HomeMy WebLinkAbout20130906Simplot Answer to Motion to Dismiss.pdfPeter J.Richardson 153 #3195
Gregory M.Adams ISB #7454
RICHARDSON ADAMS,PLLC
515 N.27th Street
Boise,Idaho 83702
Telephone:(208)938-2236
Fax:(208)938-7904
peter@richardsonadams.com
greg@richardsonadams.com
Attorneys for the I.R.Simplot Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE )CASE NO.IPC-E-13-17
APPLICATION OF THE J.R.SIMPLOT )
COMPANY TO PURCHASE AND )J.R.SIMPLOT COMPANY’S
ASSUME OWNERSHIP OF CERTAIN )ANSWER TO IDAHO POWER’S
IDAHO POWER OWNED FACILITIES )MOTION TO DISMISS FOR LACK
AND TO SET A PURCHASE PRICE )OF SUBJECT MATTER
THEREFORE JURISDICTION
INTRODUCTION AND SUMMARY
COMES NOW the J.R.Simplot Company (“Simplot”)and,pursuant to Rule 5 7(3)of the
Rules of Procedure of the Idaho Public Utilities Commission (“Commission”),submits this
Answer to Idaho Power Company’s (“Idaho Power”or the “Company”)Motion to Dismiss for
Lack of Subject Matter Jurisdiction (“Motion”).As explained below,Idaho Power itself
proposed the process by which Simplot has asked the Commission to determine the sale price for
distribution facilities placed by Idaho Power on Simplot’s side of the meter.Idaho Power
proposed the sale process as part of its response to arguments,by Simplot and many others,in
the last general rate case that Idaho Power’s facilities charge is exorbitant and inescapable.The
Commission adopted Idaho Power’s proposed sale process.At Idaho Power’s own request,the
process by which the Commission determines the sale price is part and parcel with the other
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terms and rates contained in Idaho Power’s facilities charge.The Commission’s determination to
adopt Idaho Power’s proposed sale process as a part of the facilities charge was consistent with
Idaho utility law.It was not appealed by any party.’
In reliance on Idaho Power’s sale process adopted by this Commission,Simplot engaged
in good faith negotiations to buy certain facilities and have Idaho Power remove other facilities
from Simplot’s existing Caldwell plant.Idaho Power’s Motion fails because it ignores the
Commission’s final order on the matter,and Idaho Power’s own inconsistent position —all in yet
another attempt to thwart Simplot’s now multi-year effort to get out from underneath of Idaho
Power’s unfair facilities charge.The Commission should swiftly reject Idaho Power’s Motion
and expeditiously approve the sale at Simplot’s proposed price,which is consistent with all prior
Commission orders on the topic.
ARGUMENT
1.IDAHO POWER’S MOTION IGNORES THE RELEVANT REGULATORY
BACKGROUND AND OVERLOOKS THAT SIMPLOT’S APPLICATION AND
PROPOSED SALE COMPORT WITH IDAHO POWER’S OWN TARIFF
ADOPTED BY THIS COMMISSION AT IDAHO POWER’S REQUEST.
This case is a follow-on proceeding to Idaho Power’s last general rate case (Docket No.
IPC-E-ll-O$),where the Commission addressed a challenge to Idaho Power’s exorbitant and
unfair facilities charge for industrial customers.Ever since that proceeding,Idaho Power’s
Commission-approved tariff contains Rule M,which is titled ‘Facilities Charge Service.”
Simplot has attached Rule M as Attachment 1 to this Answer.Rule M provides for and governs
the sale of company-owned facilities that are located on the property of Idaho Power’s customers
Because the underlying testimony and order in the general rate case (Docket No.IPC-E-I 1-08)are so
intertwined with the issues raised by Idaho Power’s Motion,Simplot is contemporaneously filing a motion for
official notice of the relevant portions of the testimony to allow for it to be a part of the record in this proceeding.
