20130828Motion to Dismiss.pdf

sIm.
An IDACORP Companyi I i':'-: :: I
7{II: ALII] 2B
JENNTFER M. RETNHARDT.TESSMER
iili ltl: 59
Gorporate Counse!
irei n [e-mail]
August 28,2013
VIA HAND DELIVERY
Jean D. Jewell, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re: Case No. IPC-E-13-17
J.R. Simplot Company's Petition - ldaho Power Company's Motion to
Dismiss
Dear Ms. Jewel!:
Enclosed forfiling in the above matterare an original and seven (7) copies of ldaho
Power Company's Motion to Dismiss for Lack of Subject Matter Jurisdiction.
Sincerely,
ifer M. Reinhardt-Tessmer
JRT:csb
Enclosures
'1221 W. ldaho St. (83702)
P.O. Box 70
8oise, lD 83707
LISA D. NORDSTROM (lSB No. 5733)
JENNIFER M. REINHARDT-TESSMER (lSB No. 7432)
ldaho Power Company
1221West Idaho Street (83702\
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
I no rd stro m @ ida hopower. com
irei n hardt@ id a hopower. com
Attorneys for ldaho Power Company
IN THE MATTER OF THE PETITION OF
J.R. SIMPLOT COMPANY FOR A
DETERMINATION OF PRICE
REGARDING THE PURCHASE AND
ACQUISITION OF CERTAIN ASSETS
OWNED BY IDAHO POWER COMPANY.
441" E!ln aJir ,::!,i, i
'r: ,.
CASE NO. IPC-E-13-17
IDAHO POWER COMPANY'S MOTION
TO DISMISS FOR LACK OF SUBJECT
MATTER JURISDICTION
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
COMES NOW, ldaho Power Company ("ldaho Powed' or "Company"), pursuant
to RP 56 and ldaho R. Civ. Pro. 12(b)(1), and hereby moves the ldaho Public Utilities
Commission ("Commission") to issue an order dismissing J.R. Simplot Company's
("Simplot") Application and Request to Determine Price and Request for Modified
Procedure ("Application")1 for lack of subject matter jurisdiction, with prejudice.
I. INTRODUCTION
Simplot's Application asks the Commission to determine a sale price for certain
ldaho Power facilities that Simplot wishes to purchase, but which ldaho Power refuses
' ln Order No. 32870, the Commission determined it would construe Simplot's Application as a
Petition, triggering an answer or response by ldaho Power.
IDAHO POWER COMPANY'S MOTION TO DISMISS
FOR LACK OF SUBJECT MATTER JURISDICTION - 1
to sell on Simplot's terms. Simplot brings its Application pursuant to ldaho Code S 61-
328, which requires a utility to obtain authorization from the Commission in order to sell
or transfer ownership of any property used in the generation, transmission, distribution,
or supply of electric power. ldaho Code S 61-328 confers permissive jurisdiction upon
the Commission to approve or deny a sale only when invoked by the utility; it does not
permit a customer to unilaterally call upon the Commission to determine a sale price of
the utility's assets. Therefore, without ldaho Power's willingness to sell its property at
an agreed upon price, the Commission lacks subject matter jurisdiction and this matter
must be dismissed.
II. BACKGROUND
A customer's option to purchase Company-owned assets located beyond the
Point of Deliverf was originally addressed in Case No. IPC-E-11-08 (ldaho Power's last
general rate case) in Order No. 32426. Therein, the Commission stated that customers
should be provided with the option to purchase distribution facilities beyond the Point of
Delivery and acknowledged ldaho Powe/s willingness to sell facilities to a customer in
certain situations. See Order No. 32426, p. 32. Specifically, if a customer wanted to
bear the responsibility of operating, maintaining, and replacing certain facilities, the
customer could purchase the assets "on a case-by-case basis." /d.
On September 28, 2012, Simplot requested that the Company proceed with a
sales price determination of certain Company-owned assets located beyond the Point of
Delivery at Simplot's potato processing facility in Caldwell, ldaho. The Company
calculated what it determined was a fair value of those assets, taking into consideration
' Point of Delivery as used herein refers to the junction point between the facilities owned by the
Company and the facilities owned by the customer. See ldaho Public Utilities Code No. 29, Tariff No.
