20201001Idaho Power Answer to Motions to Dismiss.pdf

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DONOVAN WALKER
Lead Counsel
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October 1,2020
VIA ELECTRONIC FILING
Jan Noriyuki, Secretary
ldaho Public Utilities Commission
11331 W. Chinden Boulevard
Building 8, Suite 201-A
Boise, ldaho 83714
Re: Case No. IPC-E-20-28
Wood Hydro, LLC v. ldaho Power Company
Dear Ms. Noriyuki
Attached for electronic filing in the above matter is ldaho Power Company'sAnswer
to Cross-Respondents'Motions to Dismiss. lf you have any questions about the enclosed
documents, please do not hesitate to contiact me.
Very truly yours,
E*{aerl4
Donovan Walker
DEW/ cld
Enclosures
DONOVAN E. WALKER (lSB No. 5921)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
dwa lker@ idahopower.com
Attorney for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
WOOD HYDRO, LLC,
Complainant,
V.
IDAHO POWER COMPANY,
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CASE NO. IPC-E-20-28
IDAHO POWER COMPANY'S
ANSWER TO CROSS-
RESPONDENTS' MOTIONS TO
DISMISS
RespondenUCross-
Complainant,
v
WOOD HYDRO, LLC,
Cross-Respondent,
ENEL GREEN POWER NORTH
AMERICA, INC.
Cross-Respondent,
V
CENTRAL RIVERS POWER US, LLC
Cross-Respondent.
IDAHO POWER COMPANY'S ANSWER
TO CROSS-RESPONDANTS'MOITIONS TO DISMISS - 1
coMES Now, ldaho Power company ("ldaho powe/' or "company") and
pursuant to Rule 56 and 256 hereby Answers the Motions to Dismiss for tack of subject
matter jurisdiction filed by Cross-Respondents Enel Green Power North America, lnc.
("Enel" or "Rock Creek #2") and Central Rivers Power US, LLC ("Central Rivers" or
"Lowline #2").
I. INTRODUCTION. FACTS. AND BACKGROUND
This case concerns whether the ldaho Public Utilities Commission
("Commission") properly has jurisdiction over the terms and conditions of power
purchase contracts entered into as must-take obligations under the federal obligations
of the Public Utility Regulatory Policies Act of 1978 ('PURPA), including the payment
terms of those contracts, that the Commission itself approved. As described in more
detai! below, well-established federal and state law, both statutory and judicial, as well
as the terms of the contracts in question themselves, squarely and unequivocally vest
jurisdiction in this Commission.
on June 25, 2020, wood Hydro, LLC ("wood Hydro" or "Mile 2g") filed a
Complaint with the Commission alleging that Idaho Power had improperly withheld Net
Firm Energy payments due to Wood Hydro under its PURPAI Firm Energy Sales
Agreement ("FESA'). Complaint at p 1. On July 13, 2020, the Commission issued a
Summons to ldaho Power directing it to Answer Wood Hydro's Complaint. On August
3, 2020, ldaho Power filed its Answer to Wood Hydro's Complaint, and additionally
brought a Cross-Complaint against Wood Hydro/Mile 28, Ene!/Rock Creek #2, and
I Public Utility Regulatory Policies Act of 1978
IDAHO POWER COMPANY'S ANSWER
TO CROSS-RESPONDANTS' MOITIONS TO DISMISS . 2
Central Rivers/Lowline #22 regarding the similar provisions contained in each of the
entities' Commission-approved FESAs under PURPA.
As stated in ldaho Power's Cross-Complaint, Mile 28, Rock Creek #2, and
Lowline #2 each have an old version of a 35-year, levelized rate, mandatory purchase,
PURPA QF3 contract with ldaho Power.a Each of the three projects are in the later
portions of their respective contract terms: Mile 28 expires in June of 2029; Rock Creek
#2 expires in April of 2024; and Lowline #2 expires in April o12023. Each of the projects
have had extended periods of non-generation constituting a permanent curtailment, or
failure to deliver their contractual Annual Net Energy amounts as required in those
agreements. Their contracts contain specific provisions, designed to ensure that the
projects continue to generate through the later years of their Ievelized rate contracts
when they are paying back customers for the early years' overpayments. When each
project permanently curtailed its Annual Net Energy.amounts, ldaho Power calculated
the appropriate Lump Sum Repayment amount from the contracts and assessed the
same in a letter to the projects. Each project responded in writing alleging that there
had been no permanent curtailment and contesting the Lump Sum Repayment amounts
claimed by ldaho Power on behalf of its customers. Mile 28 filed a formal complaint
alleging it has not permanently curtailed delivery of its Annual Net Energy amounts and
that the "liquidated damages clause in the Agreement is unenforceable under Idaho
law." Wood Hydro Complaint, P 2.
