20120403Answer.pdf

McDevitt & Miller LLP
Lawyers RECEtvEc
420 W. Bannock t2012 APR —34
[phone] P.O. Box 2564-83701 PM Ii: 03 Chas. F. McDevitt
[phone] (Fax) Boise, Idaho 83702 Dean J. (Joe) Miller
TLTtS CO1MI3:oN
April 3, 2012
Via Hand Delivery
Jean Jewell, Secretary
Idaho Public Utilities Commission
472 W. Washington St.
Boise, Idaho 83720
Re: In the Matter of the Application of Rainbow Ranch Wind LLC
of Rainbow West Wind LLC
IPC-E-12-11
Dear Ms. Jewell:
Enclosed for filing, please find an original and seven (7) copies of Rainbow Ranch Wind, LLC and
Rainbow West Wind, LLC's Answer to Idaho Power Company's Motion to Dismiss.
Kindly return a file stamped copy to me.
Very Truly Yours,
McDevitt & Miller LLP
Dean . er
DJM/hh
End.
ORIGINAL
RECEIVED
Dean J. Miller (ISB No. 1968)
Chas. F. McDevitt (ISB No. 835)
McDEVITT & MILLER LLP
420 West Bannock Street
P.O. Box 2564-83701
Boise, ID 83702
Tel: [phone]
Fax: [phone]
joemcdevitt-miller.com
chas(ä.mcdevitt-nii1ler.com
2fl1? APR -3 PH 14:03
I tTL.' )1MSS0
Attorneys for Rainbow Ranch Wind LLC
Attorneys for Rainbow West Wind LLC
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE PETITION
AND OF RAINBOW RANCH WIND LLC
AND RAINBOW WEST WIND LLC TO
MODIFY PRIOR ORDER No. 32300 AND
APPROVE FIRM ENERGY
SALES AGREEMENTS
Case No. IPC-E-12-11
RAINBOW'S ANSWER TO IDAHO
POWER COMPANY'S MOTION TO
DISMISS
COME NOW Rainbow Ranch Wind LLC and Rainbow West LLC (collectively
referred to as "Rainbow") and, pursuant to RP 57.03, submits the following Answer to
Idaho Power Company's ("Idaho Power" or "IPCo") Motion to Dismiss (Motion) dated
March 23, 2012. Rainbow respectfully requests that the Motion be denied, and in support
thereof respectfully shows as follows, to wit:
RAINBOW'S ANSWER TO IDAHO POWER COMPANY'S MOTION TO DISMISS -1
STANDARD OF REVIEW
The standard of review upon a motion to dismiss is well settled. A motion to
dismiss should not be granted unless it appears beyond doubt that the claimant can prove
no set of facts in support of his claim that would entitle him to relief. Hadfiedv. State, 86
Idaho 561, 388 P.2d 1018 (1963). A motion to dismiss admits the truth of facts alleged,
and all intendments and inferences that reasonably may be drawn therefrom, and such
will be considered in light most favorable to the plaintiff. Walenta v. Mark Means, 87
Idaho 543, 394 P.2d 329 (1964). See also, IRCP 12 (b)(6).
ARGUMENT
1. Rainbow's Petition is Not a Collateral Attack Upon Order No. 32256.
At pages 8-12 of the Motion, Idaho Power argues that Rainbow's Petition is an
impermissible collateral attack upon Order No. 32256. As demonstrated below, Idaho
Power misunderstands the doctrine of collateral attack.
First, Idaho Power overlooks and fails to analyze Idaho Code §61-624, which
provides:
"Rescission or change of orders. The commission may at any time, upon notice
to the public utility affected, and after opportunity to be heard as provided in the
case of complaints, rescind, alter or amend any order or decision made by it. Any
order rescinding, altering or amending a prior order or decision shall, when served
upon the public utility affected, have the same effect as is herein provided for
original orders or decisions."
On several occasions the Commission has used its authority under Idaho Code
§61-624 to modify or amend existing final orders even when no appeal was taken from
the initial order. Three examples follow:
RAINBOW'S ANSWER TO IDAHO POWER COMPANY'S MOTION TO DISMISS -2
In Case No. PAC-E-01-14, In Re. Petition of PacfiCorp to Modify Order No.
28213, the Commission had previously approved the merger of PacifiCorp and Scottish
Power PLC, subject to various terms and conditions, including performance standards
and customer guarantees. One condition was that 80% of customer calls to PacifiCorp
call centers be answered within 10 seconds (the 80/10 Standard). In Case PAC-E-01-14,
PacifiCorp petitioned to modify Order No. 28213, by eliminating the 80/10 based on new
information or changed circumstances. PacifiCorp asserted there was an unanticipated
increase in the number and complexity of calls to call centers that were not envisioned
when it agreed to the conditions in Order No. 28213. The Commission found this new
information was sufficient to justify modification of the previous Order. See Order No.