This Answer will cite the official transcript in that proceeding as “Tr.”and exhibits as
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which are used solely to provide service to a particular customer.Rule M provides:
3.Sale of Company-Owned facilities
Customers paying a facilities charge may request to purchase Company-owned
facilities installed beyond the Point of Delivery.All sales of facilities must be
approved by the Commission and meet the following provisions:
a.Idaho Code Section 61-328
b.No mixed ownership of facilities.A Customer purchasing Company-
owned facilities installed beyond the Point of Delivery must purchase all facilities
listed on the DFI for that location.
c.The customer must provide the operation and maintenance of all facilities
installed beyond the Point of Delivery after the sale is complete.
d.The Customer must prepay engineering costs for sales determinations
taking greater than 16 estimated hours of preparation.Sales determinations equal
to or less than 16 estimated hours of preparation will be billed to the Customer as
part of the sales agreement,or after the engineering is completed in instances
where the sate is not finalized.
Idaho Power’s Motion fails to mention Rule M.Nor does it even allude to the fact that
Simplot’s Application (deemed a Petition pursuant to Order No.32870)is fully compliant with
Idaho Power’s tariffs and this Commission’s prior orders.
In fact,in its last general rate case,Idaho Power proposed the very process that Simplot
initiated in this case.In the Commission’s final Order in that case,the Commission relied on the
recommendation of Idaho Power’s witness Youngblood that the Commission adopt Rule M,to
wit:
Mr.Youngblood explained the Company’s proposal to give facilities charge
customers the option of buying Company-owned facilities.The Company created
a new Rule M (facilities Charge Service),which would consolidate facility
charge rules.This will enable the Company to more efficiently manage tariff
issues related to facilities charge services.Under the propose Rule M,customers
may ask to buy Company-owned facilities installed beyond the delivery point.
The Commission must approve all sales and they must meet the following
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conditions:
Compliance with Idaho Code §61-328;
No mixed-ownership of facilities;
The customer must provide the O&M of all facilities installed beyond the
delivery point after the sale;and
The customer must pay for engineering costs for determination of the sale.
Tr.at 251 -52.He said Idaho Code §61-328 provides that the sale of facilities
must not adversely impact remaining customers or customer rates.Tr.252 —53.
Further,the Company would need to ensure the appropriate equipment is in place
at the delivery point so no equipment failure would degrade the Company’s
reliability and service to remaining customers.Tr.at 253.If the proposed sale
meets these conditions,the Company would make a filing with the Commission
asserting that such sale is in the public interest.Id.
Order No.32426 at 25 -26 (footnotes omitted).
The Company made this proposal in response to arguments by the Industrial Customers
of Idaho Power (“ICIP”),of which Simplot is a member,that provided witnesses on the issue.
Specifically,ICIP and Simplot witnesses argued that the never-ending 20.4%annual charge for
fully depreciated distribution assets was exorbitant,and that customers had in fact paid for these
facilities many times over in some circumstances —justifying transfer of the facilities to the
customer.The record demonstrated that Idaho Power had installed facilities on Simplot’s
premises that had a total initial investment value of $4,252,088,yet Simplot was burdened with a
never-ending,annual charge of $867,426 for those facilities.Tr.465-466.A witness from
Simplot testified,“Since this equipment has been installed,we have paid around $14 million or
three point four (3.4)times its installed investment already.We have two items that are sixty-six
(66)years oLd and have paid for those items almost seven (7)times.”Tr.465-466.ICIP also
demonstrated that the Company’s interpretation of its tariff for removal of the facilities subjected
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the customer to unfair processes and charges —particularly in circumstances where the customer
had already paid for the full value of the facilities many times over.See,e.g.,Tr.at 406-07.In
short,the record demonstrated that Idaho Power had created an unfair charge that did not work
for many customers and had provided inadequate options for customers to stop paying this
never-ending charge.
Faced with these arguments,Idaho Power supported a sale process overseen by the
Commission instead of outright transfer of facilities to the customer or some other modification
to the removal process.Idaho Power even proposed Rule M as part of its rebuttal testimony.See
Tr.at 253-254.Idaho Power’s witness Youngblood testified,“The Company is proposing to
create a new rule,Rule M -Facilities Charge Service,which would fully describe the Company’s
rules and policies for providing facilities charge services.”Tr.at 251;see also Idaho Power Ex.
52 (containing Idaho Power’s proposed Rule M).Idaho Power further explained that through
Rule M “the Company has provided a new option for customers who may request to purchase
Company-owned facilities installed beyond the point of delivery.”Id.