101, Rule B Definitions, First Revised Sheet No. B-1.
IDAHO POWER COMPANY'S MOTION TO DISMISS
FOR LACK OF SUBJECT MATTER JURISDICTION - 2
its investment in the property and economic expectations at the time of purchase, and
presented its figures in a meeting held at Simplot's offices on February 6,2013. ldaho
Power representatives returned to Simplot's offices on February 14,2013, to explain the
methodology in greater detail. Following those meetings, ldaho Power received a
counteroffer from Simplot, which the Company determined was far less than the fair
value of the assets and if accepted, would negatively impact customers. ldaho Power
rejected the counteroffer and re-extended its original offer.
On July 16,2013, Simplot unilaterally filed its Application pursuant to !.C. S 61-
328, asking the Commission to set a sale price for certain assets owned by ldaho
Power at Simplot's Caldwel! facility.
On July 31, 2013, Staff addressed Simplot's Application in its Decision
Memorandum. Therein, Staff recommended the Commission issue a Notice of Petition,
yet noted "Staff believes that ldaho Code S 61-328 presumes that the filing of an
Application (made pursuant to this statute) would be made by the utility." Decision
Memorandum, p.2.
On August 7, 2013, the Commission issued its Notice of Petition ordering ldaho
Poweds response. Order No. 32870.
III. ARGUMENT
Legal Standard for the Gommission's Review.
A motion to dismiss is reviewed under the same standard as a motion for
summary judgment, and should be granted when the pleadings, depositions, affidavits,
and admissions on file show that there is no genuine issue of material fact and the
movant is entitled to judgment as a matter of law. McDonald v. Paine, 119 ldaho 725,
IDAHO POWER COMPANY'S MOTION TO DISMISS
FOR LACK OF SUBJECT MATTER JURISDICTION .3
810 P.2d 259 (1991); Meridian Bowling Lanes v. Meridian Athletic Assh, lnc., 105 ldaho
509, 670 P.2d 1294 (1983); Young v. City of Ketchum, 137 ldaho 102, 104, 44 P.3d
1157,1159 (2002).
Pursuant to ldaho Rule of Civil Procedure 12(bX1), a complaint may be
dismissed for lack of jurisdiction over the subject matter. Here, ldaho Power asserts a
"facial" attack on the Commission's jurisdiction, as Simplot has failed to allege facts
upon which subject matter jurisdiction can be based. See Owsley v. ld. lndust.
Comm'n.,141 ldaho 129,133 (2004).
B. There is No Leqislative Authoritv Conferrinq Jurisdiction over a Disputed
Sale Price to the Commission.
As the Commission is aware, it "has no inherent power; its powers and
jurisdiction derive entirely from the enabling statutes and 'nothing is presumed in favor
of its jurisdictions."' Lemhi Telephone Co. v. Mountain Sfafes Tel. & Tel. Co.,98 ldaho
692, 696 (1977) quoting Arrow Transp. Co. v. ldaho Public Utilities Comm'n,85 ldaho
307 , 379 P.2d 422 (1963). Only when jurisdiction is clear may the Commission exercise
the power granted to it by statute. Washington Water Power Co. v. Kootenai
Environmental Alliance, 99 ldaho 875, 591 P.2d 122 (1979). The jurisdiction of the
Commission is strictly construed. Lemhi,98 ldaho at 696, 571 P.2d at757 .
Pursuant to RP 52, Simplot's Application must refer to the particular provisions of
statute, rule, or other controlling law upon which it is based, which triggers the
Commission's jurisdiction over the subject matter. See RP 52. Simplot's Application
fails to cite any authority that confers jurisdiction on the Commission to determine a
IDAHO POWER COMPANY'S MOTION TO DISMISS
FOR LACK OF SUBJECT MATTER JURISDICTION - 4
price for purposes of a private sale of ldaho Powe/s used and useful property3 or to
compel the sale of said property, because no such authority exists.
The only statute Simplot cites as controlling authority in its Application is ldaho
Code S 61-328, which provides that no electric utility may dispose of generating
property without the authorization of the Commission:
Electric utilities - Sale of property to be approved by
commission.