2 Wood Hydro, LLC owns/controls the Mile 28 hydroelectric QF, Enel Green Power NA, lnc',
owns/conirols the Rock Creek #2 hydroelectric QF, and Central Rivers Power US, LLC owns/controls the
Lowline #2 hydroelectric QF.
3 QF, or Qualifying Facility under PURPA.
a Each af's ffSA was aitached as Attachments 1 through 3 to ldaho Power's Answer and Cross-
Complaint.
IDAHO POWER COMPANY'S ANSWER
TO CROSS.RESPONDANTS'MOITIONS TO DISMISS - 3
All three contracts contain a nearly identical provision in Section 21 of the
Agreements stiating,
lf, at any time prior to the end of the term of the Agreement,seller permanenfly curtails in whole or in part its long-term
average deliveries of the Annual Net Firm Energy amountspecified in paragraph 6.3, seller shall pay to ldaho power,as reasonable liquidated damages arising out of thispermanent curtailment of Annual Net Firm Energy deliveries,the appropriate rump sum repayment amounispecified in
Appendix D, multiplied by the difference in megawatt-hours
between the Annual Net Firm Energy amount specified inparagraph 6.3 and the reduced Annual Net Firm Energy
amount after the permanent curtailment.
All three contracts also contain a table, Appendix D, that provides a Lump Sum
Repayment amount to be applied by contract year for which there is permanent
curtailment of the Annual Net Energy amounts. This is designed as a mechanism to
protect customers in the levelized agreement and to make sure projects continue to
generate in the later years to "pay back" customers for the ;evelized overpayment
amount from the early years of the contract.
ln its Answer and Cross-Complaint ldaho Power respectfully requests that the
Commission address the relevant contract provisions relating to the Annual Net Energy
Amount, Permanent curtailment of the Annual Net Energy Amount, Lump sum
Rayment Amount, and any other necessary contractual provisions for all three Cross-
Respondents, and provide direction to ldaho Power and the QF Cross-Respondents as
to the proper interpretation of the contractual provisions as they relate to the
Commission's implementation of PURPA's mandatory purchase, legally enforceable
obligation for these projects in the state of ldaho.s
s.ldaho Power did not plead and does not seek a judgment from the Commission for an award ofdamages as claimed by Cross-Respondents. ldaho Power seeks a determination from the Commission
IDAHO POWER COMPANY'S ANSWER
TO CROSS-RESPONDANTS'MOITIONS TO DISMISS - 4
On August 27,2020, the Commission issued Order No. 34764, Notice of Cross-
Complaint, directing Wood Hydro to file a reply to ldaho Power's Answer and Cross-
Complaint, and directing Rock Creek #2 and Lowline #2 be issued Summonses giving
each eF 21 days w1h which to answer ldaho Power's Cross-Complaint. On September
17, 2020, Rock Creek #2 and Lowline #2 filed separate Motions to Dismiss ldaho
power's Cross-Complaint alleging the Commission lacked subject matter jurisdiction'
Neither filed an Answer to the Cross-Complaint.
II. SUMMARY OF ANSWER TO MOTIONS TO DISMISS
The Commission has jurisdiction to hear these matters not only based upon the
express agreement of the parties, but also based upon its express, statutory authority
under state and federal law.
The Commission has the express statutory jurisdiction and authority over utility
rates, any contracts affecting such rates, and the power and authority to hear
complaints and investigate any single rate, contract, or practice of a utility' ldaho Code
SS 61-129, 61-S01 ,61-502,61-503. Case Precedent is rich with examples' The ldaho
Supreme Court has recognized that the Commission may interpret contractual
provisions, which may normally be within the jurisdiction of the courts, upon the consent
of the parties for the Commission to hear such matters. Afton Energy, lnc. v. ldaho
Power Company, 111 ldaho 925,929,729 P.2d 4OO, 404 (1986XAtron lV) quoting
Bunker Hitl Co. v. Washington Water Power Co., 98 ldaho 249,252,561 P.2d 391,394
regarding the proper avoided cost rates, and the mechanisms in the FESA (AnnualNet Energy Amount,
Permanent Curtailment of the Annual Net Energy Amount, Lump Sum Repayment Amount, Liquidated
Damages, etc.) designed to protect customers ahO tne proper allocation of rates to customers resulting
from pURpA's mandatory purchase obligation and the levelized rate contracUlegally enforceable
obligation in each case.
