rule upon which it is based, as required by Commission rule. Furhermore, the Commission is
prohibited by federal law from regulating QFs, and hence does not have authority to restnct their
access to markets. Granting the Petition would violate the Commerce Clause of the United
States Constitution by restncting QFsfrom access to markets outside of the boundares of Idaho.
Finally, FERC rules specifically require utilties to wheel (even involuntaly) QF output to third
par purchasers and prohibit utility-type regulation of QFs.
IDAHO POWER'S REQUEST
Idaho Power makes a seemingly simple and direct request for a declaratory order from
this Commission:
More specifically, Idaho Power requests findings by the Commission stating that a QF
located in Idaho Power's service territory in the state of Idaho, interconnecting with
Idaho Power's system in the state of Idaho, must contract, with Idaho Power pursuant to
the Idaho Commission's PURP A rules, rates, and regulations.
Petition at 12.
IDAHO POWER'S PETITION VIOLATES THE COMMISSION'S RULES BY FAILING
TO CITE TO CONTROLLING OR SUPPORTING LAW
Idaho Power fied its Petition "pursuant to RP 101:"1 That Rule requires all petitions for
declaratory rulings to "Indicate the statute, order, rule, or other controllng, law. . . on which the
petitioner relies to support its petition." Idaho Power does not cite to a single statute or rue
i Petition at 1. RP is a reference to the Rules of
Procedure of the Idaho Public Utilties Commission.
ANSWER AND MOTION TO DISMISS BY WESTERN DESSERT ENERGY AN TUMBLEWEED
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anywhere in its twelve page Petition. No state statute or rule conferrng the Commssion with
jurisdiction over to whom a QF may sell its output is cited. No federal statute or rule conferrng
the Commission with jursdiction over'to whom a QF may sell their output is cited. Obviously
no such statute or rule exists.
The only legal authonties contained in the Petition are three complaint cases that were
heard by the Idaho Commission and one Idaho Supreme Cour case: Earth Power Minerals, Inc.
V. Idaho Power Company, IPC-E-92-29 (1993); Island Power Company, Inc. v. PacifCorp,
UPL-E-93-4; Vaagen Brow. Lumber, Inc. v. The Washington Water Power Company, WW-E-
94-6; and Afton Energy Inc., v. Idaho Power Company 107 Idaho 781, 693 P.2d 427 (1984); 111
Idaho 925729 P.2d 400 (1986); 114 Idaho 852, 761 P.2d 1204 (1988); 122 Idaho 333,834 P.2d
850 (1992). The thee IPUC complaint cases and the Idaho Supreme Cour's Afton decision
comprise the full extent of Idaho Power's legal authority relied upon in its Petition. As discussed
below, none of the four cited legal authorities provide even a modicum of support for the
incredible request that the Commssio.n close Idaho's borders to exported wholesale electric
power.
THE IDAHO PUBLIC UTILITIES COMMISSION DOES NOT HAVE JURISDICTION
OVER QFs AND HENCE CANNOT ORDER QFs TO SELL THEIR ELECTRIC
OUTPUT TO A UTILITY OF IDAHO POWER'S CHOOSING
The fudamental premise of Idaho Power's request is that the Commission has the
requisite legal authority to act upon that request. The Commission must have regulatory
authority over QEs before it can legally order them to sell their output to Idaho Power. As noted
above, Idaho Power cites to no rue or 'law conferring that jurisdiction on the Commission. In
ANSWER AND MOTION TO DISMISS BY WESTERN DESSERT ENERGY AND TUMBLEWEED
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addition, none ofthe three PUC cases Idaho Power cites, nor the Idaho Supreme cour case it
cites, confer that jursdiction.
Of course, it would be absurd on its face to rely on any of the IPUC complaint cases cited
by Idaho Power as the foundational source of the Commission's jursdiction over QFs - if that
were so, then the Commission would be conferring jursdiction on itself. It is well settled that
the Commission is a creation of the legislature -- not the legislatue itself. As early as 1921, the
Idaho Supreme Cour made clear that the Commission only has jurisdiction over public utilties:
(Y)et in every case before the Public Utilities Commission, it must in the first instace
determine from the evidence before it whether the utility with which it is seeking to deal
is a public utility, for uness it be a public utility, tle commission is without any
jurisdiction over it whatsoever. . .