Most importantly,Idaho Power’s witness explained the sale process under Idaho Power’s
proposed Rule M,as follows:
If the Company’s proposed tariff language is adopted and approved by the
Commission,and if and when a customer requests the purchase of facilities
beyond the Company’s point of delivery,the Company would attempt to
determine a mutually agreed upon price for the sale of the facilities prior to
bringing the sales transaction to the Commission for approval.If a sales price
cannot be mutually agreed upon,the Company or the customer may initiate a
proceeding before the Commission in order to determine the appropriateness of
the price.
Tr.at 253-54 (emphasis added).Nowhere did Idaho Power’s testimony indicate that Idaho
Power’s proposed sale price would be the only option.
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The Commission relied on Idaho Power’s testimony in approving Rule M.The
Commission’s understanding of the mechanics of how that new rule is to be implemented is
illustrated by its liberal quotations from Idaho Power’s witness’s testimony:
He [Idaho Power witness Youngblood]said the Company does not propose a
specific methodology for determining the facility sales price.Rather,the
Company simply proposes changing its tariffs to allow for the buyout option.Id.
He stated that if the Commission approves the Company’s Rule M tariff,and if a
customer asks to buy facilities,the Company would attempt to agree with the
customer on a sales price before bringing the proposed sale to the Commission.
Tr.at 253-54.If the Company and customer cannot agree on a price,either (
them could ask the Commission to determine the appropriate price.Tr.at 254.
Id.at p.26 (emphasis provided).Nothing could be clearer.Idaho Power proposed,in the event
of a disagreement as to price,that “either of them could ask the Commission to determine the
appropriate price.”Now Idaho Power asserts the Commission lacks jurisdiction to entertain a
request from the first customer to lodge a request that the Commission determine the appropriate
price.
In its findings in Order No.32426 the Commission clearly relied on Idaho Power’s
testimony:
The Company conceded in its rebuttal testimony that customers ought to be able
to purchase distribution facilities dedicated to their specific use and located on
their premises.In particular,if a customer wants to bear the responsibility of
operating,maintaining and replacing such facilities,then we believe there ought
to be an opportunity for the customer to purchase the assets on a case-by-case
basis.Pursuant to Idaho Code §6 1-328,a proceeding to determine the values of
such facilities would be necessary.
Order No.32426 at 32.The Commission even instructed the Company to “explain new Rule M
to its facilities charge customers and provide each customer with the ‘Acknowledgement form’
so that customers will be aware of the option to purchase the distribution facilities for which they
are assessed facilities charges.”Id.at 33.
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Idaho Power was represented by legal counsel in that docket.Although having ample
opportunity to do so,the Company’s counsel never once even suggested that the methodology
that it proposed this Commission adopt for customers to purchase facilities beyond the point of
delivery was in any way illegal or outside of the scope of this Commission’s authority.2 That
case was only decided less than two years ago.While Idaho Power’s one-hundred-and-eighty
degree flip on this issue is remarkable,this Commission should not allow itself to be whip-sawed
in this manner.
2.THE COMMISSION’S APPROVAL OF IDAHO POWER’S PROPOSED SALE
PROCESS WAS PROPER BECAUSE THE COMMISSION HAS BROAD
AUTHORITY TO VALUE UTILITY PROPERTY AND TO SET RATES FOR
THE PROVISION OF ELECTRIC SERVICE.
The Commission’s authority over the provision of utility service is very broad —
unquestionably broad enough to cover the rates at which Idaho Power sells its facilities beyond
the meter.Idaho Code Section 6 1-502 provides:
Whenever the commission,after a hearing had upon its own motion or upon
complaint,shall find that the rates,fares,tolls,rentals,charges or classifications,
or any of them,demanded,observed,charged or collected by any public utility for
any service or product or commodity,or in connection therewith,including the
rates or fares for excursions or commutation tickets,or that the rules,regulations,
practices,or contracts or any of them affecting such rates,fares,tolls,rentals,
charges or classifications,or any of them,are unjust,unreasonable,discriminatory
or preferential,or in any wise in violation of any provision of law,or that such
rates,fares,tolls,rentals,charges or classifications are insufficient,the
commission shall determine the just,reasonable or sufficient rates,fares,tolls,
rentals,charges,classifications,rules,regulations,practices or contracts to be
thereafter observed and in force and shall fix the same by order as hereinafter
provided...