IDAHO POWER COMPANY'S ANSWER
TO CROSS-RESPONDANTS'MOITIONS TO DISMISS - 5
(1977)(Bunker Hill l). The Court has recognized that the Commission has the
jurisdiction and authority to determine whether an event of force majeure occuned
pursuant to a FESA between ldaho Power and a PURPA QF. tdaho Power Co. v. New
Energy Two, LLC, 156 ldaho 4o2,46s,328 p.3d 442,44s (2014). The court has
recognized that the Commission has the jurisdiction and authority to interpret the
arbitration clause provisions in a contractual agreement between a regulated utility and
an unregulated paging provider where the Commission was tasked with implementation
of federal telecommunications law in the state of ldaho. McNeal v. ldaho Public Utitities
Commission, 142ldaho 685, 689, 132 P.3d 442,446 (2006). The Court has held that
the Commission has jurisdiction to examine common law contract issues between eFs
and utilities. A.W. Brown v. ldaho Power Co., 121 ldaho 812,819,829 p.2d g41, g4g
(1992)("Brown argues that the PUC had no jurisdiction 'to litigate the common law
contract issues ...' We disagree.") Additionally, federal courts have recognized a state
regulatory agency's jurisdiction and authority to interpret contractual provisions between
a utility and a PURPA QF. Wheelabrator Lisbon, lnc. v. Connecticut Dept. of pubtic
Utility Control, 531 F.3d 183, 188-89 (2d Cir.2008) (acknowledging state regulatory
agency's jurisdiction and authority to interpret contract between regulated public utility
and PURPA OF) (citing Wheelabrator Lisbon, lnc. v. Dept. of Pubtic lJtitity Control,2gl
Conn. 672,689,931 A.2d 159, 171 (2007)(state Supreme Court upholding the state
regulatory agency's jurisdiction to interpret power purchase agreement).
All of the above-cited authorities illustrate the public policy rationale in favor of
the Commission's jurisdiction to resolve disputes and interpret PURpA power purchase
agreements including: the conservation of judicial resources; the Commission's duty to
IDAHO POWER COMPANY'S ANSWER
TO CROSS-RESPONDANTS'MOITIONS TO DISMISS - 6
protect retail electric consumers; the Commission's duty to implement federal PURPA
law and regulations; as well as the fact that the Commission is best suited to make
determinations and interpretations regarding claims arising from contractual provisions
that it requires and approves for use. The Commission, particularly in this case, is best
suited to interpret the required provisions in a PURPA mandatory-purchase, levelized-
rate agreement where it has exercised its rate-making authority to require lump sum
repayment provisions in the event the QF curtails its generation without fully
compensating customers through the levelized rates contained therein.
III. ANSWER TO MOTION TO DISMISS
Rock Creek #2 and Lowline #2 ("Cross-Responderts"lo both maintain that the
Commission lacks the subject matter jurisdiction to hear contractual matters, primarily
relying upon the "general rule" that contract interpretation is for the courts, and not the
Commission. Cross-Respondents, while acknowledging that the Court has recognized
exceptions to this "general rule" erroneously seek to draw distinctions from the present
cases and those recognized exceptions, either ignoring the Court's acknowledged
exceptions where the Commission has proper jurisdiction or attempting distinctions
without significance between themselves and the applicable cases. As set forth below,
there are instances in which the Commission can, and does, interpret and enforce
contracts entered into by public utilities that it regulates, and has the jurisdiction to do
so. Cross-Respondents rely only upon the Court's "general rule" without regard to the
exceptions thereto, or the specific facts of this case.
6 Wood Hydro, who initiated this matter by its own Complaint, has not objected to the Commission's
jurisdiction.