Natatorium Co. v. Erb, 34 Idaho 209, 215, 200 P. 348 (1921).
The Commission's jursdiction is statutorily derived and canot be expanded without
legislative action. "The Public Utilities Commission has no inherent power; its powers and
jursdiction derives in its entirety from the enabling statutes, and nothng is presumed in its
jursdiction." Lemhi Telephone Co. v. Mt. States Tele. & Tele. Co., 98 Idaho 692, 696, 571 P.
2d 753 (1977). "The power which the Commission has is that given by the legislature. It has no
other. It exercises a limited jurisdiction; nothing is presumed in favor of its jurisdiction."
(Citations omitted). The general rule is stated in 42 Am.Jur. 440, § 109, as:
Administrative authorities are tribunals of limited jursdiction. Their jurisdiction is
dependent entirely upon the provisions of the statutes reposing power in them; they
canot confer it upon themselves, although they may determine whether they have it. If
ANSWER AND MOTION TO DISMISS BY WESTERN DESSERT ENERGY AND TUMBLEWEED
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the provisions of the statutes are not met and complied with, they have no jursdiction."
Arow Transporttion Co. v. Idao Public Utilties Comm'n, 85 Idaho 307, 313-314, 379
P.2d 422 (1963), citing Malone v. Van Etten, 67 Idaho 294, 178 P.2d 382,383; In the
Matter of the Jursdiction of the Oregon P. U. C., 201 Or. 1,268 P.2d 605; 42 Am. Jur.,
Pub.Ad.Law., secs. 109, 157; I.C. § 61-808; 49 U.S.C. § 312(a).
The enabling statute for the Commission is clear and unequivocal, and narowly circumscribes
the Commission's jurisdiction:
61-501. INVESTMENT OF AUTHORITY. The public utilities commission is hereby
vested with power and jurisdiction to supervise and regulate every public utility in the
state and to do all things necessary to carr out the spirit and intent of the provisions of
ths act.
I.C. § 61-501 (emphasis supplied). The express scope of the Public Utilities Law is limited to
the supervision and regulation of public utilities in Idao. There is no provision in the Public
Utilities Law that requires or permits the Commission to regulate QFs and such authority is not
"necessary" to car out the "spirit and intent" of the Commission's regulatory and supervisory
authority over public utilities.
In all three of the IPUC cases cited by Idaho Power, the Commission was asked to
exercise jursdiction over an Idaho utility in order to require the utility to purchase QF power
pursuant to the Idaho Commission's jurisdictional authority over utilities operating in Idaho. In
none of those cases did the Commission exercise jurisdiction over the QF that was seeking a
PURP A contract with an Idaho utility over which the Idaho PUC had jurisdiction.
ANSWER AND MOTION TO DISMISS BY WESTERN DESSERT ENERGY AND TUMBLEWEED
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The Idaho Supreme Cour case cited by Idaho Power likewise does not confer jurisdiction
on the Commission over QFs. The Afton line of case were about whether an Idaho utilty under
the Idao Commission's regulatory authority could be required to purchase QF power generated
outside of the State of Idaho. It certainly was not about granting the Commission jurisdiction
over QFs.
It is clear from the above, that; (1) Idaho Power has not complied with IPUC Rule of
Procedure 101 that it, "Indicate the statute, order, rule or other controlling law. . .upon which the
petitioner relies;" and (2) the Commission does not have jurisdiction over QFs.