The proposed sale of utility-owned facilities to a ratepayer was the result of arguments that Idaho
2 Indeed,Idaho Power’s witness was under oath and its counsel moved the testimony to be entered into the record
without objection or correction as to legal infirmity.
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Power had subjected its customers to a never-ending and exorbitant annual facilities charge of
20.4%of the initial value of fully depreciated equipment,and provided no realistic option to stop
paying that charge through reasonable removal provisions or otherwise.In adopting Idaho
Power’s requested sale process embodied in Rule M,the Commission surely acted well within its
authority provided by the all-encompassing phrase in the statute providing the Commission
authority over all “rates,fares,tolls,rentals,charges or classifications ...for any service or
product or commodity ...or that the rules,regulations,practices or contracts ....“I.C.§61-
502.
In addition to Section 6 1-502,however,which clearly grants the Commission authority to
set the rate for purchase,Section 6 1-503 provides:
The commission shall have power,upon a hearing,had upon its own motion or
upon complaint,to investigate a single rate,fare,toll,rental,charge,
classification,rule,regulation,contract or practice,or any number thereof,or the
entire schedule or schedules of rates fares tolls,rentals,charges,classifications,
rules,regulations,contracts or practices,or any thereof,of any public utility,and
to establish new rates,fares,tolls,rentals,charges,classifications,rules,
regulations,contracts or practices or schedule or schedules in lieu thereof.
The Idaho Code is unambiguous —the rate for the sale of facilities on the customer side of the
meter is a contract or practice of a public utility inexorably tied to the provision of utility service
including Idaho Power’s facilities charge and a customer’s options to stop paying that charge.
Idaho Power is,essentially,arguing that it is not a public utility offering to sell electric
plant that is currently being used to provide utility service.Idaho Power trivializes this
Commission’s role in fulfilling its most basic of functions —setting rates:
Simplot’s Application attempts to use I.C.§6 1-328 to further its own private
business interests (at the expense of other Idaho Power customers)by requesting
the Commission to override Idaho Power’s proffered sale price,which the
Company has already determined is representative of the property’s fair sale
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value.
Motion at 9.
Of course,the impact on Idaho Power’s other customers cannot be known until this
Commission makes that determination.The “property”is “electric plant”as defined in Idaho
Code Section 61-118 to include “all real estate,fixtures,and personal property owned,
controlled,operated or managed in connection with or to facilitate the production,generation,
transmission,delivery or furnishing of electricity.”In addition,the Commission values utility
property in Idaho —not the utility in its sole and unchecked discretion.Idaho Code Section 61-
523 provides,“The commission shall have power to ascertain the value of the property of every
public utility in this state and every fact which,in its judgment,may or does have any bearing on
such value.”Certainly,Idaho Power’s opinion as to the value of the “property”may be relevant
to the Commission’s deliberations,but Idaho Power cannot usurp the Commission’s statutory
duty.
Idaho Power further asserts:
Idaho 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 Idaho Power’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,Idaho Power is not the only entity that owns the type of
equipment Simplot wishes to purchase nor does Idaho Power wish to act as a
common distributor of such equipment for customers like Simplot.
Motion at 9.
Idaho Power ignores that eliminating the ability of monopolists to unilaterally determine
the price for electric service,including the sales price of electric plant used and useful in
providing that service,is precisely why we have a public utilities commission in the first
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instance.Idaho Power is the only electric utility monopolist with which Simplot may legally do
business.No other entity is permitted to provide the service Idaho Power provides,and Simplot
is stuck paying the facilities charge or Idaho Power’s excessive removal costs unless and until
this Commission remedies the situation.Again,pursuant to Rule M,Idaho Power is required to
offer its customers,like Simplot,the option to purchase Company-owned facilities on the
Customer’s side of the meter.Idaho Power owns,operates and maintains those facilities,and
charges rates set by the Commission.This tariff and the sale option are part and parcel with the
other elements of the facilities charge,and without the option to purchase at a price set by the
Commission the entire facilities charge would need to be re-examined —particularly for
removing the facilities from the customer’s premises or otherwise enabling a customer to stop
paying the charge.