(1) No electric public utility or electrical corporation as
defined in chapter 1, title 61, ldaho Code, owning, controlling
or operating any property located in this state which is used
in the generation, transmission, distribution or supply of
electric power and energy to the public or any portion
thereof, shall merge, sell, lease, assign or transfer, directly
or indirectly, in any manner whatsoever, any such property
or interest therein, or the operation, management or control
thereof, or any certificate of convenience and necessity or
franchise covering the same, except when authorized to do
so by order of the public utilities commission.
(2) The electric public utility or electrical corporation shall
file a verified application setting forth such facts as the
commission shall prescribe or require. The commission
shall issue a public notice and shall conduct a public hearing
upon the application.
(3) Before authorizing the transaction, the public utilities
commission sha!!find:
(a) That the transaction is consistent with the
public interest;.
(b) That the cost of and rates for supplying service
will not be increased by reason of such transaction; and
3 While ldaho Power acknowledges the Commission's authority to determine a value of certain
utility-owned property for purposes of ratemaking, such authority does not extend to a price determination
for purposes of a private sale. See l.C. S 61-523 and Application of Utah Power & Light Co. v. Public
Utilities Comm'n., 107 ldaho 446,451, 690 P.2d 901, 906 (1984) citing Artesian Water Co. v. Public
Utilities Commission, 40 ldaho 690, 700, 236 P. 525, 527 (1925) ("value" for purposes of statute
authorizing the Commission to ascertain value of public utility property in determining rate base does not
necessarily mean market value or sale value, but the value of that which the utility employs for public
convenience).
IDAHO POWER COMPANY'S MOTION TO DISMISS
FOR LACK OF SUBJECT MATTER JURISDICTION - 5
(c) That the applicant for such acquisition or
transfer has the bona fide intent and financial ability to
operate and maintain said property in the public service.
The applicanf shall bear the burden of showing that
standards listed above have been satisfied.
(4) The commission shall have power to issue said
authorization and order as prayed for, or to refuse to issue
the same, or to issue such authorization and order with
respect only to a part of the property involved. The
commission shall include in any authorization or order the
conditions required by the director of the department of
water resources under section 42-1701(6), ldaho Code. The
commission may attach to its authorization and order such
other terms and conditions as in its judgment the public
convenience and necessity may require.
l.C.S 61-328 (emphasis added).
The plain language of the statute provides that the Commission's jurisdiction is
triggered by a utility's verified application requesting the Commission to authorize the
sale of its property. l.C. S 61-328(2). Whether the Commission has jurisdiction to force
a utility to sell its used and useful property at a certain price has not been specifically
addressed by this Commission; however, the Commission has clearly acknowledged its
inability to "require a utility to enter into what should be a consensual contract." ln re
PacifiCorp, 1994 WL713849, 8 (Order No. 25753). A utility's sale of its used and useful
property is just that-a consensual contract-limited only by the Commission's
oversight to ensure it meets appropriate standards pursuant to l.C. S 61-328. See Afton
Energy, lnc. v. ldaho Power Co., 111 ldaho 925,929,729 P.2d 4OO,4O4 (1986) ("A
public utility has the right to enter into a private contract but the state can modify that
contract when it falls outside the parameters of an appropriate standard."). The ldaho
Supreme Court has also ruled that such consensual contracts are beyond the
IDAHO POWER COMPANY'S MOTION TO DISMISS
FOR LACK OF SUBJECT MATTER JURISDICTION - 6
Commission's jurisdiction, even if one of the parties is a public utility. See Lemhi, 98
fdaho at 696, 571 P.zd at 757-58 (Contract disputes should be heard by the courts
"notwithstanding that the parties are public utilities or that the subject matter of the
contract coincides generally with the expertise of the commission."); see also Bunker
Hill Co. v. Wash. Water Power Co., 101 ldaho 493, 494,616 P.2d 272, 273 (1980)
("While one of the parties is a public utility, and while the general area of power supply
may be one in which the Commission is presumed to have expertise, nevertheless, the
matter remains a contractual dispute, it should be heard by the Courts.").
Authorities outside of ldaho have specifically addressed whether a customer like
Simplot can unilaterally invoke a commission's jurisdiction under statutes mirroring
!.C. S 61-328 and responded with a resounding "No." Specifically, in addressing
California'sa counterpart to l.C. S 61-328(2), California Public Utility Code Section 8515,
the California Public Utilities Commission held that "[t]he only entity having standing
before this Commission in an application for authority under Section 851 of the Public
Utilities Code is the public utility filing the application." Application of J.D.