THE COMMISSION IS PROHIBITED FROM REGULATING QFS
In addition to having no jursdiction over QFs, the Idaho Commission is prohibited from
regulating QFs by federal law. QFs are entitled to special treatment under federal and state laws
regulating power producers. See 16 U.S.C. Sec. 824a-3(e)(1); 18 C.F.R. Sec. 292.602(c)(1). The
Federal Energy Regulatory Commission (FERC) promulgates regulations affecting QFs. State
utilty regulatory commissions such as the Idaho PUC implement FERC's regulations on the
purchases and sales of power between utilities and QFs. In passing the legislation authorizing
special rues for QFs, the Public Utilty Regulatory Policies Act of 1978 (PURP A), Congress
viewed QFs as desirable alternatives to traditional electric 'utility generating facilties. See FERC
v Mississippi, 456 U.S. at 750, 102 S.Ct. at 2132. At that time, Congress perceived two
impediments to QF development: the reluctance of public utilities to sell power to and buy power
from QFs; and the financial burdens imposed on QFs by state and federal laws designed to
regulate utilties providing electricity to the public. See id. at 750-51, 102 S.Ct. at 2132-34. To
overcome the first impediment, Congress mandated that FERC promulgate regulations, for states
ANSWER AND MOTION TO DISMISS BY WESTERN DESSERT ENERGY AND TUMBLEWEED
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to implement, governng transactions between utilties and QFs, including a requirement that
utilities purchase electrcity from QFs at a rate up to the utility's avoided cost (i.e., the utility's
cost if it generated the power itself, or purchased it from another source). See 16 U.S.C. Sec.
824a-3(b), -3(d). To solve the second problem, Congress eased the financial burdens on QFs by
authorizing FERC to exempt QFs from certn federal laws, and from state laws or regulations
"respecting the rates, or respecting the financial or organzational regulation, of electric utilities,"
if necessary to encourage QFs. Id. Sec. 824a-3(e). FERC's exemptions for QFs are codified at 18
C.F.R. §§ 292.601 and .602. Because, QFs are exempt from utility-tye regulation pursuant to
federal law, the Idaho Commission is precluded from regulating when or where a QF chooses to
make sales for resale under PURP A.
PROHIBITING QFS FROM SELLING THEIR OUTPUT IN OTHER STATES
VIOLATES THE INTERSTATE COMMERCE CLAUSE
Idaho Power requests an order from the Commission that the power produced in its
service territory by QFs should remain in Idaho Power's service territory. This request directly
implicates the Commerce Clause ofthè United States Constitution, Ar. I, § 8 Clause 3.
Essentially, the result ofIdaho Power's request would be the restriction of the flow of privately
owned and produced electricity in interstate commerce.
It has been clearly established that the buying and sellng of power is a matter covered by
the Commerce Clause. FERC v. Mississippi supra; Re: Orange & Rockland Utilities, Inc. 92
P.U.R. 4th 1 (FERC Docket No. EL87-53-000 April 14, 1988.) (Purchase of electricity by any
ANSWER AND MOTION TO DISMISS BY WESTERN DESSERT ENERGY AND TUMBLEWEED
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utilty is a transaction in interstate commerce so long as the purchased electricity enters an
interstate grid.)
The United States Supreme Cour has consistently reiterated that the Commerce Clause
"precludes a state from mandating that its residents be given a preferred right of access, over out-
of-state consumers, to natual resources located within its borders or to the products derived
therefrom." New England Power Co. v. New Hampshire, 455 U.S., 71 L.Ed.2d 188, 102 S. çt.
1096 (1982); see also City of Philadelphia v. New Jersey, 437 U.S. 617, 57 L.Ed.2d 475,98 S.
Ct. 2531 (1978) (a state is powerless to prevent privately owned aricles of trade from being
shipped and sold in interstate commerce because those aricles are required to satisfy local
demands or are needed by the states' citizens.)
In New England Power, the New Hampshire public utility commission prohibited New
England Power from sellng its hydro electric output outside of the state of New Hampshire. The
Supreme Cour pointed out that the ban "is precisely the sort of protectionist regulation that the
Commerce Clause declares off limits to the states...Moreover, it canot be disputed that the
commission's 'exportation ban' places direct and substatial burdens on transactions in interstate
commerce." New England Power, 455 U.S. at 339, 71 L.Ed.2d at 195, 102 S.Ct. at 1101. The
action of the commission violated the Commerce Clause because the burdens imposed by its
order were justified by nothing more than a desire to advance simple economic protectionism.