IDAHO POWER COMPANY'S ANSWER
TO CROSS-RESPONDANTS'MOITIONS TO DISMISS - 7
A. fhe Gommission Hai Jurisdictign to tnterpret and Enforce ContractualProvisions Contained in a,F!rJ=n F,ngrqve+9 Approves Between a Public Utilitv and
PURPA.
The ldaho Supreme Court has specifically found, despite a "general rule" that
contract interpretation is for the courts, that the Commission does have jurisdiction and
the right to interpret contracts in certain instances and under certain exceptions to the
"general rule." A.w. Brown v. ldaho power co., 121 ldaho g12, g1g, g2g p.2d g41, g4g
(1992)(Commission has jurisdiction to hear complaints and examine common law
contract issues between QFs and utilities); McNealv. ldaho Pubtic lJtitities Commission,
142 ldaho 685, 689, 132 P.3d 442, 446 (2006)(Commission has the authority to
interpret arbitration provisions in telecommunications interconnection agreemen t); Afton
Energy, lnc. v. ldaho Power co., 111 ldaho g2s, g2g, 72g p.2d 4oo, 404
(1986)(Commission may interpret contractual provisions, which may normally be within
the jurisdiction of the courts, upon the consent of the parties for the Commission to hear
such matters)(quoting, Bunker Hill Co., v. Washington Water Power Co., gg ldaho 249,
252, 561 P.2d 391, 394 (1977)); ldaho power co. v. New Energy Two, LLC, 156 ldaho
462, 465,328 P.3d 442, 445 (2[\(Commission has the jurisdiction and authority to
determine whether an event of force majeure occurred pursuant to a FESA between
ldaho Power and a PURPA QF).
ln A.W. Brown, the Court stated that "the Commission has jurisdiction to hear
complaints against utilities alleging violation of any provision of law ..." 121 ldaho at
819,828 P.2d at 848. The Court affirmatively disagreed with Brown's contention that
the Commission had no jurisdiction "to litigate the common law contract issues between
Brown and ldaho Power" stating simply, "We disagree.,, ld.
IDAHO POWER COMPANY'S ANSWER
TO CROSS-RESPONDANTS'MOITIONS TO DISMISS - 8
ln Afton /V, the Court expressly affirmed two previously announced "exceptions"
to the ,,general rule" that contract interpretation is normally a matter for the courts' 111
ldaho at g29, 72g P.2d at 4O4. The first exception is where the parties agree to submit
the matter to the Commission. /d., quoting Bunker Hill Co. v. Washington Water Power
co., gg ldaho 24g,252,561 P.2d 391,394 (1977). The otherexception is where "the
Commission Gan use its expertise and supply a reasonable contract rate where the
parties have an existing contract but are unable to agree to the specific rate." /d', citing
F.M.C. Corp v. tdaho Public tJtitities Commission,lO4ldaho 265, 658 P.2d 936 (1983).
ln McNea/, the Commission's interpretation of an arbitration provision in a
Commission-approved contract between PageData, an unregulated paging provider,
and ewest, at that time a regulated public utility, was found to be properly within the
jurisdiction of the Commission. td. ln McNeal, the Commission was tasked with
implementation of federal regulations, which led to an interconnection agreement, a
contract, between pageData and Qwest. PageData filed a complaint alleging that
ewest was not in compliance with certain provisions of the agreement. The
Commission dismissed the complaint, finding that, under the arbitration clause of the
contract, the parties were to first submit the matter to arbitration. The Supreme Court
held that the Commission had authority to interpret the arbitration provision in the
contract. /d.
Similarly, in Ner,v Energy, the Court citing lo McNealfound that the Commission
has the jurisdiction to determine whether or not an event of force majeure occurred that
would excuse the QF's performance under a PURPA FESA. 156 ldaho al 465, 328
p.3d at 445. New Energy being the most recent ldaho Supreme Court case regarding
IDAHO POWER COMPANY'S ANSWER
TO CROSS.RESPONDANTS'MOITIONS TO DISMISS - 9
the Commission's jurisdiction and dealing with a FESA between ldaho power and a
PURPA QF is both instructive and controlling. The Court not only found that the
Commission properly exercised its jurisdiction based upon the express agreement by
the parties to submit all disputes and interpretations to the Commission, but also
recognized the Commission's statutory authority to interpret and enforce the contracts.
ld., 156ldaho at 464-65, 329 p.3d at 444-45.
