HomeMy WebLinkAbout20130523final_order_no_32813.pdfOffice of the Secretary
Service Date
May 23,2013
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE MOTION OF )IDAHO POWER COMPANY FOR )CASE NO.IPC-E-13-12APPROVALOFASETTLEMENT)AGREEMENT WITH GLENNS FERRY )
COGENERATION PARTNERS.)ORDER NO.32813
______________________________________________________________________________
)
On April 25,2013.Idaho Power filed a Motion for Approval of Settlement
Agreement pursuant to Idaho Code §61-502,Commission Procedural Rules 56 and 274
requesting an Order approving the Settlement Agreement and Mutual Release (“Settlement
Agreement”)between Idaho Power and Glenns Ferry Cogeneration Partners,LTD.(“Glenns
Ferry”).IDAPA 31.01.01.056 and .274.Idaho Power amended its Motion on May 2,2013.
Idaho Power requests that the Commission grant its Motion and approve the Settlement
Agreement in its entirety,without material change or condition,pursuant to Rule 274.IDAPA
3 1.01.01.274.
BACKGROUND
The Firm Energy Sales Agreement between Idaho Power and Glenns Ferry is dated
December 9,1992,and provides for a 20-year contract term.See Case iso.IPC-E-92-32.The
Agreement was approved by the Commission on January 22,1993.Order No.24674.In
February 2008,Glenns Ferry lost its sole thermal host and ceased the delivery of energy to Idaho
Power.
On October 16,2008,Idaho Power filed a Petition for Declaratory Order and
Complaint for Breach of Contract C’Petition”)against Olenns Ferry with the Commission.Idaho
Power alleged that the permanent curtailment of energy deliveries amounted to a default of the
Firm Energy Sales Agreement (“FESA”).Idaho Power sought termination of the Agreement.
See Case No.IPC-E-08-20.On October 6,2011,pursuant to Procedural Rule 68,Idaho Power
filed a Notice of Withdrawal of its Petition.By operation of the rule,the notice was effective as
of October 20,2011,and the case was closed.See IDAPA 31.01.01.068.
On October 28,2011,Idaho Power filed a Complaint for Breach of Contract and
Declaratory Judgment (“Complaint”)against Glenns Ferry in the District Court of the Fourth
Judicial District of the State of Idaho alleging a breach of contract and seeking a declaratory
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judgment terminating the FESA (“State Court Action”).On November 15,2011,Glenns Ferry
removed the State Court Action to the United States District Court for the District of Idaho
(“Federal Court Action”).
The complaint alleged,among other things,that Glenns Ferry materially breached the
FESA by losing its thermal host,Idaho Fresh-Pak;failing to maintain its Public Utility
Regulatory Policies Act of 1978 qualifying facility (QF)status;and permanently curtailing its
deliveries of annual net firm energy.The complaint also alleged that in or about April 2008,
Idaho Fresh-Pak defaulted on the Thermal Host Agreement between Glenns Ferry and Idaho
Fresh-Pak.The Thermal Host Agreement provided,among other things,that Idaho Power was a
third-party beneficiary to that agreement and that Idaho Fresh-Pak would be liable to Idaho
Power,limited to amounts specified in the Thermal Host Agreement,in the event Idaho Fresh
Pak defaulted on the Thermal Host Agreement.
On January 22,2013,Idaho Power,Glenns Ferry,and Idaho Fresh-Pak attended
mediation before the Honorable Mikel H.Williams of the U.S.District Court and settled all
claims among them,subject to the approval of this Commission.
THE SETTLEMENT AGREEMENT
The Settlement Agreement provides for:(1)the termination of the FESA;(2)a
Stipulated Judgment in the amount of $15,000,000 entered in favor of Idaho Power in the
Federal Court Action,to which Idaho Power agrees to enter into a Covenant Not to Execute on
the Stipulated Judgment;(3)provisions prohibiting Glenns Ferry from developing any new
facility at the current location until such time as the Stipulated Judgment is paid in full;(4)
payment of $250,000 from Glenns Ferry and payment of $750,000 from Idaho Fresh-Pak;(5)
provisions for securing the above-mentioned payment amounts;and (6)other provisions such as
a mutual release of liability,liability for power bills at the project site,mutual cooperation,etc.