28999.
In Case No. QWE-T-04-11, In Re: Petition of Qwest Corporation to Modify Rate
Consolidation Order No. 28943, two local exchanges were originally consolidated as a
rate center to facilitate possible extended area service (EAS). In its Petition, Qwest
asserted that in the two years since the initial order, EAS activity relating to the
exchanges had not materialized and other new facts justified consolidating the two
exchanges into the Idaho Falls rate center. The Commission found this new information
sufficient to justify amendment of the prior Order. See, Order No. 29525.
In Case No. IPC-E-l0-28, In Re: Application of Idaho Power Company to Amend
Accounting Order No. 30940, the Commission had previously entered an order
authorizing Idaho Power to record and defer unrecovered transmission-related revenues
that were disallowed in a rate case before the FERC. Subsequent activity at FERC, and
the associated time to accomplish it, resulted in a new deferral amount and the need for a
RAINBOW'S ANSWER TO IDAHO POWER COMPANY'S MOTION TO DISMISS -3
new beginning date for the amortization period. The Commission found these new facts
to be a sufficient basis to modify the previous order. See, Order No. 321771.
These cases have three things in common. First, in each case there was not an
appeal of the initial order. Second, in each case new facts or circumstances justified
modification of the existing order. Third, there was no suggestion by the Commission in
any of the cases that modification based on new facts constituted a collateral attack on the
previous orders.
Here, the FERC Cedar Creek Order is a new fact or circumstance similar to those
discussed above justifying modification of Order No. 32256, which held, in essence, that
a legally enforceable obligation may be created only by a fully executed contract The
Cedar Creek Order provides a clarification to the law relating to legally enforceable
obligations that was unavailable to the Commission when it issued Order No. 32256, and
is thus a new circumstance. Accordingly, whether the Rainbow Petition is considered as
a motion to modify Order No. 32256 or as a new application, it is not barred by the
doctrine of collateral attack.
Idaho Power's Motion also fails to cite or analyze relevant Idaho Supreme Court
precedent, specifically the case of Associated Pac. Movers v. Rowley, 97 Idaho 663, 551
P.2d 618 (1976). As Rainbow explained in its Petition, in Rowley, the Commission
entered an order denying a motor carrier permit, and the applicant neither filed a petition
for reconsideration nor filed a notice of appeal. Later the applicant filed a second
application seeking the same authority, which the Commission granted. The second
'In Staff's Comments filed in this case, Staff argued Idaho Power's failure to appeal the initial order was a
bar to the subsequent proceeding. The Commission was apparently not impressed with the argument, as it
was not discussed in the findings and conclusions of Order No. 32177.
RAINBOW'S ANSWER TO IDAHO POWER COMPANY'S MOTION TO DISMISS -4
application was supported by testimony of witnesses who were unavailable to the
applicant in the earlier proceeding. 97 Idaho at 665.
On appeal, the Protestants to the application argued that the award of the permit in
the second application amounted to a collateral attack on the first order and thereby
violated Idaho Code §61-625. The Court rejected this argument, noting "Any
modification of an existing order under Idaho Code §61-624 arguably could be a
collateral attack on that order, but such an interpretation would bring those two
consecutive statutory sections into direct conflict, a result we cannot support". 97 Idaho
at 664-665. Relying on an Arizona Supreme Court case considering a similar statutory
scheme, the court clarified that "collateral attack" means an attack such as an application
to a court for injunctive relief against an order of the Commission, but it does not include
an application to the Commission to modify an existing order based on new facts or
information. Thus, whether considered a petition to modify an existing order or as a new
application—like in Rowley—this pleading does not violate Idaho Code §61-625.
Here, in Order No. 32256, based on the terms of the agreements, the Commission
determined that the projects were not entitled to published avoided cost rates because, at
the time the agreements became effective, published rates were available only to wind
and solar projects with a design capacity of 100kW or less. (Order No 32256 at 14).
The Cedar Creek Order, however, reaffirms FERC's regulations providing that
entitlement of published rates may arise from an executed contract or from a "non-
contractual, but still legally enforceable obligation":
"[w]hile 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
RAINBOW'S ANSWER TO IDAHO POWER COMPANY'S MOTION TO DISMISS -5
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."
137 FERC 61,006 at pg. 13.
Idaho Power's Motion does cite one Idaho Supreme Court case, Utah-Idaho
Sugar Co., v. Intermountain Gas Co., 100 Idaho 368, 597 P.2d 1056 (1979). The facts
of Intermountain Gas, however, detract from Idaho Power's argument, more than they
help it. There, U & I had notice of a pending Intermountain Gas rate case but neither
sought intervention nor petitioned for reconsideration from the Commission's final order,
unlike Rainbow. Subsequently U & I filed a separate complaint alleging that the rates
approved by the Commission in the rate case were unreasonable and the procedures
followed in the rate case were improper. The Commission dismissed the complaint and
the Supreme Court affirmed, holding the complaint was an impermissible collateral
attack.