At page 8 of its Motion,Idaho Power asserts that,it has the burden for demonstrating to
the Commission the criteria set forth in Idaho Code Section 6 1-328 and concluded,“Simplot
cannot take the utility’s place as an applicant in assuming that burden.”In support of that
unremarkable statement Idaho Power cites In the Matter of the Application ofRocky Mountain
Powerfor Authority to Sell St.Anthony Hydroelectric Generation Plant,2013 WL 3973729,1
(Order No.32822),and states the “applicant”as referred to in subsection (3)refers to the utility.
Id.Yet Order No.32222 is a mere “Notice of Application.”It contains no findings of fact,nor
any conclusions of law.The order does not address the issue of whether the utility is solely able
to be an applicant or carry the burden of proof under the statute.Indeed,the quoted word
“applicant”never even appears in the order.
At page 6 of its Motion,Idaho Power asserts that the Commission itself has
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acknowledged that it may not “require a utility to enter into what should be a consensual
contract.”See Id.(citing In the Matter ofthe Application ofPacifiCorp (d/b/a Pacflc Power &
Light Company,)and the Washington Water Power Company,PPL-E-94-1,WWP-E-94-1,Order
No.25753,at $(1994)).The consensual contract the Commission referred to was a possible
service territory agreement between Washington Water Power (“Water Power”)and neighboring
cooperative electric utilities that are not subject to the Commission’s jurisdiction.Unlike in this
case,Water Power was not providing electric service to the cooperative utilities pursuant to a
Commission approved tariff.
The case cited by Idaho Power,on the other hand,does instruct what happens when a
utility fails to follow both the letter and spirit of Commission approved tariffs:
Every public utility,including The Washington Water Power Company,is
under a statutory duty to “comply with each and every requirement of every order,
decision,direction,rule or regulation.”Idaho Code 6 1-406.A regulated utility
must also comply with its filed and approved tariffs.Idaho Code §61-3 13.To
remedy violations the Public Utility Law includes provision for the Commission
to enforce its Orders,rules and other statutory obligations.Idaho Code §61-701
et seq.More specifically,Idaho Code §6 1-706 provides that any utility that fails
to comply with any Commission Order shall be subject to civil penalty of not
more than $2,000 for each offense....
Rather than imposing the statutory maximum penalty of $2,000 per day,
we preliminarily conclude that the Commission should instead assess a civil
penalty of $2,000 for each month the Company has violated its line extension
tariffs.
Order No.25753 at 12.The Commission stressed the importance of utility’s adherence to tariffs
and imposed the fine against Water Power for failing to do so,“even in the absence of evidence
showing an immediate injury to the public.”Id.
Likewise,Idaho Power’s reliance on the Idaho Supreme Court cases holding the
Idaho Power’s Motion cited page 8,but the most relevant passage appears on page Ii.
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Commission lacks jurisdiction to adjudicate contract disputes is misplaced.Motion at 6-7.
Simplot is seeking to invoke the provisions of the Company-proposed Rule M —a tariff duly
approved by this Commission.Rule M is not a contract between $implot and Idaho Power.
Rule M applies generally to all of Idaho Power’s ratepayers that have Company-owned facilities
on their side of the meter.It is black letter utility law that tariffs have the force of law,see
Southern Pacific Co.v.Brown,Alcantar &Brown,Inc.,409 F.2d 1331,1332 (5th Cir.1969),and
tariffs establish the liability of a recipient of services covered by the tariff,even if the recipient
was quoted a different price,see Louisville &Nashville Railroad Co.v.Maxwell,237 U.S.94,
97,35 S.Ct.494,495 (1915),or the recipient was a party to a contract under which the services
were to be provided at a different price,see Texas &Pacific Railway Co.v.Mugg &Dryden,
202 U.S.242,245,26 $.Ct.628 (1906).
Idaho Power’s Motion drifis even further off point to rely on several cases from
California.See Motion at 7-8.The Commission is not bound by California Public Utility and
Railroad Commissions’decisions reaching decades into the past.Even if it were,Idaho Power
has not asserted that any of these cases addressed a situation where the utility itself proposed that
the Commission set the sale price in the event of a disagreement.These California cases are
wholly inapplicable to this Idaho case.