Transportation Co.69 Cal. P.U.C.298 (1969); see a/so P. T. Durty 4 C.R.C. (California
Railroad Commission) 447 (1914) (application should be made by the owner of the
property because the authority must run to such owner). Similarly, in interpreting
S 51(a) of the Public Utilities Act (the predecessor statute to $ 851 that contained nearly
t ldaho's utility laws largely follow that of California. ldaho Power & Light Co. v. Btomquist et al.,
26 ldaho 222, _, 141 P.1083, 1087 (1914) ("Much of our public utilities law was copied from the
California act.").
5 Cal. Pub. Util. Code $ 851 provides in pertinent part "A public utility, other than a common
carrier . . . shall not sell, lease, assign, mortgage, or otherwise dispose of, or encumber the whole or any
part of its railroad, street railroad, line, plant, system, or other property necessary or useful in the
performance of its duties to the public, without first having either secured an order from the
commission authorizing it to do so . . . ."
IDAHO POWER COMPANY'S MOTION TO DISMISS
FOR LACK OF SUBJECT MATTER JURISDICTION - 7
identical provisions), it has been held that a commission's authority is merely permissive
and the commission cannot order a public utility to sell its property. See Hanlon v.
Eshleman, 169 Cal. 200 (1915) (when an owner of an operative right does not desire to
sell, the Commission cannot compel him to do so); and H. C. Venablek, Ry.Comm.Dec.
27935, App. 19909 (May 6, 1935) (application to transfer denied when applicant
explained circumstances under which he signed the application and testified that he no
longer wanted to transfer the right).
While ldaho Power declines to address the substantive pricing arguments set
forth in Simplot's Application, as it is ldaho Power's position that the Commission lacks
the jurisdiction to even reach the merits of Simplot's Application, it should be noted that
the cases Simplot cites in support of its Application all involve ldaho Power as an
applicant, wherein ldaho Power appropriately assumed the burden for demonstrating to
the Commission the criteria set forth in l.C. S 61-328(3). Simplot cannot take the utility's
place as an applicant in assuming that burden. See /n the Matter of the Application of
Rocky Mountain Power for Authority fo Se// fhe Sf. Anthony Hydroelectric Generation
Plant, 2013 WL 3973729, 1 (Order No. 32822) (the "applicant" as referred to in
subsection (3) refers to the utility); see a/so Application of J.D. Transportation Co. 69
Cal.P.U.C. 298 (1969) ("The burden of proof in such proceeding must be sustained by
applicant, and no other party can assume the burden.").
C. Simplot's Application Gontravenes the Lesislative lntent of ldaho Code S
61-328.
The Legislature's purpose for enacting LC. S 61-328 was to ensure that a public
utility's sale of property (that is still used and useful) is consistent with the public
interest. See Statement of Purpose RS10362, 2000 ldaho Laws Ch.224 (H.B. 815).
IDAHO POWER COMPANY'S MOTION TO DISMISS
FOR LACK OF SUBJECT MATTER JURISDICTION .8
Specifically, the intent of the statute was to protect customers and to require inclusion of
the Director of the Department of Water Resources' conditions regarding water rights
(as it pertains to hydropower water rights). /d
Simplot's Application attempts to use l.C. S 61-328 to further its own private
business interests (at the expense of other ldaho Power customers) by requesting the
Commission to override ldaho Power's proffered sale price, which the Company has
already determined is representative of the property's fair sale value. ldaho Power is
certainly cognizant of the important and necessary role the Commission plays in
regulation of various aspects of the Company's business; however, the sale of ldaho
Powe/s used and useful property, at a price the Company has determined it is not
willing to sell at, is not an appropriate area of regulation. To be clear, ldaho Power is
not the only entity that owns the type of equipment Simplot wishes to purchase, nor
does ldaho Power wish to act as a common distributor of such equipment for customers
like Simplot. Simplot certainly has the option of purchasing its desired property from a
third party for use beyond the Point of Delivery.
