20130607Notice of Appeal.pdf

Angelo L. Rosa (ISB No. 7546)
I 168 E. 1700 S.
Salt Lake City, Utah 84105
Telephone: [phone]
Fax: [phone]E-mail: [e-mail]
Afforney for:
New Energy Two, LLC
New Energy Three, LLC
CASE NO. IPC-E-12-25
CASE NO. IPC.E.I2-26
NOTICE OF APPEAL
i
r'1 .}.trl;i i';;T
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE
COMPLAINT AND PETITION OF
IDAHO POWER COMPANY FOR A
DECLARATORY ORDER
REGARDTNG THE FIRM ENERGYSALES AGREEMENT AND
GENERATOR TNTERCONNECTION
AGREEMENT WITH NEW ENERGY
TWO, LLC.
TN THE MATTER OF THE
COMPLATNT AND PETITION OF
IDAHO POWER COMPANY FOR A
DECLARATORY ORDER
REGARDING THE FIRM ENERGYSALES AGREEMENT AND
GENERATOR TNTERCONNECTION
AGREEMENT WITH NEW ENERGY
THREE, LLC.
NOTICE OF APPEAL - Page I
TO: The IDAHO POWER COMPANY and its counsel of record, and to the IDAHO
PUBLIC UTILITIES COMMISSION:
NOTICE IS HEREBY GIVEN THAT:
l. The titles of the actions are as stated above.
2. Appellants, New Energy Two, LLC and New Energy Three, LLC, by and through
their counsel, Angelo L. Rosa, hereby appeal Order No. 32780 issued by ldaho Public Utilities
Commission, Respondent, to the Idaho Supreme Court ("Order No. 32780") entered in the
above-entitled consolidated actions on 4 April 2013. A copy of Order No. 32780 is attached and
incorporated hereto as "Exhibit 1".
3. Appellant has a right to appeal to the ldaho Supreme Court, and the order
described above is an appealable order under Idaho Appellate Rule (I.A.R.) I l(e).
4. The issue on appeal which the appellant intends to assert in the appeal is whether
the Public Utilities Commission has jurisdiction to determine the applicability of a force majeure
clause in contracts between Appellants and the ldaho Power Company, and whether Order No.
32780 denying Appellant's Motion to Reconsider the Commission's Order No. 32755 denying
Appellant's Motion to Dismiss on those grounds ("Order No. 32755") should have been granted
as a matter of law. A copy of Order No. 32755 is attached and incorporated hereto as "Exhibit
2".
No order has been entered sealing the record.
Appellants request the preparation of the entire reporter's transcript.
5.
6.
NOTICE OF APPEAL -PageZ
7.Appellants request the preparation of the entire clerk's record as set forth in I.A.R.
28.
8. A copy of this Notice of Appeal has been not been served on the reporter as there
were no live proceedings held in this matter.
9. The clerk of the P.U.C. has been paid the estimated fee for preparation of the
reporter's transcript and the clerk's record.
10. The applicable appellate filing fee has been paid.
I l. Service has been made on all parties required to be served pursuant to I.A.R. 20.
DATED:7 June20l3
ANGELO L. ROSA, ESQ.
tul
Angelo L. Rosa
Attomey for New Energy Two, LLC and
New Energy Three, LLC
NOTICE OF APPEAL - Page 3
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on 7 June 2013,I caused a true and correct copy
NOTICE OF APPEAL to be served by the method indicated below, and addressed
following:
of the
to the
Jean Jewell
Secretary
Idaho Public Utilities Commission
472W Washington Street
Boise, Idaho 83702
Peter Richardson
Richardson & O'Leary, PLLC
515 N.27th Street
Boise, Idaho 83702
Donovan Walker
Jason Williams
Idaho Power Company
l22l West ldaho Street
Boise,ldaho 83702
( ) U.S.Mail, Postage Prepaid
( X) Hand Delivered( ) Overnight Mail
( X) Facsimile
( X) Electronic Mail
( ) U.S.Mail, Postage Prepaid( ) Hand Delivered( ) Overnight Mail
(X) Facsimile
(X) Electronic Mail
( ) U.S.Mail, Postage Prepaid( ) Hand Delivered( ) Overnight Mail
( X ) Facsimile
(X) Electronic Mail
TM
Signed
Angelo L. Rosa
NOTICE OF APPEAL -Page 4
E,XHIBIT 1
Office of the Secretary
Service Date
April 4,20I3
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN TI{E MATTER OF TIIE COMPLAINT
AIYD PETITION OF IDAHO POWER
COMPANV T'OR A DECLARATORY
ORDER REGARDING TIIE FIRM ENERGY
SALES AGREEMENT AND GENERATOR
INTERCONNECTION AGREEMENT WITH
NEW ENERGY TWO, LLC.
IN THE MATTER OF TIIE COMPLAINT
AIYD PETITION OF IDAHO POWER
COMPAIIY ['OR A DECLARATORY
ORDER REGARDING THE FIRM ENERGY
SALES AGREEMENT AND GENERATOR
INTERCONNECTION AGREEMENT WITH
NEW ENERGY THREE, LLC.
CASE NO. IPC.E.I2-25
CASE NO. IPC.E-I2.26
oRDER NO. 32780
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On November 9 and 21,2012, ldaho Power Company filed two separate "Complaints
and Petitions for- Declaratory Order' regarding two Power Purchase Agreements ("PPAs")
between itself and New Energy Two and New Energy Three, respectively, ldatro Power
generally alleged the New Energy projects (collectively "New Energy") breached their
respective PPAs by failing to supply power to the utility. On December 4, 2012, the
Commission consolidated the two cases into a single proceeding and directed New Energy to
answer the Complaints and Petitions by December 27 ,20 I 2. Order No. 32692. Rather than file
an answer, New Energy filed a "Motion to Dismiss for Lack of Subject Matter Jurisdiction."
Idaho Power filed an answer to the Motion, and New Energy hled a reply to Idaho Power's
answer.
On March 5, 2013, the Commission issued Interlocutory Order No. 32755 denying
New Energy's "Motion to Dismiss." The Commission found that it did have jurisdiction to
resolve the contract dispute because New Energy and Idaho Power had expressly agreed in their
PPAs to submit disputes arising under their respective PPAs to the Commission for resolution.
Order No. 32755 at l0 citing Afton Energy v. Idaho Power Co. ("Afron IV"), ll l ldaho 925,
929,729 P.2d 400, a04 (1986); PPA $ 19.1. The Commission also ordered New Energy to file
its answer (if any) to the Complaints and Petitions no later than March 19, 2013. Id. at 12.
oRDERNO. 32780
On March 18,2013, New Energy filed a Motion generally seeking the Commission's
permission for leave to lile a permissive appeal pursuant to ldaho Appellate Rule (LA,R,) l2
challenging the Commission's decision that it did have jurisdiction to resolve the dispute. New
Energy did not request a hearing on its Motion and Idaho Power did not file an answer to the
Motion. As set out below, the Motion is granted in part and denied in part.
BACKGROUND
A, Interconneclion und the PPA Processes
The baokground for this consolidated case is taken primarily liom the two complaints
and is set out in greater detail in Order No. 32755. Briefly, New Energy proposed to build two
separate anaerobic digesterr projects at Swager Farms (New Energy Two) and Double B Dairy
(New Energy Three) that would generate elechicity for sale to Idaho Power pursuant to the
Public Utility Regulatory Policies Act (PURPA), PURPA generally requires electric utilities
such as Idaho Power to purchase the output from "qualifying facilities (QFs)" at rates set by the
stateregulatory commissions. PURPA $ 210(a), l6 U.S.C, $ 824a-3(a), PURPA also requires
QFs (srrch as thq anaerobic digesters in this aasq) to pa.y tbe cos! o.f -construgti[g the nec-essary
interconnection facilities (or transmission upgrades) to "connect" the QF project with the
purchasing utility's system, Order No. 32755 at 2 citing t8 C.F.R. s\ 292.308. Thus, the typical
PURPA transaction in ldaho contains two separate and independent parts. One part is the
parties' obligations to sell and purchase the electrical output flom the QF project - in this case
embodied in the PPAs. The other part is the interconnection process where the utility and the QF
negotiate and contract tbr the construction of the necessary interconnection facilities. Order No.
32755 at nn.2, 3, The culmination of the interconnection process is the execution of a Generator
Interconnection Agreement (GIA) and the construction of the transmission facilities by the
utility.2
Returning to the facts of this case, New Energy initiated discussions with Idaho
Power in October 2009 about the interconnection process for the two digester projects. Order
Nos. 32755 al7;32692 at2. Following initial discussions, New Energy submitted a request to
I Anaerobic digesters utilize animal waste to produce methane gas which is then combusted to provide motive force
fbr the production of electricity, Order No. 28945 at 2.