Idaho Power maintains that the Settlement Agreement avoids additional,costly
litigation,recognizes a judgment in favor of Idaho Power and its customers,and provides for the
partial recovery of damages pursuant to the FESA.Idaho Fresh-Pak has a sale pending for its
facility,and the Settlement Agreement provides that Idaho Power would receive any proceeds
from such sale to satisfy Idaho Fresh-Pak’s $750,000 liability.
Although the Settlement Agreement acknowledges a judgment in favor of Idaho
Power in the Federal Court Action in the amount of $15,000,000,the Settlement Agreement
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provides for the collection of $1,000,000 of that amount.Through its investigation and
discovery related to this matter,Idaho Power determined that there was not sufficient cash or
assets available from the limited liability,special purpose business organizations representing
Glenns Ferry,the contracting QF,or any party with liability under the contract—essentially
making a resulting judgment in favor of Idaho Power uncollectable.Idaho Power,through the
underlying contract and the limited security provisions allowed by Commission rules and Orders,
does have a second security interest in certain assets of the contracting QF.Such assets were
determined to have an approximate value of $1,000,000,which is the amount provided for
collection from the responsible parties pursuant to the Settlement Agreement.
The Settlement Agreement contains a provision stating that all terms and conditions
of the Settlement Agreement are subject to approval by this Commission and that only after such
approval,without material change or modification,has been received shall the Agreement be
valid and effective.Idaho Power believes that the Settlement Agreement is a fair and equitable
resolution to this matter,and in the public interest.
Commission Staff concurs with Idaho Power that recovery of the full $15 million
Federal Court Judgment is highly improbable.Therefore,Staff does not oppose approval of the
proposed Settlement Agreement.
FINDINGS AND CONCLUSIONS
The Idaho Public Utilities Commission has jurisdiction over Idaho Power,an electric
utility,and the issues raised in this matter pursuant to the authority and power granted it under
Title 61 of the Idaho Code and the Public Utility Regulatory Policies Act of 1978 (PURPA).The
Commission has authority under PURPA and the implementing regulations of the Federal
Energy Regulatory Commission (FERC)to set avoided costs,to order electric utilities to enter
into fixed-term obligations for the purchase of energy from qualified facilities (QFs)and to
implement FERC rules.
The Commission has reviewed the record in this case,including the Settlement
Agreement between Idaho Power,Glenns Ferry,and Idaho Fresh-Pak and the recommendation
of Commission Staff.The Settlement Agreement provides for the collection of $1,000,000.
Although the Settlement Agreement acknowledges a judgment in favor of Idaho Power for
$15,000,000,the parties have a reasonable basis upon which to believe that the larger sum would
be uncollectable.Based on the foregoing considerations,we find that the terms of the proposed
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Settlement Agreement are fair,just and reasonable to all parties,including Idaho Power’s
ratepayers.
ORDER
IT IS HEREBY ORDERED that the Settlement Agreement and Mutual Release
entered into between Idaho Power,Glenns Ferry Cogeneration Partners and Idaho Fresh-Pak is
approved in its entirety.without material change or condition.
THIS IS A FINAL ORDER.Any person interested in this Order may petition for
reconsideration within twenty-one (21)days of the service date of this Order.Within seven (7)
days after any person has petitioned for reconsideration,any other person may cross-petition for
reconsideration.See Idaho Code §6 1-626.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of May 2013.
PAUL KJ LAND,PRESIDENT
MACK A.REDFORDZOMMISSIONER
MARSHA H.SMITH,COMMISSIONER
ATTEST:
J dn D.Jewell (I
O5mmission Secfetary
O:IPC-E-13-l2ks
ORDER NO.32813 4