In Intermountain, the U & I complaint did not allege the existence of new
information that should be taken into account; rather it argued the rate case order was
wrongly decided. Intermountain thus makes clear that a subsequent direct challenge to
the propriety of a final order that has become non-appealable is a collateral attack.
Rowley, on the other hand, makes clear that a subsequent proceeding based on new
information is not a collateral attack. Rowley, not Intermountain, controls the facts of this
case.
RAINBOW'S ANSWER TO IDAHO POWER COMPANY'S MOTION TO DISMISS -6
2.Neither the Doctrine of Collateral Estoppel nor Res Judicata Bar the Rainbow
Petition.
At pages 12-13, the Idaho Power Motion argues that the Rainbow Petition is
barred by the doctrines of collateral estoppel and res judicata. This argument is easily
disposed of by observing that the Rainbow Petition does not seek to re-litigate Order No.
32256. Rather, the Petition calls to the Commission's attention new facts and
circumstances—the Cedar Creek Order—which facts and circumstances did not exist
when Order No. 32256 was issued. Both the doctrines of collateral estoppel and res
judicata require, as the IPCo Motion points out, that the issue decided in the prior
litigation was identical to the issue presented in the present action. Here, the issues are
not identical because the Petition is based on new facts and circumstances.
3.Whether Idaho Power Delayed Negotiations is Not an Issue Properly Before the
Commission on a Motion to Dismiss.
At pages 14-16, Idaho Power presents factual allegations to support its contention
it did not intentionally delay negotiations. As pointed out in Standard of Review, supra,
the function of a motion to dismiss is to test the sufficiency of the pleading initiating a
proceeding. It is not the function of a motion to dismiss to set forth additional factual
allegations which are in the nature of an affirmative defense. Whether Idaho Power was
guilty of foot-dragging, and whether that is relevant to whether a legally enforceable
obligation arose, is an issue to be decided after an evidentiary hearing or such other
procedure as the commission may adopt.
RAINBOW'S ANSWER TO IDAHO POWER COMPANY'S MOTION TO DISMISS -7
4. The Cedar Creek Order Clarifies the Proper Role of a Public Interest Analysis.
The final section of Idaho Power's Motion to Dismiss argues that Order No.
32256 found it would not be in the public interest to approve contracts that were not fully
executed before December 14, 2010. This is true enough, but it does not help Idaho
Power. The Cedar Creek Order makes it clear that a QF by committing itself to sell to an
electric utility, also commits the electric utility to buy from the QF and the resulting
legally enforceable obligation cannot be eradicated by a more general public interest
analysis. 137 FERC 61,006 at pg. 13.
CONCLUSION
As noted supra, for the purpose of a motion to dismiss the allegations of the initial
pleading must be taken as true. Of specific importance in this case are the allegations of
paragraphs 32-35 of Rainbow's Petition that it incurred a legally enforceable obligation
prior to December 14, 2010. Idaho Power does not seriously dispute these allegations.
Rather, Idaho Power raises a series of procedural objections, all designed to prevent
consideration of the substantive question of whether the guidance provided by the Cedar
Creek Order compels a different conclusion than that reached in Order No. 32256. As
demonstrated above all of these procedural objections are without merit.
Accordingly, Idaho Power's attempts to deflect attention from the merits the case
should be rejected and the Motion to Dismiss should be denied.
ORAL ARGUMENT IS REQUESTED
RAINBOW'S ANSWER TO IDAHO POWER COMPANY'S MOTION TO DISMISS -8
DATED this ______day of April, 2012.
MCDEVITT & MILLER, LLP
By: 'WL'
Dean J. Miller
Attorney for Rainbow Ranch Wind LLC
and Rainbow West Wind LLC
RAINBOW'S ANSWER TO IDAHO POWER COMPANY'S MOTION TO DISMISS -9
CERTIFICATE OF SERVICE
I hereby certify that on the 671 day of April, 2012, I caused to be served, via the
method(s) indicated below, true and correct copies of the foregoing document, upon:
Jean Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
P.O. Box 83720
Boise, ID 83720-0074
[e-mail]
Donovan E. Walker
Jason Williams
Idaho Power Company
1221 W. Idaho Street
P.O. Box 70
Boise, ID 83707
[e-mail]
[e-mail]
Hand Delivered
U.S. Mail
Fax
Fed. Express
Email
Hand Delivered
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Email
RAINBOW'S ANSWER TO IDAHO POWER COMPANY'S MOTION TO DISMISS -10