Idaho Power also conflates the question of who has the burden of demonstrating the
criteria of Idaho Code Section 61-328 with the question of who may initiate the sale proceeding.
Section 6 1-328 is not restrictive and does not prohibit or invalidate Idaho Power’s Rule M sale
procedure or the Commission’s order adopting it.One of the fundamental purposes of the statute
is to protect the ratepayers in the event of the acquisition of an incumbent utility by a third party.
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The legislative intent for the 2000 amendment to Section 6 1-328 provides insight:
It is therefore the policy of the state of Idaho to regulate acquisitions of public utilities
which provide electric energy in a manner that promotes the public interest.
Idaho Sess.Laws 2000,ch.224,§2,p.619 (emphasis provided).That said,the substantive
provisions of the statute still require the Commission’s authorization prior to the sale ofy
utility asset,even outside of the context of an outright acquisition.But nowhere does the statute
purport to protect the utility from selling assets to a customer at a price set by the Commission.
Idaho Power’s reading of the statute would forever bar a ratepayer with Company-owned
facilities on its property from ever accessing the Commission for a valuation determination of the
electric plant being used to serve it.The catch-22 proposed by Idaho Power requires the
customer,such as Simplot,to continue paying Idaho Power’s monopolist rate for the facilities
charge or agree to Idaho Power’s unilateral sale price.4 furthermore,by being forced to accept
Idaho Power’s sale offer and signing an agreement or other contract for the purchase,the
customer would then be barred from subsequently challenging its agreement with Idaho Power
when it brings a Section 6 1-328 application to the Commission for approval of the agreement.
By effectively barring the door to the Commission for ratepayers,Idaho Power will be
able to exercise its monopoly powers and force any customer seeking a valuation to accept Idaho
Power offer’s with no recourse.This case demonstrates the unfair results that will occur.
Simplot merely asked to purchase the facilities at a price comparable to that Idaho Power agreed
to provide to the Sinclair Oil Company for facilities at the Sun Valley Village —which was the
book value of the equipment.See Application at 2-4.Yet Idaho Power would require Simplot
The oniy other option is top’Idaho Power to remove Idaho Power’s facilities,after having already
overpaid for years under the facilities charge.
Simplot also asked that the price be reduced for overpayments to Idaho Power.The issue of overpayments
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to pay twice the book value.Id.at 2 and Ex.3.The two cases would appear to present similar
situations —aside from the fact that Simplot challenged the facilities charge in a rate case and
Sun Valley did not.Idaho Power thus hopes to abuse its monopoly power by arbitrarily
discriminating against certain customers.Idaho law expressly prohibits such discrimination.See
I.C.§61-3 15 (“No public utility shall,as to rates,charges,service,facilities or in any other
respect,make or grant any preference or advantage to any corporation or person or subject any
corporation or person to any prejudice or disadvantage”(emphasis added)).The Commission
unquestionably had authority to prevent this discriminatory outcome when it approved Idaho
Power’s proposed sale process in the last general rate case.
3.IDAHO POWER’S MOTION IS BARRED AS AN IMPERMISSIBLE
COLLATERAL ATTACK.
Idaho Power is barred from making its claim of lack of subject matter jurisdiction
because that argument is an impermissible attack upon a final Order of the Commission and is
prohibited by Idaho Code Section 6 1-625.That statute provides that,“[a]ll orders and decisions
of the commission which have become final and conclusive shall not be attacked collaterally.”
Thus the law of the case is now settled and the Commission’s December 30,2011,Order cannot
be attacked on appeal or collaterally.The Idaho Supreme Court has explained that:
The legislature has afforded the orders of the Commission a degree of finality
similar to that possessed by judgments made by a court of law.I.C.§6 1-625.
Final orders of the Commission should ordinarily be challenged either by a
petition to the Commission for [reconsideration]or by appeal to this Court as
provided by Idaho Code §61-626 and 627;Idaho Const.Art.5,§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-Idaho Sugar Co.v Interrnottntain Gas Co.100 Idaho 368,373-74,565 P.2d 1058,1063-64
was not addressed in the Sun Valley case,and it is not clear that there were any overpayments by Sun Valley.