: Typically there are three steps to the interconnection process: (l) the QF submits a g,enerator interconnection
request and signs a Study Agreement with the utiliry; (2) the utility prepares and issues a Study Report; and (3) if the
study is acceptable, the parties sign the GIA and QF pays the utility to construcl the interconnection thcilities.
ORDER NO. 32780
Idaho Power for the utility to prepare an Interconnection Study Report (including proposed
routing, estimated cost, and a construction schedule). Id. at n.2. [daho Power submitted separate
Study Reports for each project to New Energy. Order No. 32755 at 2.
In May 2010, Idaho Power and New Energy entered into a separate PPA for each
digester project. Each project was contracted to supply 1.2 MW of power to Idaho Power over a
lS-year term. The scheduled commercial operation date (COD) for Swager Farms was October
l. 2012, and the COD for Double B was December l,2Al2. Id. On July 1, 2010, the
Commission approved the PPAs for Swager Farms and the Double B Dairy in Order Nos. 32026
and 32027, respectively. Id.
In January 2011, New Energy requested that the interconnection capacity for each
project be increased from 1.2 MW to 2.0 MW. ld. at 2-3. New Energy and Idaho Power
subsequently executed new Study Agreements and Idaho Power prepared a new Facility
(lnterconnection) Study Report for each project. In late April 2011, Idaho Power issued its final
Facility Study Reports estimating that the cost for the Swager Farms' 2.0 MW interconnection
would cost approximately $1.71 millisn' and-Double B1s 2,0 MW interconnection capacity
would cost approximately $376,000. Id. at3. The parties then engaged in protracted discussions
and communications leading up to Idaho Power's preparation of draft "Generation
Interconnection Agreements" (G[As) for each QF,
On March 22,2ol2,ldaho Power sent New Energy the draft GIA for Swager Farms.
In April 2012, New Energy asked ldaho Power to revise the interconnection facilities to the
original 0.8 MW capacity. Swager Farms Complaint at ![ 59.3 The parties executed a "Re-
Study'Agreement and Idaho Power subsequently estimated that the interconnection cost for the
reduced Swager Farms capacity would be approximately $225,000. Id. at t[fl 60-61.
On September 14, z}lz,Idaho Power sent the final GIA to Swager Farms at the
lower 0.8 MW capacity. Idaho Power's cover letter to the GIA advised Swager Farms that it
"must have the execut
construction by this date." Id. at lf 66 (emphasis original). In a follow-up e-mail, Idaho Power
wamed New Energy that if the executed GIA and the required ftrnding are not received by
3 hr May 201l, New Energy advised ldaho Power that Exergy Devetopment would assist New Energy with its two
QF projects. Order No. 32'155 at 3 .
0RDERNO. 32780
October 1,2012, "it will not be possible to complete the required interconnection work before
the end of the yeu2012." Id. at\68,4
On May 9,20l2,ldaho Power sent a drat GIA to New Energy for the Double B
project and advised it that failure to submit all of the required items and the executed GIA "will
cause the Generator lnterconnection request to have been deemed withdrawn," Double B
Complaint at fl 49, Orr June 19,20lZ,ldaho Power sent Double B a final GIA to be executed
and returned to Idaho Power no later than July 20, or "your IGIA] will be deemed withdrawn." s
Id. at\ 53, ldaho Power insisted in its Complaint that New Energy did not execute the GIA and
return it to the utility. Idaho Power subsequently issued a deficiency notice to New Energy that
the GIA had been deemed withdrawn and removed the project from ldaho Power's
interconnection queue. On August 28,2012,ldaho Power asserted it lefunded New Energy's
interconnection deposit for the Double B project. Id. at\ 54-55.
B. Notice of Force Majeure
On September 28, 2012, the two New Energy projects sent a joint "Notice of Force
Majeure" to Idaho-Power in acoordance with Seotion 14 of their raspeotive PPAs, The projects
explained they could not perform under the respective PPAs because of "the occurrence of a
force majeure event." Swager at Tab 56; Double B at Tab 36. The projects alleged in their
notice that the Commission's generic PURPA investigation (GNR-E-11-03) and other "pending
proceedings" caused lenders to be "unwilling to lend in Idaho pending the outcome of these
proceedings." /r/, Thus, ',vith "no ftnancing available, . . . it [is] impossible for [the QF] projects
to perform [their] obligation" under the PPAs. Id. n4: Order No. 32755 at 4.
C. New Energy's Motion to Dismiss
ln its Motion to Dismiss, New Energy maintained that the Commission does not
possess the necessary jurisdiction to interpret and/or entbrce contracts. In particular, New
Energy asserted the Supreme Court has stated that the "general rule" is:
Generally, the construction and enforcement of contract rights is a matter that
lies in the jurisdiction of the courts and not the public utilities commission,
This is true notwithstanding that the parties are public utilities or that the
subject matter of the contract coincides generally with the expertise of the
{ 'fhe Swager Farms PPA provided that the project's commercial operation date lor supplying power to the uti}ity is
October 1,2012.
5 Under the terms of its PPA. Double B was to be in commercial operation supplying power to the utility no later
than December I ,2012.
ORDER NO. 32780
commission. If the matter is a contractual dispute, it should be heard by the
courts,
Morion at 6 quoting Lernhi Telephone Co. v. Mountain States Tel. & Tel. Co.,98 Idaho 692,, 696,
571 P,2d753,757 (1977). New Energy did concede that the Court has recognized exceptions to
the general rule set out above. Id. at9-10. More specifically, the Court inAfton Energtv. ldaho
Power Co. ("Afton IV"),reilerated the exception to the general rule is that the Commission may
resolve a contract dispute because "the parties ageed to let the PUC settle this dispute and . . .
there is substantial evidence in the record to support the Commission's decision." I I I Idaho
925,729 P,2d 400 (1986), citing Bunker Hillv, lVashington Water Power Co,,98ldaho 249,
259, 561 P.2d 391, 394 (1977). New Energy also observed the Afton IV Court found that the
PURPA contract "between Afton and Idaho Power does not fall within any of [the] exceptions
[to the general rule]. Idaho Power and Afton have not agreed to allow the Commission to
interpret the contract." Motion atl0 quoting Afton IV,l I I Idaho at9?9,729 P.zd at 404, ldaho
Power filed an answer opposing the Motion. See Order No. 32755 at 7-8.
THE CO-MMISSION'S INTERLOCUTORY ORDER NO. 32755
In Order No. 32755, the Comrnission recognized that the general rule is "lfrlenerally,
the construction and enforcement of contract rights is a matter which lies in the jurisdiction of
the courts and not in the public utilities commission." Order No. 32755 at 9 quoting lfton IV,
l1 I Idaho at 928,729 P.Zd at 403 (emphasis added). However, the Commission found that this
case is controlled by one of the exceptions to the general rule where "the parties agreed to let the
PUC settleth[e] dispute. , , ." Id. at9-10;Afton IV,lll Idaho at929,729P,zdat404 quoting
Bunker Hill, gS ldaho at 24?,561P.2d at 394.6 In particular, the Commission found
that the "consent" exception (where parties agree to let the Commission
settlc a contractual dispute) is controlling in this instance. More
specifically, we find that the QFs and Idaho Power have expressly agreed in
their PPAs to submit disputes arising under their respective PPAs to the
Commission for resolution. As pointed out by ldaho Power, each PPA
contains a provision granting the Commission jurisdiction over this matter.
Section l9.l ofeach PPA provides:
6ln lulcNeal v. ldaho PIJC, l42ldaho 685, 689, 132 P.3d 442, 446 (2006), the Court recognized another exception
to the general rule regarding the Commission's ability to interpret and enlorce interconnection agreements betlveen
telecommunication carriers. In explaining this exception, the Court stated it has been "care firl to use words such as
'qenerally'and'normally'[when stating the applicability of the general rule] and also, to provide for exceptions to
the norm," (Emphasis added.) The Commission resolving disputes about interconnection agreements is an
exception to the general rule (i.e., notm).
oRDER NO. 32780
Disputes - AII disoutes related to or arising under this Aqreement,
including, but not limited to, the interpretation of the terms and
conditions of this Agreement, will be submitted to the Commission for
resolution.