The Legislature's intent in enacting ldaho Code S 61-328 was to protect the
public interest. Should the Commission force the Company to sell its property at a price
that is less than the real value to the Company, to tne detriment of customers, it would
contravene the Legislature's intent in enacting the statute.
IDAHO POWER COMPANY'S MOTION TO DISMISS
FOR LACK OF SUBJECT MATTER JURISDICTION - 9
D. Forcins the Companv to Sell Its Propertv at a Reduced Price Would
Gonstitute a Takinq.
The Fifth Amendment takings clause of the United States Constitution proscribes
the taking of propertyo without just compensation. Brown v. Legat Found. of Wash.,
538 U.S. 216,235, 123 S.Ct. 1406, 155 L.Ed.2d 376 (2003); see a/so ld. Const. Art. I,
$ 14 (private property may be taken by the government for a public use, "but not until a
just compensation" has been paid for the property). The United States Supreme Court
recognizes two classifications of takings that are relevant in this matter: physical and
regulatory. See Loretto v. Teleprompter Manhattan CATV Corp.,458 U.S. 419 (1982);
Penn Cent. Transp. Co. v. New York City, 438 U.S. 104 (1978). A physica! taking
involves permanent physical occupation by the government of private property and a
non-categorical regulatory taking occurs when a government action diminishes the
value of an owner's property and his or her investment-backed expectations. /d.
Simplot's Application argues that regardless of the value Idaho Power places on
the facilities, "the ultimate decision-maker for determining the value is this
Commission." Application, p. 2. Should the Commission somehow find it has
jurisdiction to set a reduced sale price on ldaho Power's assets, it would constitute a
diminution in the value of the Company's investment-backed expectations. Should the
Commission actually divest ldaho Power of physical ownership of its assets by not only
locking ldaho Power into a sale price of its assets but also compelling the Company to
sell, it would constitute a physical taking. See Loretto v. Teleprompter Manhattan
CATV Corp.,458 U.S. 419 (1982).
6 Real property, personal property, and intangible property each may constitute the subject of a
takings claim under the Fifth Amendmenl. American Pelagic Fishing Co., L.P. v. U.5., C.A.Fed.2004,
379 F.sd 7363, rehearing en banc denied, certiorari denied 125 S.Ct. 2963, 545 U.S. 1139,162 L.Ed.2d
887.
IDAHO POWER COMPANY'S MOTION TO DISMISS
FOR LACK OF SUBJECT MATTER JURISDICTION - 1O
A determination as to the sale price of used and useful property, in a private sale
with a customer, is a matter that should be left to the discretion of the utility. A decision
by the Commission forcing a sale of the Company's private property at a price less than
the amount determined by the Company to be its fair sale value, would not only exceed
the authority granted to it by the Legislature, but would also constitute a taking of the
Company's property.
IV. CONCLUSION AND PRAYER FOR RELIEF
ldaho Code S 61-328 does not confer jurisdiction upon the Commission to set a
sale price of used and useful, utility-owned property over the utility's objection. As
Commission Staff aptly noted, "ldaho Code S 61-328 presumes that the filing of an
Application (made pursuant to this statute) would be made by the utility." Decision
Memorandum, p. 2. Therefore, in the absence of the requisite subject matter
jurisdiction, ldaho Power respectfully requests that the Commission dismiss Simplot's
Application in its entirety, as a matter of law.
Respectfully submitted this 28th day of August 2013.
IDAHO POWER COMPANY'S MOTION TO DISMISS
FOR LACK OF SUBJECT MATTER JURISDICTION - 11
HARDT.TESSMER
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 28th day of August 2013 I served a true and
correct copy of IDAHO POWER COMPANY'S MOTION TO DISMISS FOR LACK OF
SUBJECT MATTER JURISDICTION upon the following named parties by the method
indicated below, and addressed to the following:
Commission Staff
Kristine A. Sasser
Deputy Attomey General
ldaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
J.R. Simplot Gompany
Peter J. Richardson
Gregory M. Adams
RICHARDSON ADAMS, PLLC
515 North 27th Street (83702)
P.O. Box 7218
Boise, ldaho 83707
IDAHO POWER COMPANY'S MOTION TO DISMISS
FOR LACK OF SUBJECT MATTER JURISDICTION - 12
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