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(1979).Final Orders of the Commission must be challenged either by petitioning the
Commission for reconsideration,or by appeal to the Idaho Supreme Court.Idaho Power did
neither.
4.JUDICIAL ESTOPPEL BARS IDAHO POWER’S “FAST AND LOOSE”
ATTEMPT TO BENEFIT FROM INCONSISTENT POSITIONS.
“Judicial estoppel,sometimes also known as the doctrine of preclusion of inconsistent
positions,precludes a party from gaining an advantage by taking one position,and then seeking a
second advantage by taking an incompatible position.”Sword v.Sweet,140 Idaho 242,252,92
P.3d 492,502 (2004)(quoting Rissetto v.Plumbers and Steamfitters Local 343,94 F.3d 597,600
(9th Cir.1996)).The doctrine is intended to “protect against a litigant playing fast and loose with
the courts”and to “protect the dignity of the judicial process.”Id.(quoting Rissetto,94 F.3d at
600).
This doctrine is not limited to judicial proceedings.The Ninth Circuit decision relied
upon by the Idaho Supreme Court explained that the doctrine has equal applicability to
proceedings,such as this one,that are administrative in nature,as follows:
[M]any cases have applied the doctrine where the prior statement was made in an
administrative proceeding,and we are not aware of any case refusing to apply the
doctrine because the prior proceeding was administrative rather than judicial.See
Chaveriat v.Williams Pipe Line Co.,11 f.3d 1420,1427 (7th Cir.1993)(“Though
calledjudicial estoppel,the doctrine has been applied,rightly in our view,to
proceedings in which a party to an administrative proceeding obtains a favorable
order that he seeks to repudiate in a subsequent judicial proceeding.”)(collecting
cases);Smith v.Montgomery Ward &Co.,38$F.2d 291,292 (6th Cir.196$)
(position taken in workers’compensation proceeding estopped party in subsequent
personal injury action);Simo v.Home Health &Hospice Care,906 F.Supp.714,
71$(D.N.H.1995)(Social Security Administration disability proceeding);UNUM
Corp.v.United States,886 F.Supp.150,158 (D.Me.1995)(Maine Bureau of
Insurance approval proceeding);Zapata GulfMarine Corp.v.Puerto Rico
Maritime Shipping Auth.,731 F.Supp.747,750 (E.D.La.1990)(Interstate
Commerce Commission proceeding);Muellner v.Mars,Inc.,714 F.Supp.351,
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357-58 (N.D.Ill.19$9)(SSA proceeding)(applying Illinois law).This rule has
been justified on the ground that “[t]he truth is no less important to an
administrative body acting in a quasi-judicial capacity than it is to a court of law.”
Mueliner,714 f.Supp.at 357 (quoting Dept.of Transp.v.Coe,112 Ill.App.3d
506,510,68 Ill.Dec.58,445 N.E.2d 506 (4th Dist.1983)).
Rissetto v.Plumbers and Steamfitters Local 343,94 F.3d at 604.
The doctrine unquestionably applies here,and there is little doubt that Idaho Power
would be estopped from pressing its “gotcha”argument in any appeal.Again,Idaho Power’s
rate case testimony proposed,“If the Company and customer cannot agree on a price,either of
them could ask the Commission to determine the appropriate price.”See Order No.32426 at pp.
25-26 (citing and relying upon Idaho Power’s testimony).Now that the Commission and
Simplot have taken up Idaho Power on its offer,the Company argues that the Commission and
Simplot cannot “override Idaho Power’s proffered sale price,which Company has already
determined is representative of the property’s fair sale value.”Motion at 9.Nothing could be
more inconsistent.Judicial estoppel bars Idaho Power from changing its position after inducing
the Commission to approve its sale procedure in Rule M.See Rissetto,94 F.3d at 600 (noting
that all federal circuits recognizing the doctrine apply it to subsequent proceedings when the
inconsistent position was actually adopted in the prior proceeding,while others do not even
require the position be adopted).
5.THE DOCTRINE OF LACHES BARS IDAHO POWER’S MOTION.
“The defense of laches is a creation of equity and is a specie of equitable estoppel.”