Swager at Tab l, Double B at Tab 1 (emphasis added). Unlike the parties in
Afton IV, we lind that New Enerry and ldrho Power have expressly
agreed that "[alll disputes related to or arising under this Agreement . . .
will be submitted to the Commission for resolution." PPA at $ 19.1. New
Energy Two and New Energy Three signed their respective PPAs containing
Section l9.l on May 21 , 2010. We further find this provision of the PPA to
be clear and unambiguous. "An unambiguous contract will be given its plain
meaning." Shawver v. Huckleberuy Estates,l40 tdaho 345, 361, 93 P.3d 685,
692 (2004). In this case, the dispute between the parties is "related to or
arising under this Agreement." In addition, New Energy's force majeure
notice specifically refcrs to Section 14 of the PPAs - clearly relating to the
PPAs, Swager at Tab 56, Double B at Tab 36. Moreover, each PPA provides
in Section 20.1 that "This Agreement is subject to the jurisdiction of those
governmental agencies having control over either party of this Agreement."
Swager at Tab l, Double B at Tab I,
We further t-rnd that there is a statutory basis for our jurisdiction in this
matter, Just as in the case where QFs rnay bring complaints aghinSt utilities
under PURPA (Afton l/lll, 107 ldaho at 781, 693 P.Zd at 427\, the
Commission is authorized under ldaho Code $ 61-621 to hear complaints
made by public utilities.T As the Idaho Supreme Court noted in Aftin l/\il,
Section 6l-612 "gives the Commission jurisdiction to hear complaints against
public utilities alleging violations of rules, regulations or any provision of law;
I.C. $ 61-502 gives the Commission jurisdiction to determine reasonable rates,
including rates collected under contracts; and I,C. $ 6l-503 gives the
Commission power to investigate a single contract. ." t07 Idaho a|784,
693 P.zd at 430. The PPAs at issue in this case directly aft'ect ldaho Power's
rates through the annual Power Cost Adjustment (PCA). Idaho Code $ 6l-
502, Kootenai,gg ldaho at 880, 591 P.2d at 127.8 The United States Supreme
Court also noted in FERC v. Mississippi, PURPA "and the [FERCI
irnplementing regulations simply require the [state regurlatory] authorities to
adjudicate disputes arising under [PURPA]. Dispute resolution of this kind is
the very t:tpe of activity cnstomarily engaged in by the Mississippi [Public
Utilitiesl Commission. . ," 456 U.S. 742,760, 102 S,Ct. 2126,2138 (1982)
7 ldah, Code $ 6l-621 statesl "Any public utility shalt have a right to complain on any grounds upon which
complaints are allowed to be filed by other parties. . . ,"
8 Thc Idaho Supreme Court in Afion l/lll observed: "Contracts enrered into by public utilities with [QFs] or
decisions by utilities not to contract with [QFs] have a very real effect on the rates paid bv consur-ners both at present
and in the future." I 07 ldaho at 789, 693 P .2d at 43 5 (emphasis added).
ORDER NO. 32780
(emphasis added); Afton l/il|, 107 Idaho at 789, 693 P.2d at 435 (ernphasis
original).
Order No. 32755 at 10-11 (bolding added, undetline original, footnote original). Having found
that it has jurisdiction to resolve the contract dispute, the Commission ordered New Energy to
file its answer by March 19, 2013,
NEW ENERGY'S MOTION FOR PERMISSIVE APPEAL
New Energy's Motion for leave to file a permissive appeal has four parts. First, it
requests that the Commission designate its wo Interlocutory Orders (Nos. 32692 and 32755) as
final Orders pursuant to Commission Rule 323.[03],e IDAPA 31.01.01.323.03. Motion at 2,
Second, New Energy seeks a Commission Order approving New Energy's Motion for a
Permissive Appeal under I.A.R. 12. Id. Third, New Energy seeks a stay of the current
proceeding pursuant to Rule "324 until the appeal to the Supreme Court is resolved." Id.
Finally, and in the alternative, New Energy seeks reconsideration of Order Nos. 32692 and
32755 pursuant to Commission Rule 331, IDAPA 31.01.01.331. Each component of New
Energy's Motion is setourand rOview-edin grEater detail beiow.
A. Designating the Commission's Interlocutory Orulers as Final Orders
New Energy first requests that the Commission designate its trvo interlocutory Orders
(Nos. 32692 and32755) as final Orders pursuant to Commission Rule 323.[03].r0 Rule 323.03
provides in pertinent part that: 'oWhenever a party believes that an order not designated as a final
order according to the tetms of these rules should be a final order, the party may petition the
Commission to designate the order as ftnal." IDAPA 31.01,01,323.03. In its Motion, New
Energy states that it "intends to appeal the [two] Orders in question and designation of those
Orders as final is appropriate." Motion at 2. New Energy insists that these two Orders "embrace
a controlling issue of law and are appealable pursuant to the appellate provisions of the IPUC
Rules of Procedure and the Idaho Code." Id.
Commission Findings: Idaho Code $ 6l-601 provides that all proceedings before the
Commission shall be governed by the Public Utilities Law and by the rules of practice and
procedure adopted by the Comrnission. Cornmission Rule 321 defines and designates certain
e New Energy actually cites to Rule 323.04 but quotes Rule 323.03. Motion at 2-3.
lo Supra, n.9.
ORDER NO. 32780
Commission Orders as interlocutory orders. Rule 321.01 defines interlocutory orders as those
orders "that do not finally decide all previously undecided issues presented in a proceeding,
except the Commission may by order deoide some of the issues presented in a proceeding and
provide in that order that its decision on those issues is final and subject to review by
reconsideration and appeal. . . ." IDAPA 31.01.01.321.01. Rule 321.02 specifically designates
certain orders as "always intellocutory [including]: orders initiating complaints or
investigations; orders joining, consolidatins or separating issues, proceedines or parties. . . ."
IDAPA 31.01.01 .321.02 (emphasis added).
Retuming to the first Order (32692), we tind that it is clearly an interlocutory order as
defined by our Rule 321. Order No. 32692 initiated the complaint and consolidated the two
complaints into a single proceeding. In addition, the ldaho Supreme Court has held that "[a]s a
general rule, final judgment is an order or judgment that ends the lawsuit, adjudicates the subject
matter of the controversy, and represents a final determination of the rights of the parties." /rz rc
Johnson, 153 Idaho 246,251 n.5, 280 P.3d 749,754 n.5 (Ct.App. 2012) quoting Camp v. East
Fork Ditch co.,I37 Idaho 850, 867,55 P.3d 3A4,i2l QDA?J. Oru fusrOrderneither ended rhe
case nor represented a final determination. It does not meet the definition of a final order under
our Procedural Rules or the guidelines issued by our appellate courts.
The Commission's second Order No. 32755 denying New Energy's Motion to
Dismiss also was not designated as a final Order pursuant to Rule 323, IDAPA 31.01.01.323.01.
However, it is not the "title" or desuiption of an order that is conholling but whether the order
represents a final decision of the whole controversy. lllillictms v. State Bd. of Real Estate
Appraisers, 149 Idaho 675, 677-78, 239 P.3d 780, 782-83 (2010). An order "which is
intermediate or incomplete and, while it settles some of the rights of the parties, leaves
something to be done in the adjudication of their substantive rights in the case is
interlocutory." Id. quoting Evans State Bank v. Skeen,30 Idaho 703, 705, 167 P. 1165, 166
(1917), The Commission exprcssly noted that OrderNo. 32755 did not address or resolve the
substantive issues in dispute. Order No. 32755 at 12. Although this second Order decided that
the Comrnission had jurisdiction to resolve ftis contract dispute, it did not end the lawsuit, did
not fully adjudicate the subject matter of the controversy. and did not represent a final
determination of the rights of the parties, Rule 321 .01 .
0RDERNO. 32780
Our Supreme Court held in Williarns that an "order simply denying a motion to
disrniss is not a {inal order." 149 Idaho at 678, 239 P.3d at 783. The Court went on to say that
an order denying a motion to dismiss'\ryould only be reviewable in connection with the petition
for judicial review of the final order ultimately entered." Id, Consequently, we conclude that the
Comnrission's Order Nos. 32692 and 32755 are not "final Orders" and we decline to designate
them as final Orders (thereby becoming subject to reconsideration), Idaho Code $$ 6l-626(l).
6l-627; Key'fransp, v, Trans Magic Airlines,96 Idaho I10, 524 P.2d 1338 (1974).