If this Commission were to force the sale of power generated in Idaho Power's service
terrtory to just Idaho Power, it would be essentially restricting Idaho based QFs from sellng
their power into any other state. The situation here is exactly on point with the facts in New
ANSWER AN MOTION TO DISMISS BY WESTERN DESSERT ENERGY AND TUMBLEWEED
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England Power because Idaho Power is asking this Commission to prohibit an Idaho based wind
QF from transmitting its output across state lines. Ths restrction of the sale of power would
burden transactions in interstate commerce, without serving any rational state purose, and
would be an unlawfl restriction of the interstate sale of electricity.
FERC RULES SPECIFICALLY REQUIRE UTILITIES TO WHEEL QF OUTPUT TO
THIRD PARTY PURCHASERS
Idaho Power attempts to divert the Commission's attention by complaining that Idaho
based QFs are taking advantage of Oregon's higher avoided cost rates by having their power
delivered to Oregon. The short answe! to this contention is that there is nothing unjust about an
Idaho based QF seeking the best available market for its power. In fact, PURP A was enacted, in
par, in order to create just such a market for independent power production. This purose is
clearly evidenced by the fact that PURPA, through FERC regulation, specifically gives QFs the
legal right to deliver power to the market of their choice: 18 C.F .R. § 292.303( d) provides:
Transmission to other electric utilities. If a qualifying facilty agrees, an electrc
utility which would otherwse be obligated to purchase energy or capacity from such
quaifying facilty may transmit the energy or capacity to any other electric utility. Any
electric utilty to which such energy or capacity is transmitted shall purchase such energy
or capacity under this subpar as if the quaifying facilty were supplying energy or
capacity directly to such electric utilty. The rate for purchase by the electric utility to
which such energy is transmitted shall be adjusted up or down to reflect line losses
pursuant to § 292.304(e)(4) and shall not include any charges for transmission. 2
The intent of this federal regulation is to give QFs the option to deliver power to utilities other
than the utility to which the QF is physically interconnected. Furhermore in doing so, the QF
2 According to FERC, "any person generating electric energy for sale for resale (including QFs) may obtain
involunta wholesale transmission service." In Re Utah Power & Light 62 FERC 61,236 (1993) p. 3.
ANSWER AN MOTION TO DISMISS BY WESTERN DESSERT ENERGY AND TUMBLEWEED
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 29th day of July, 2011, a true and correct copy of the
within and foregoing ANSWER AND MOTION TO DISMISS was served by ELECTRONIC
MAIL and US MAIL, to:
Donovan E. Walker
Lisa Nordstrom
Idaho Power Company
1221 West Idaho Street
Boise, Idaho 83707-0070
dwalker(áidahopower.com
lnordstrom(áidaopower.com
t~.-By:
Peter Richardson ISB # 3195
ANSWER AND MOTION TO DISMISS BY WESTERN DESSERT ENERGY AN TUMBLEWEED
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does not have to sacrifice its right to demand that the utilty purchasing the power do so at the
established PURP A rates.
CONCLUSION
Tumbleweed and Western Desert respectfuly request the Commission issue its order in
this matter sumarily dismissing Idaho Power's Petition for a Declaratory Ruling, with
prejudice. Tumbleweed and Western Desert do not believe either a hearng or oral arguent wil
necessary for the Commssion to grant their Motion to Dismiss. Nevertheless, both stad ready
to paricipate in any oral argument or hearing should the Commission so decide.
RESPECTFULLY SUBMITTED this 29th day of July, 2011
Peter J. Richardson ISB #3195
~dei
RICHARSON & O'LEARY, PLLC
ANSWER AN MOTION TO DISMISS BY WESTERN DESSERT ENERGY AND TUMBLEWEED
ENERGY
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