Sword,140 Idaho at 249,92 P.3d at 499 (citing Huppert v.Wolford,91 Idaho 249,257,420 P.2d
11,19(1966)).The elements of laches are met here:(1)Idaho Power alleges Simplot’s
Application invades Idaho Power’s rights,(2)Idaho Power delayed in asserting its rights,having
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had notice and an opportunity do so during the last rate case,(3)Simplot lacked knowledge
Idaho Power would assert it rights at this time,and (4)Simplot would be injured or prejudiced if
Idaho Power’s jurisdictional defense is not held to be barred.See Huppert,91 Idaho at 257,420
P.2d at 19.
In this case,the delay is undeniable,and Simplot unquestionably “has been injured or
placed to a disadvantage by the delay.”Grover v.Idaho Public Utilities Commission,83 Idaho
351,357,364 P.2d 167,170 (1961)(finding delay in filing petition for rehearing did not
constitute laches because at that time I.C.§6 1-626 contained no deadline for filing such a
petition).In reliance on Idaho Power’s proposed sale process,Simplot expended time and effort
to negotiate in good faith with Idaho Power and arranged its business affairs for closure of its
existing Caidwell facility based on the assumption that the Commission would set a fair price for
sale of the facilities at issue.Idaho Power waited until after negotiations failed and only a few
months prior to the date that Simplot intends to commence operations at its new Caldwell facility
to argue for the first time that the Commission lacks authority to implement the sale process
Idaho Power proposed.Requiring Simplot to accept Idaho Power’s unfair price at twice the
facilities’book value at this late date prejudices Simplot.Idaho Power’s argument is barred by
laches.
6.IDAHO POWER’S TAKINGS ARGUMENT FAILS.
Idaho Power’s takings argument is also misplaced.See Motion at 10-11.According to
Idaho Power,requiring a “reduced sale price”of anything less than Idaho Power’s proposed
price set at twice the book value would constitute a “diminution in the value of the Company’s
investment backed expectations.”Id.at 10.Idaho Power fails to mention,however,that to
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qualify for a regulatory taking its investment back expectations must be reasonable.See
Sprenger,Grubb andAssoc.,Inc.v.Cit ofHalley,127 Idaho 576,582,903 P.2d 741,747 (1995).
Expecting to obtain twice the book value on a sale for equipment used to overcharge Simplot (for
decades in many instances)is not reasonable.
Likewise,because Idaho Power proposed the sale process as a means to deflect other
proposed revisions to its facilities charge tariff,it cannot now claim its own sale process
constitutes a physical taking.In addition to judicial estoppel and laches,the doctrine of res
judicata bars this argument.See City of Caldwell v.Roark,9$Idaho 897,900,575 P.2d 495,498
(1972)(holding that prior judgment is resjudicata as to all defenses that could have been raised
in prior action).The time to argue that the sale process would constitute a physical taking was in
the general rate case.Instead,Idaho Power proposed Rule M and explained,“If a sales price
cannot be mutually agreed upon,the Company or the customer may initiate a proceeding before
the Commission in order to determine the appropriateness of the price.”Ir.at 253-54.Idaho
Power cannot now claim that “requiring”it to follow its own sale process constitutes a physical
taking.
CONCLUSION
For the reasons set forth above,the Commission should deny Idaho Power’s Motion to
Dismiss.The Conmiission unquestionably has jurisdiction to,in Idaho Power’s own words
“determine the appropriateness of the price”offered by Idaho Power under Rule M.
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RESPECTFULLY SUBMITTED this day of September 2013
RICHARDSON ADAMS,PLLC
Peter J.Richardson
Of Attorneys for J.R.Simplot Co.
CERTIFICATE OF SERVICE
I hereby certify that on the 6th day of September 2013,copies of the foregoing Reply of
the J.R.Simplot Company to Idaho Power’s Motion was delivered to:
Jennifer M.Reinhardt-Tessmer Jean Jewel
Lisa Nordstrom Secretary
Idaho Power Company Idaho Public Utilities Commission
1221 West Idaho 472 West Idaho
Boise,Idaho 83702 Boise,Idaho 83702
Kris Sasser
Counsel
Idaho Public Utilities Commission
472 West Washington Street
Boise,Idaho $3702
Administrative Assistant
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