B, Motion for Approval of Permissive Appeal
New Energy next requests that the Commission approve the digesters' Motion tbr
permission to appeal from an interlocutory order pulsuant to Appellate Rule 12. New Energy
asserts that a permissive appeal from the Commission's interlocutory Orders is appropriate in
this circumstance "because the issues on appeal are threshold matters that will determine whether
these proceedings may be adjudicated before the Commission or in another forum, As such,
these are controlling issues of law reviewable by an appellate court preparatory to an
adjudication of the merils,". Motiou-a12.3. -
Appellate Rule l2(a) provides that the Supreme Court may grant permission to appeal
lrom an interlocutory order issued by the Commission "which is not otherwise appealable under
these rules, but which involves a controlling question of law as to which there is substantial
grounds for difference of opinion and which an immediate appeal from the order or decree may
materially advance the orderly resolution of the litigation." New Energy asserts that a
permissive appeal is warranted at this juncture in the case "given the disagreement between the
parties and the Commission as to which adjudicatory body has jurisdiction to hear [thisl
dispute." Motion at 6. lt further maintains that it would be "duplicitous and wasteful" for the
proceeding to continue until the question of jurisdiction has been resolved. Id. Consequently,
New Energy respectfully requests that the Commission grant permission for an interlocutory
appeal "to materially advance the orderly resolution of this dispute," ld. at7,
Commission Findings: Our Supreme Coutt has held that permission to appeal from
an interlocutory order should only be granted "in the most exceptional casos." Verska v, St.
Alphonnts Reg. Med, Center, 151 Idaho 889, 892, 256 P.3d 502, 505 (201 I ); Montalbano v. St.
,4lphonstts Reg, luled, Center.l5l Idaho 837 n.1,264 P,3d994 n.1 (2011); see also Aardemav.
ORDER NO. 32780
U.S. Dairy Systerns, 147 Idaho 785, 215 P.2d 505 (2009). ln Verska, the Court laid out six
factors to be considered when evaluating a request for permissive appeal.
It was the intent of I.A.R, 12 to provide an immediate appeal from an
interlocutory order if [there are: (l)] substantial legal issues of great public
interest[; (2)] legat questions of first impression[; (3)] the impact of an
immediate appeal upon the parties[; (4)] the effect of the delay on the
proceedings in the [agency] pending the appeal[; (5)] the likelihood or
possibility of a second appeal after judgment is finally entered by the
[agency; and (6)] the case workload of the appellate courts. No single factor
is controlling in the Court's decision of acceptance or rejection of an appeal
by certification, but the Court intends by Rule 12 to ueate an appeal in the
exceptional case and does not intend by the rule to broaden the appeals which
may be taken as a matter right under I,A.R. I l.
l5l Idaho at 892,265 P.3d at 505 quoting Budell v, Todd,l05 Idaho 2,4,665 P.2d 701,703
( I 983) (emphasis added).
Turning to the first two Verska factors set out above, we find that the question of
jurisdiction in this case is neither a legal question of first impression nor an issue of great public
interest. As the eommission noted in its Ol'cler, this C6urt has recognized an exception to the
general rule that allows the Comrnission to resolve contract disputes when both parties consent to
the Commission's jurisdiction. Order No. 32755 at 9- I I ; Afton IV, I I I ldaho at 929,729 P.2d at
404. Relying on $ l9,l of the Agreements, the Commission found that New Energy and Idaho
Power expressly agreed that "[a]ll disputes related to or arising under this Agreement . . . will be
submitted to the Commission for resolution." Order No. 32755 at 10. The Commission also
noted that New Energy's Notice of Force Majeure specifically references $ l4 of the PPA and
that $ 20,1 of the PPA provides that the Agreement "is subject to the jurisdiction of those
governmental agencies having control over either parly of this Agreement." ld. Section 19 also
states that the interpretation of terms contained in the Agreement - including what constitutes
force tnajeure under $ l4.l - will be submitted to the Commission for resolution. /d; PPA $$
14. I and 19. I . As far as this issue being "of great public interest," it involves two QF entities, a
utility, and the Commission. While this issue rnay be of great interest to the parties. it does not
rise to the level of "great public interest,"
Turning to the remaining f'actors, we find that granting a permissive appeal from the
interlocutory Order will certainly delay this proceeding and cause the parties to commit
additional time and resources. While a decision on the issue of the Commission's jurisdiction
oRDER NO. 32780 IO
will be definitive, a ruling in favor of the Commission may not eliminate the possibility of a
second appeal on the merits. Motion at 2. Although there is a difference of opinion whether the
Commission has jurisdiction to resolve this dispute, New Energy has not demonstrated the
"substantial grounds" regarding the dispute over jurisdiction or why the Commission's decision
is in error, I.A.R. l2(a), There is substantial and competent evidence to support the
Commission's findings as well as a statutory basis to hear the utility's complaint. Industrial
Cnstomers of ldaho Power v. Idaho PUC, 134 Idaho 285, 288, I P,3d 786, 789 (2000); Order
No. 32755 at 9-l l; Idaho Code $ 6l-621. In summary, after weighing the factors set out above,
we find that these lactors tip the scales in favor of disapproving New Energy's request for
granting a permissive appeal.
C. Reconsideration of Order No, 32755
If the Commission is not inclined to either designate its Orders as final or approve a
request tbr a permissive appeal, then New Energy moves in the altemative for the Commission to
reconsider its Order denying the Motion to Dismiss. Relying on our Procedural Rule 33 l, New
Energy requests that the Csmmission lreconsider'l its ruling on jurisdiction-for the-reasons set
lorth in New Energy's Motion and its reply to Idaho Power's answer, Motion at 8. The Motion
ftrrther states that "the fact that the New Energy parties agreed to boilerplate language offered by
Idaho Power as to [the] forum lor dispute resolution is not outcome determinative because [sic],
as set forth in detail in the New Energy pafiies' Motion to Dismiss." ^ld,
Commission Findings: For the reasons set out below, we decline to "reconsider"
Order No. 32755. Our Rule 331 provides that within 21 days of the "issuance of any final order,
any person interested in a final order may petition for reconsideration." TDAPA
31.01.01.331.01 (emphasis added). First, under the Commission's Rules of Procedure,
reconsideration under Rule 331 is only applicable to final Orders of the Commission. As the
Commission found above, Order No. 32755 is neither a "finaln' Order nor does it result in a final
determination of the rights of the parties, As our appellate courts have held, a final order is one
that resolves all issues, or the last umesolved issue. Johnson, I 53 Idaho at 25 l, 280 P,3d at 7 54:
Williams,l4g Idaho at677-78,239 P.3d at 782-83; Camp v. East Fork Ditch Co.,l37 ldaho at
867, 55 P,3d at 321.
Second, Rule 331.01 also requires that requests "for reconsideration rnust set fbrth
specifically the ground or grounds why the petitioner contends that the order or any issue
lt0RDER NO. 32780
decided in the order is unreasonable, unlawful, erroneous, or not in conformity with the law, and
a statement of the nature and quantity of evidence or argument the petitioner will offer if
reconsiderationisgranted." IDAPA3l.0l.0l.33l.0l. NewEnergydoesnotspecificallypointto
any particular finding or analysis contained in the Commission's Order that is in error. Order
No. 32755 set forth several reasons supporting the Commission's jurisdiction but New Energy
does not indicate which speoific finding is in error. The Motion merely asks the Comrnission to
reconsider its Order based upon "the reasons set forth in the New Energy parties' motion to
dismiss and reply" to Idaho Power. Motion at 8. Despite New Energy's concession that the
dispute resolution language contained in Section l9.l allows the Commission to resolve contact
disputes, New Energy does not elaborate why this "is not outcome determinative,"
Third, and more importantly, New Energy's request is more properly viewed as a
motion to "review" interlocutory Order No. 32755 pursuant to Rule 322, "t\e distinction here is
important because "reconsideration" is only available from final orders and is a statutory
prerequisite for parties seeking to appeal. Idaho Code $ 6l-626; compare Rule 322 wilft Rule
331, IDAPA 31.01.01-322 and.3ll. -As the Supreme Court observed in Washingtoru-Water-
Power Co. v. Kootenai Environmental Alliance, the purpose of "reconsideration" under ldaho
Code $ 6l-626 is "to afford an opportunity for the parties to bring to the Cornmission's attention
in an orderly manner any question [previously] determined in the [proceeding] and thereby
afford the Commission an opportunity to rectify any mistake made by it before" an appeal. 99
ldaho 875, 879, 591 P.2d 122,126 (1979),
In essence, reconsideration is an administrative remedy that must be exhausted before
seeking judicial review. Rule 331.01, IDAPA 31.01.01.331 .01; ldaho Code $$ 6l-6?6, 6l-627;
Eagle Water Co, y. Idaho PUC,l30 Idaho 314, 316, 940 P.zd 1133, I135 (1997). "Final orders
of the Commission should ordinarily be challenged either by petition to the Commission for
[reconsideration] or by appeal to this Court as provided by I.C. $$ 6l -626 and -627; Idaho Const.
Arl. V, $ 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-ldaho
Sugar Co, v. Intermountain Gas Co.. 100 ldaho 368,373-74,597 P.Zd 1058, 1063-64 (1979)
(emphasis added), Simply put, reconsideration is not available with the issuance of every
Commission Order.
ORDER NO. 32780 t2
Finally, we find that New Energy's reliance on the Afton cases is misplaced because
the Agreement and facts in the Afion cases are distinguishable from the Agreements and facts in
this case. ln Afton I/III, Afton filed a complaint with the Commission requesting that the
Commission order Idaho Power to enter into a PURPA contract with Afton. tdaho Power
objected to the Commission's jurisdiction (authority) to compel the utility to enter into a PURPA
contract with Afton. Afton Energt v. Idaho Power Co.,107 Idaho 781,782,693 P.zd 427,428
(1984) (Afton I/IU),tt Ln Alton IV,Idaha Power petitioned the Commission to interpret the
underlying contract but the Commission declirred finding that the proper forurn was district
court. I 1 t ldaho at 928, 729 P,zd at 403. The Court stated in Afton IV that o'ldaho Power and
Afton have not agreed to allow the Commission to interpret the contract." Id. at929,729 P.2d at
404.
The PURPA Agreemeni in AJion l/IIl is markedly ditferent than the Agreements in
this proceeding. The A.fton Agreement Article XIII (Legal Dispute) states that there is "a bona
fide legal dispute , . . belween [Afton] and Idaho [Power] as to the authority of the Idaho Public
Utilities Qsmmi5sion to order Idaho[Power] to enter into contracts containing rates, terms and
conditions with which Idaho [Power] does not concur." A[tonPPA, Art. XIII dated Aug. ll,
1982. That language stands in stark contrast to the dispute resolution language in the current
PPAs which provides that "all disputes telated to or arising under this Agreement, including, but
not limited to, interpretation of the terms and conditions of this Agreement will be submitted to
the Commission for resolution." Order No. 32755 at l0 citing PPA $ 19.1. Thus, the parties in
the present Agreements have expressly agreed to the Commission's jurisdiction, while each parly
in the Afton cases and Agreement did not consent to submitting the dispute to the Commission's
.iurisdiction.
Having reviewed our interlocutory Order No, 32755, we deny New Energy's
alternative request for reconsideration for the reasons set out above.
tf The lineage of the Afton cases is sometimes confusing. Alton I was issued in January 1984, Idaho Power
subsequently petitioned the Court for rehearing and the case was re-argued, In July 1984. the Court issued a
subsequent opinion (Afton tI1 at which time Afton petitioned for rehearing. Finally, in December 1984, the Court
withdrew its A,fton // opinion and issued a third opinion (A{ton lll) that modified the Court's Afton I opinion.
Consequently, the fust opinion is often cited as "Afton l/lll." Order No. 32755 atn.6 citing Afion IV,l I I Idaho 927
n,|,729 P.2d 402 n.l.
t3ORDER NO. 32780
D, Requestfor Stoy
As part of its Motion, New Energy requests that the Commission stay the proceedings
while the digesters pursue an interlocutory appeal under I.A.R. 12, Motion at3,7. New Energy
maintains that a stay is appropriate so that'othe threshold issue ofjtuisdiction is resolved" and a
stay will preserue resources. Id. al7, Rule 324 provides that the Commission may "stay any
order. whether interlocutory or final." IDAPA 31.01,01,324.
Commission Findings: While the Commission does not approve New Energy's
request to seek a permissive appeal, we find there is merit in granting a stay, Appellate Rule
lz(c)(l) provides that any party may appeal an agency's "order approving or disapproving a
motion for permission to appeal" within l4 days of the agency's order. The Commission flrnds
that it is reasonable to stay our proceeding for l5 days to see whether New Energy files a motion
for a permissive appeal with the Court. If New Energy tiles a Rule 12 motion with the Court
requesting acceptance of an appeal by permission, then the Commission will continue its stay of
this proceeding until such titne as the Court has ruled on the Rule l2 motion.
OR_DER
IT IS HEREBY ORDERED that New Energy's Motion for Permissive Appeal is
granted in part and denied in part. More specifically, New Energy's request that the Commission
designate its two interlocutory Order Nos, 32692 and 32755 as final Orders is denied.
IT IS FURTHER ORDERED that New Energy's motion that the Commission
approve a permissive appeal from the two interlocutory Orders is denied.
IT IS FURTHER ORDERED that New Energy's request that the Commission
reconsider its Order No. 32755 regarding the Commission's finding that it has jurisdiction to
resolve the contract dispute is denied,
lT IS FURTHER ORDERED that New Energy's request for a stay of this proceeding
is initially granted for 15 days from the date of this Order. If New Energy does not file an
Appellate Rule l2 motion with the Supreme Court within 14 days fronr the service date of this
Order, the stay will be lifted and New Energy is directed to file an answer to ldaho Power's
complaints within 28 days tlom the service date of this Order. If Nelv Energy does file a timely
Rule 12 motion with the Supreme Court seeking a permissive appeal from interlocutory Order
No. 32755, the stay shall be continued until such time as the Court rules on New Energy's
motion.
ORDER NO. 32780 t4
DONE by Order of the ldaho Public Utilities Commission at Boise, Idaho this 'f
fh
day of April 2013,
MARSHA H. SMITH, COMMISSTONER
O: IPC-E- I 2-25-lPC-E-l 2.26_dh4
oRDER NO. 32780
EXHIBIT 2
Office of the Seuetary
Service Date
March 5,2013
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE COMPLAINT
AND PETITION OF IDAHO POWER
COMPANY FOR A DECLARATORY
ORDER REGARDING THE FIRM ENERGY
SALES AGREEMENT AND GENERATOR
INTERCONNECTION AGREEMENT WITH
NEW ENERGY TWO, LLC.
IN THE MATTER OF THE COMPLAINT
AND PETITION OF IDAHO POWER
COMPANY FOR A DECLARATORY
ORDER REGARDING THE FIRM ENERGY
SALES AGREEMENT AND GENERATOR
INTERCONNECTION AGREEMENT WITH
NEW ENERGY THREE, LLC.
CASE NO. IPC-E-12-25
CASE NO. IPC-8.12.26
ORDER NO. 32755
On November 9 and 21, zUl2,Idaho Power Company filed two separate "Complaints
and Petitions for Declaratory Order" regarding two Power Purchase Agreements (PPAs) between
itself and New Energy Two and New Energy Three, respectively. In the 12-25 case, Idaho
Power alleged that New Energy Two's proposed anaerobic digester at Swager Farms failed to
meet its scheduled commercial operation date of October 1,2012. In the 12-26 case, Idaho
Power alleged that New Energy Three's proposed anaerobic digester at the Double B Dairy did
not meet its scheduled operation date of December l, 2012. Idaho Power asserted in both
complaints that the qualifying facilities (QFs) have "failed to take the necessary steps required to
bring the facilit[ies] online and operational by the dates required in [their power purchase
agreements (PPAs)l including, . . . failing to take steps required to secure the interconnection of
[their] proposed facilit[ies] to Idaho Power's system." Complaints at 3.
On December 4, 2012, lhe Commission issued a Notice of the Complaints and
Petitions and ordered that the two cases be consolidated into a single proceeding. Order No.
32692. The Commission directed the Commission Secretary to serve copies of the complaints
on the respondents. On December 27, 2012, New Energy Two and New Energy Three
(collectively "New Energy") filed a "Motion to Dismiss for Lack of Subject Matter Jurisdiction."
Idaho Power filed an answer to the Motion, and New Energy filed a reply to the answer. Rules
56-57. As outlined below. the Commission denies the Motion to Dismiss.
ORDER NO. 32755
BACKGROUND
A. Interconnection and the PPAs
The background for these cases is taken primarily from the two complaints and
summarized below. In October 2009, New Energy initiated discussions with Idaho Power
begin the interconnection process for two anaerobic digester projects to be located at Swager
Farms and Double B Dairy.r Under the federal Public Utility Regulatory Policies Act (PURPA),
QFs are obligated to pay the costs of constructing the necessary interconnection facilities (or
transmission upgrades) between the QF project and the purchasing utility's system. l8 C.F.R. $
292.308.2
Following initial discussions, New Energy submitted a small generator
interconnection request to Idaho Power for each project. Both QF projects executed
interconnection Facility Study Agreements with Idaho Power in late October 2009. Order No.
32692 at 2, Idaho Power subsequently prepared and submitted separate Study Reports for each
project to New Energy.
In May 2010, Idaho Power and New Energy entered into two separate PPAs for each
of the biogas projects.3 Initially each biogas project was projected to sell L2 MW of power to
the utility. The PPAs contained avoided cost rates which were in effect prior to the issuance of
Order No. 31025 (March 16, 2010), and contained l5-year operating terms. The scheduled
commercial operation date (COD) for Swager Farms was October l, 2A12, and the COD for
Double B was December l,2Al2. On July 1,2010, the Commission approved the Swager Farms
and the Double B Dairy PPAs in Order Nos. 32026 and 32027, respectively.
About the time Idaho Power submitted the PPAs for approval, Idaho Power and New
Energy continued their discussions regarding interconnection. In January 201l, New Energy
requested that the interconnection capacity for each of its projects be increased from 1.2 MW to
I Double B subsequently authorized New Energy Three to act on its behalf in negotiating with Idaho Power.
2 Typically the interconnection process has three primary steps. First, a QF submits a small generator
interconnection (GI) request to the utility and the parties execute an lnterconnection Facilities Study Agreement.
Second, once the Study Agreement is executed, the utility prepares a CI "Study Report" outlining the necessary
construction for interconnection. Finally, if the interconnection Study Report (including proposed routing, estimated
costs, and a construction schedule) is acceptable to the QF, then the parties execute a "Generator Interconnection
Agreement" (CIA) and the QF pays the utiliry so the utility can begin construction of the interconnection facilities.
'The interconnection process and the GIA are separate and distinct from the PPA obligations to sell and purchase
QF power. In other words, the QF transaction requires the construction of both the interconnection facilities and thc
QF's generating plant.
ls
to
ORDER NO. 3275s
2.0 MW. The parties subsequently executed new Facility Study Agreements and tdaho Power
then prepared a new Facility Study Report for each project. Drafts of the two Study Reports
were provided to New Energy. In late April 2011, Idaho Power issued its final Facility Study
Reports estimating that constructing the transmission interconnection for Swager Farms' 2 MW
interconnection would cost approximately $1.71 million.a Idaho Power's final Facility Study
Report for Double B's 2.0 MW capacity estimated that interconnection would cost
approximately $376,000. In May 2011, New Energy advised Idaho Power that Exergy
Development would be assisting New Energy with its two QF projects. Order No. 32692 at 3.
The parties then had protracted discussions and communications leading up to Idaho Power
preparing the draft "Generation [nterconnection Agreements" (GIAs) for each QF.
On May 9,2012,ldaho Power sent a draft GIA to New Energy/Exergy for the Double
B project and advised it that failure to submit all of the requested items and the executed GIA
"will cause the Cenerator Interconnection request to have been deemed withdrawn." Double B
Complaint at'!f 49. On June 19,2012, Idaho Power sent Double B a final GIA to be executed
and returned to Idaho Power no later than July 20, or "your Generation Interconnection
Application will be deemed withdrawn." Id. at fl 53. Idaho Power insisted that the GIA was not
returned and that Idaho Power subsequently issued a deficiency notice that the GIA has been
deemed withdrawn and that the project has been removed from Idaho Power's interconnection
queue. On August 28, 2012,Idaho Power refunded Exergy's interconnection deposit for the
Double B project. Id. atl54-55.
On March 22,2012,ldaho Power sent the draft GIA to Swager Farms. Swager Farms
at fl 58. In April 2012, Exergy asked that Idaho Power "revisit" the interconnection at a lower
capacity of 0.8 MW. Id. at I 59. The parties executed a "Re-Study" Feasibility Study
Agreement which estimated an interconnection cost for the reduced capacity of S225,000 . Id. at
J[ 61. On September 14,2012, ldaho Power sent the final GIA to Swager Farms at the lower 0.8
MW interconnection. Id. at\ 66. The cover letter for the Swager Farms GIA stated that [daho
Power "must have the executed GIA and funding no later than October 1.2012, in order to
complete construction by this date." Id. (emphasis original). In an e-mail dated September 20,
2012,Idaho Power warned Exergy that if the GIA and the required funding is not received by
a The final Study Report also noted that interconnection costs for the smaller 1.2 MW interconnection would cost
approximately $575,000.
ORDERNO.32755
October 1,2012, "it will not be possible to complete the required interconnection work before
the end of the year 2012." Id, at'][ 68. ldaho Power alleged that Swager Farms did not execute
the GIA and did not pay for the interconnection.
B, Force Majeure
On September 28, 2012, Swager Farms and Double B provided a joint 'Notice of
Force Majeure" to Idaho Power. In accordance with Section l4 of their respective PPAs, the QF
projects notified the utility that they could not perform under their respective Agreements
because of "the occurrence of a Force Majeure event." Swager Complaint at Tab 56; Double B
Complaint at Tab 36. More specifically, the QFs alleged that the Commission's generic PURPA
investigation (GNR-E-l l-03) and other "pending proceedings" caused the force majeure event.
They insisted that the Commission's investigation regarding the ownership of renewable energy
credits (RECs) and the issue of "curtailment" caused lenders to be "unwilling to lend in Idaho
pending the outcome of these proceedings." Id. Thus, with "no financing available, . . . it [is]
impossible for [the QFs] to perform [their] obligation" under the PPAs. Id. at\ 4.
THE COMPLAINTS AND PETITIONS
In its Complaints and Petitions, Idaho Power alleged that Swager Farms and Double
B failed to meet their obligations under their PPAs of providing power to ldaho Power by
October 1,2012, and December l, 2012, respectively, Swager Complaint at f[ 2, Double B
Complaint at I2. Idaho Power maintained that the Commission has the authority to issue
declaratory orders pursuant to the Uniform Declaratory Judgrnents Act, citing ldaho Code $ l0-
1203. Swager at !f 76, Double B at fl 63 citing Utqh Power & Light Co. v. Idaho PUC, I 12 ldaho
I 0, I 2, 730 P.2d 930, 932 (l 987).
Idaho Power maintained that the Commission has jurisdiction over this matter
because: (l) the parties have agreed to submit disputes under the PPA to the Commission; (2) the
dispute requires an interpretation of the PPAs approved by the Commission; (3) the Idaho
Supreme Court allows the Commission to interpret contracts where parties agree to allow the
PUC to settle a dispute; (4) the Commission has authority over the generator interconnection
process; and (5) the allegations of force majeure pertain to Commission proceedings. Swager at
fl''ll 76, 89, Double B at !}u 63,75. Idaho Power asserted that it and New Energy "agreed to the
Commission's jurisdiction regarding any and all disputes under the [PPA]." Swager at I79,
ORDER NO. 32755
Double B at fl 65, Idaho Power relies on Section I 9. I of the PPAs executed by both Idaho Power
and the QFs which provides:
Disputes - All disputes relatins to or arising under this Asreement, including,
but not limited to, the interpretation of the terms and conditions of this
Agreement, will be submitted to the Commission for resolution.
/d (Swager & Double B Tab I at p. 24) (emphasis added). Idaho Power asserted that the parties'
agreement in Section l9.l above - to submit all disputes involving contract interpretation to the
Commission - falls within an exception to the "general rule" that generally the interpretation of
contracts is a matter for the courts. Swager al\77, Double B at !| 63, citing Afton Energt v.
Idaho Power Co. ("Afton IV"), I I I Idaho 925,929,729 P.2d 400, 404 (1986); Bunker Hill Co.
v. Washington Water Power Co. ("Bunker Hill I"),98 ldaho 249,252,561 P.2d 391,394
(te7T.s
Given that the QF projects have failed to meet their scheduled operation dates, ldaho
Power claimed that they are in material breach of their respective PPAs. Idaho Power also points
to Section 5.4 of the respective PPAs that upon a material breach by New Energy, Idaho Power
may terminate the PPAs at any time. Swager at !f 86, Double B at I 72. Consequently, Idaho
Power requested that the Commission issue an Order declaring that Idaho Power may terminate
the PPAs due to the breach and recover delay damages. Id.
In summary, the utility requested that the Commission find and declare:
L That the Commission has jurisdiction "over the interpretation and
enforcement of the [PPAs] and the GIA[s]";
2. That New Energy/Exergy's "claim of force majeure does not . . . excuse
[the QFs] failure to meet the amended Scheduled Operation Date for the
IPPAs]";
3. That New Energy/Exergy have failed to place Swager Farms and Double
B in service by their respective scheduled commercial operation dates of
October 1,2012, and December 1,2012;
4. That Idaho Power may terminate the PPAs if Swager Farms and Double B
failed to cure their defaults under their respective PPAs by December 30,
2012, and March 1,2013;
5. That under the terms of the PPAs ldaho Power is entitled to an award of
liquidated damages; and
t ldaho Power also noted that New Energy's force majeure notice specifically refers to Section I 9. I of the PPAs.
ORDER NO. 32755
6. Award any further relief to which Idaho Power is entitled.
Swager Farms Complaint at 37; Double B Complaint at 27-28.
NEW ENERGY'S MOTION TO DISMISS
On December 27,2012, New Energy filed a timely "Motion to Dismiss for Lack of
Subject Matter Jurisdiction." New Energy advanced two primary arguments. First, New Energy
maintained that the Commission does not possess the necessary jurisdiction to interpret and/or
enforce contracts. In particular, New Energy noted the Idaho Supreme Court has stated the
"general rule" is that the
construction and enforcement of contract rights is a matter that lies in the
jurisdiction of the courts and not the public utilities commission. This is true
notwithstanding that the parties are public utilities or that the subject matter of
the contract coincides generally with the expertise of the commission. If the
matter is a contractual dispute, it should be heard by the courts.
Lemhi Telephone Co. v. Mountain States Tel. & Tel. Co., 98 Idaho 692, 696, 571 P.2d 7 53, 7 57
(1977); Bunker Hill Co. v. l(ashington ll'ater Power Co. (" Bunker Hill il "), 101 [daho 493, 494,
616 P.2d 272, 27 3 ( l 980).
Although New Energy acknowledged that the ldaho Supreme Court has held
"PURPA was intended to confer upon state regulatory commissions responsibilities not
conferred under state law," it argued that "PURPA provides no independent basis of authority to
interpret executed QF contracts." Motion at 7-8 quoting Afton Energt v. Idaho Power Co.
("Afton l/lll"), 107 Idaho 781,785,693 P.2d 427,431 (1984). Consequently, New Energy
asserted that the interpretation of the PPAs is a matter governed by state contract law "and each
particular state's laws govern the proper forum for such contract disputes. In Idaho, the
Commission simply does not have ongoing jurisdiction over any contract disputes." Id. at 8.
New Energy also conceded that the Supreme Court recognizes exceptions to its
general rule that the Commission does not have jurisdiction over contract disputes. Motion at 9-
10. In Afton IV, the Court reiterated the exception to the general rule is that the Commission may
"interpret an imprecise contract because 'the parties agreed to let the PUC settle this dispute and
. . . there is substantial evidence in the record to support the Commission's decision."' I I I Idaho
at 929,729 P.2d at 404, citing Bunker Hill 1,98 Idaho at249, 561 P.2d at 391.u Ho*euer, New
u The lineage of the Afton cases is sometimes confusing. Afton I
subsequently petitioned for rehearing and the case was re-argued.
was issued in January 1984. ldaho Power
In July 1984, the Court issued a subsequenl
ORDER NO, 32755
Energy noted the Afton IV Court found that the QF contract "between Afton and Idaho Power
does not fall within any of the exceptions [to the general rule]. ldaho Power and Afton have not
agreed to allow the Commission to interpret the contract." ,Id.
Second, New Energy asserted it has not consented to the Commission's jurisdiction to
interpret and enforce the two PPAs. In particular, New Energy insisted the dispute resolution
provision in each PPA does not confer jurisdiction upon the Commission. Although Section
19.17 of each PPA requires that all disputes be submitted to the Commission, New Energy
argued that the Commission "has consistently disavowed the ability of the parties to unilaterally
confer jurisdiction" on the Commission. Motion at 10. More specifically, New Energy relies on
two prior Commission Orders cautioning PURPA parties "that jurisdiction may not be conferred
upon the Commission by contractual stipulation." Motion at l0-l l, citing Order Nos. 21359 at
l;24674 al 4. Consequently, New Energy urged the Commission to decline jurisdiction and
grant its Motion to Dismiss Idaho Power's Complaints and Petitions for Declaratory Order.
Motion at 12.
IDAHO POWER RESPONSB
On January 10, 2013, Idaho Power filed a response to the Motion to Dismiss.
Although Idaho Power conceded that the "general rule" normally requires that the interpretation
and enforcement of a contract is a matter for the courts, it asserted that the Court has recognized
exceptions to the general rule. More specifically, Idaho Power maintained that the Supreme
Court in Afton IV allowed the Commission to interpret a contract because "the parties have
agreed to submit a dispute involving contract interpretation to the Commission." Response at 5
citing lll Idaho at929,729P.2dat404;Bunker Hill L98 ldaho at252,561 P.2d at394.
Idaho Power also pointed out that the Court created another exception to the general
rule in McNeal v. Idaho PUC, 142 Idaho 685, 132 P.3d 442 (2006). In McNeal, the Idaho
Supreme Court found that the Commission had authority to interpret an interconnection
agreement between two telecommunications carriers. After citing the general rule that contract
interpretation and enforcement are normally matters for the courts, the Idaho Supreme Court held
that the Commission does have authority to interpret and enforce interconnection agreements
opinion (Afton lt) at which time Afton petitioned for rehearing. Finally, in December 1984, the Court withdrew
Afton II and issued a third opinion (Afton llI)that modified the Court's Afton I opinion. Consequently, the opinion
is often cited as "Afton l/lll." See Afton IV, I ll ldaho 927 n.|,729 P.2d 402 n.l.
7 Supra,p,5.
ORDER NO. 327s5
between telecommunications carriers. Response al 4 citing McNeal, 142 Idaho at 689, 132 P.3d
at 446. Like the Commission's authority under the federal Telecommunications Act to interpret
interconnection agreements, Idaho Power insisted that PURPA grants the Commission "the
jurisdiction and authority to interpret the force majeure clause in the [PPAs]." Response at 5.
Idaho Power also asserted New Energy had agreed in the PPAs to submit all contract
disputes to the Commission. In particular, the utility reiterated that Section l9.l of the PPAs
provides that "all disputes relating to or arising under this Agreement, including, but not limited
to, the interpretation of the terms and conditions of this Agreement, will be submitted to the
Commission for resolution." Id. Idaho Power also insisted that Section 7.7 of each PPA
provides that the Commission will have continuing jurisdiction over the Agreemenl. Id.
Idaho Power next argued that there is a statutory basis for the Commission's
jurisdiction over this dispute. In particular, Idaho Power insisted that ldaho Code $ 6l-501
provides the Commission with the authority to supervise utilities and to do "all things necessary
to carry out the spirit and intenl" of the Public Utilities Law. In addition, Idaho Code $$ 6l-502
and 6l-503 provides the Commission with jurisdiction over contracts affecting rates and the
power to investigate a single contract, respectively. "The [PPAs] at issue are utility contracts
which affect rates as defined under $ 6l -502 and which the Commission has specific authority to
investigate under $ 6l -503." Response at 6-7 .
Finally, Idaho Power asserted "PURPA itself grants the Commission jurisdiction. . .
." Id. at 7. Idaho Power declared that our Supreme Court has stated that "it is clear that PURPA
was intended to confer upon state regulatory commissions responsibilities not conferred under
state law." Id. quoting Afton I/III, 107 Idaho at 784-85, 693 P.zd at 430-31. Consequently,
Idaho Power insisted that "the present dispute between a utility and [New Energy] over a
PURPA matter is seemingly precisely what FERC envisioned when it promulgated l8 C.F.R. $
292.401(a);' Id. Combining the lbderal authority with the specific state statutory authority
"creates an explicit grant of authority to the Commission to interpret a PURPA contract." Id. at
8.
NEW ENERGY REPLY
On January 16, 2013, New Energy filed a reply to Idaho Power's response. New
Energy takes issue with Idaho Power's reliance on the exceptions to the general rule set out in
the McNeal case. More specifically, New Energy distinguishes the McNeal case which is
ORDER NO. 32755
premised upon the federal Telecommunications Act. ln McNeal, the Supreme Court cited
Southwestern Bell Telephone Co. v. PUC of Texas, 208 F.3d 475 $th Cir. 2000), for the
proposition that the Telecommunications Act grants state commissions the authority to interpret
and enforce the provisions of interconnection agreements that state commissions have approved.
New Energy Reply at 2. However, New Energy asserts that Idaho Power does not cite to any
FERC or PURPA case law allowing state commissions to decide and enforce disputes under
PURPA. New Energy argues that Idaho Power has not cited to any PURPA case "because there
are none." Reply at 3.
While it recognizes that the PPAs contain language "to the effect that disputes would
be submitted to the Commission for resolution," New Energy reiterates that the Commission's
prior Orders have declined to exert jurisdiction. Id. at 6. Consequently, New Energy urges the
Commission to grant its Motion to Dismiss and "defer the common breach of contract claims to
the proper forum for resolution." Id. at7.
COMMISSION FINDINGS AND DISCUSSTON
In its Motion, New Energy asked us to dismiss Idaho Power's Complaints and
Petitions for Declaratory Order arguing that the Commission does not have the jurisdiction to
resolve disputes regarding PPAs. It is well settled that the Commission exercises limited
jurisdiction and nothing is presumed in favor of its jurisdiction. Utah Power & Light Co. v.
Idaho PUC, lA7 Idaho 47,52,685 P.2d 276,281 (1984). The Commission may determine
whether it possesses jurisdiction over a particular matter. Id. However, once jurisdiction is
clear, the Commission is allowed all powers necessary to enable it to carry out its
responsibilities. Washington Water Power Co. v Kootenai Environmentol Alliance, 99 Idaho
875,879,591 P.2d 122,126 (1979).
Both parties recognize and we agree that the general rule is that "[gJenerally, the
construction and enforcement of contract rights is a matter which lies in the jurisdiction of the
courts and not in the public utilities commission. . . , If the matter is a contractual dispute, it
shoufd be heard by the courts." Afton IV, ll I Idaho at 928,729 P.2d at 403 (emphasis added);
Lemhi Telephone,98 Idaho 692,696,571 P.zd753,757 (1977); McNeal, 142 Idaho 685, 132
P.3d 442 (2006). However, the Supreme "Court has recognized exceptions to this [general]
ruIe." Afton IV, I I I Idaho at 924, 729 P.2d at 404. ln McNeal, the Court explained that it has
"been careful to use words such as 'generally' and 'normally' [when stating the general rule] and
ORDER NO. 3275s
also, to provide for exceptions to the norm." 142 Idaho at 689, 132 P.3d at 446 (emphasis
added). More specifically, the Court held that one exception to the general rule is where "the
parties agreed to let the PUC settle th[e] dispute. . . ." A.fton IV,lll Idaho at929,729P.2dat
404 quoting Bunker Hill 1,98 ldaho at242,561 P.2d at394. New Energy declared that it has not
consented to allowing the Commission to resolve this contract dispute, while Idaho Power
believes that the exception to the general rule is applicable in this instance.
Based upon our review of the pleadings, the underlying record, and the case law, we
find that the "consent" exception (where parties agree to let the Commission settle a contractual
dispute) is controlling in this instance. More specifically, we find that the QFs and [daho Power
have expressly agreed in their PPAs to submit disputes arising under their respective PPAs to the
Commission for resolution. As pointed out by Idaho Power, each PPA contains a provision
granting the Commission jurisdiction over this matter. Section l9.l of each PPA provides:
Disputes - All disputes related to or arisine under this Agreement, including,
but not limited to, the interpretation of the terms and conditions of this
Agreement, will be submitted to the Commission for resolution.
SwageratTab l, Double B at Tab I (emphasis added). Unlike the parties inAfton 14 we find
that New Energy and Idaho Power have expressly agreed that "[a]ll disputes related to or arising
under this Agreement . . . will be submitted to the Commission for resolution." PPA at $ 19.1.
New Energy Two and New Energy Three signed their respective PPAs containing Section 19.1
on May 21,2010. We further find this provision of the PPA to be clear and unambiguous. "An
unambiguous contract will be given its plain meaning." Shawver v. Huckleberuy Estates, 140
ldaho 345, 361, 93 P.3d 685,692 (2004). In this case, the dispute between the parties is "related
to or arising under this Agreement." In addition, New Energy's force majeure notice specifically
refers to Section 14 of the PPAs - clearly relating to the PPAs. Swager at Tab 56, Double B at
Tab 36. Moreover, each PPA provides in Section 20.1 that "This Agreement is subject to the
jurisdiction of those governmental agencies having control over either party of this Agreement."
Swager at Tab l, Double B at Tab l.
We further find that there is a statutory basis for our jurisdiction in this matter. Just
as in the case where QFs may bring complaints against utilities under PURPA (Afton l/il|,107
Idaho at 781,693 P.2d at 427),the Commission is authorized under ldaho Code g 6l-621to hear
oRDER NO. 327s5 l0
complaints made by public utilities.s As the Idaho Supreme Court noted in Afton t/lil, Section
6l-612 "gives the Commission jurisdiction to hear complaints against public utilities alleging
violations of rules, regulations or any provision of laws; I.C. $ 6l-502 gives the Commission
jurisdiction to determine reasonable rates, including rates collected under contracts; and LC. $
6l-503 givesthe Commission powerto investigate asingle contract, . . ." l0T Idaho at784,693
P.2d at 430. The PPAs at issue in this case directly affect Idaho Power's rates through the annual
Power Cost Adjustment (PCA). Idaho Code $ 6l-502, Kootenai,99 Idaho at 880, 591 P.2d at
127,e The United States Supreme Court also noted in FERC v. Mississippi, PURPA "and the
[FERC] implementing regulations simply require the [state regulatory] authorities to adjudicate
disputes arising under [PURPA]. Dispute resolution of this kind is the verv tvpe o-f activity
customarily engaged in by the Mississippi [Public Utilities] Commission. . . ." 456U.5.742,
760, 102 S.Ct. 2126, 2138 (1982) (emphasis added); Afton l/lil, 107 Idaho at 789, 693 P.2d at
435 (emphasis original).
New Energy also relies on two prior Orders of this Commission to support its
argument that the Commission does not have jurisdiction in this matter. In its reply, New Energy
concedes that "While the instant parties do have language in their Agreements to the effect that
disputes would be submitted to the Commission for resolution, the Commission has already
disavowed the ability of the parties to unilaterally confer jurisdiction on [the Commission]."
Reply at 6. In particular, New Energy refers to a 1993 Order where the Commission cautioned
contracting parties regarding the Commission's jurisdiction. Order No.24674 in Case No. IPC-
E-92-32. In that case, the parties (Idaho Power and Glenns Ferry Cogeneration) had executed a
PPA that contained identical language to the dispute resolution provision at issue in this case. In
reviewing the language in the Glenns Ferry PPA, the Commission
reminds the parties that jurisdiction may not be conferred on the Commission
by contractual stipulation. The authority and jurisdiction of the Commission
is restricted to that expressly and by necessary implication conferred upon it
by enabling statutes. The nature and extent of the Commission jurisdiction to
resolve actual disputes will be determined by the Commission on an
" Idaho Code $ 6l-62 I states: "Any public utility shall have a right to complain on any grounds upon which
complaints are allowed to be filed by other parties. . . ."
' The ldaho Supreme Court in Afton t/Ut observed: "Contracts entered into by public utilities with [eFs] or
decisions by utilities not to conffact with [QFs] have a very real effect on the rates paid by consumers both at present
and in the future." I 07 Idaho at 789, 693 P .2d at 43 5 (emphasis added).
ORDERNO. 3275s
individual case-by-case basis notwithstanding [the dispute resolution
provision] of the Agreement.
Order No. 24674 at 4 (emphasis added). Despite expressing concern about the language, the
Commission approved the Glenns Ferry contract including the dispute resolution provision. Id.
We find New Energy's reliance on this prior case is misplaced. As noted above, the
Commission stated that the nature and extent of our jurisdiction "will be determined . . . on an
individual case-by-case basis." In the Glenns Ferry case, the Commission did not foreclose
exercising jurisdiction; it stated that the scope of its jurisdiction "to resolve actual disputes will
be determined . . . on an individual case-by-case basis." For the reasons outlined above, the
Commission finds in this particular case that it has jurisdiction to resolve this contract dispute
pursuant to the consent exception to the "general rule."
ln addition and without addressing the merits of the case, the Commission also notes
that New Energy alleges that the occurrence of the force majeure event concerned this
Commission's generic PURPA investigation and possibly other PURPA proceedings. Because
New Energy's force majeure allegation arises from Commission proceedings, we find that the
Commission is well-suited to review these allegations. Finally, we note that because "regulatory
bodies perform legislative as well as judicial functions in their proceedings, they are not so
rigorously bound by the doctrine of stare decisis that they must decide all future cases in the
same way as they have decided similar cases in the past." McNeol v. Idaho PUC, 142ldaho at
690,132 P.3d at 447;Lltashington Wqter Power Co. v. Idoho PUC,l01 Idaho 567,579,617 P.2d
t242,1254 (1980).
In summary, the Commission finds in this particular case that it has jurisdiction to
resolve the contract dispute under the consent exception to the general rule. Having found
jurisdiction in this matter, New Energy Two and New Energy Three should file their
consolidated answer (if any) to the Complaints and Petitions within l4 days of the service date of
this Order.
ORDBR
IT IS HEREBY ORDERED that New Energy Two and New Energy Three's Motion
to Dismiss for Lack of Subject Matter Jurisdiction is denied.
IT IS FURTHER ORDERED that New Energy Two and New Energy Three file their
answer (if any) to the Complaints and Petitions within l4 days of the service date of this Order.
0RDERNO.32755 t2
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 4'rL
day of March 2013.
ATTEST:
O:IPC-E-12-25 IPC-E-12-26 dh3
PAUL KJE
ISSIONER
MARSHA H. SMITH, COMMISSIONER
oRDERNO. 32755 13