The commission also based its order upon decisions of thiscourt regarding the commission's statutory authority. TheAgreements in this case were executed pursuant to thePubric Utirity Reguratory poricies Act of 1gzb (puRpA), andthe biogas generation facilities to be constructed by'NewEnergy were to be qualifying facilities (eFs) under that act.The Commission wrote as follows:
we find that there is a statutory basis for our jurisdiction
in this matter. Just as in the case where eFsmay bringcomplaints against utilities under puRpA (Afton l/itt, 107ldaho at781, 693 P.2d at 427 [19g4]), the Commissionis authorized under tdaho Code 5 Ot_OZt to hearcomplaints made by public utilities. As the ldahoSupreme Court noted tn Afton t/llt, Section 61-621.gives
the.commission jurisdiction to hear complaints ag'ainstpublic utilities alleging violations of rules, regulatio-ns orany provision of laws; l.C. S 61-502 gives thecommission jurisdiction to determine reasonible rates,including rates collected under contracts; and l.C. S 61_503 gives the commission power to investigate a singrecontract. ..." 107 ldaho atlg4,693 p.2d at +gO. T-hePPAs at issue in this case direcfly affect ldaho power's
rates through the annual power Cost Adjustment (pCA).l!1ho Code S 61-502, Kootenai, gg ldaho at eeb, Sg1P.2d at 127. The United States Supreme Court alsonoted in FERC v. Mr.ssissrppi, pURpA ,,and the TFERCIimplementing regulations simply require the [stateregulatoryl authorities to adjudicate disputes aiisingunder [PURPA]. Dispute resolution of this kind in thevery type of activity customarily engaged in by theMississippi [Public Utilities] Commission. ...', 4SO U.S.742,760, 102 S.Ct. 2126, 213g, 72 L.Ed.2d 532, 547-4g
IDAHO POWER COMPANY'S ANSWER
TO CROSS-RESPONDANTS' MOITIONS TO DISMISS. 1O
(1982)(emphasisadded);Aftonl/lll,107ldahoat789'
693 P.2d at 435 (emphasis original)'
(Footnotes omitted.) New Energy did not address this
analYsis bY the Commission.
ln the commission's above-quoted analysis, it noted the
statement by the United states supreme court in F.E.R.C. v.
Mr'ssissipp i,-456 U.5.742,760, 102 S'Ct' 2126, 2137'38' 72
L.Ed.2d532,547-48(1982),thatPURPA"andthe
implementing regulations simply require the Mississippi
[Public Utilities commission] to adjudicate disputes arising
under the statute." ln McNeal, we held that because the
Telecommunications Act of 1996 granted the commission
the commission the authority to approve or disapprove the
contract at issue, the Act necessarily granted the
commission the authority to interpret and enforce the
provisions of the contract that it had approved' 142 ldaho at
bgg, t3z p.3d at 446. The agreements in this case had
been aPProved bY the Commission'
New Energy, 156 ldaho at464,329 P.3d at444'
ln this case, just as in McNealand in New Energy, the commission is tasked with
implementation of a federal regulatory scheme, here PURPA, which led to an
agreement between ldaho Power, a regulated utility, and Cross-Respondents' non-
regulated PURPA QFs. Here, ldaho Power has also filed complaints due to the QFs'
failure to meet contractual commitments in those agreements. The provisions at issue
in this matter are specific ratemaking provisions in the contracts required by the
Commission and designed to protect retail customers whose electric rates directly pay
the costs of these contracts. Just as the Commission had the jurisdiction and authority
to interpret the arbitration clause tn McNeal, and the force majeure provisions in Net'v
Energy, the Commission here has the jurisdiction and authority to interpret the Annual
Net Energy, Lump Sum Repayment, Liquidated Damages, and any other provision in
the FESAS.
IDAHO POWER COMPANY'S ANSWER
TO CROSS.RESPONDANTS' MOITTONS TO DISMISS. 11
B.
The Commission has jurisdiction over the interpretation of contracts where the
parties have agreed to submit a dispute involving contract interpretation to the
commission' Afton Energy, lnc. v. ldaho Power co., 111 ldaho g25, g2g,72g p.2d
400,4O4 (1930) 929,729 P.2d a1404 (citing Bunker Hitl Co. v. Wash. Water power Co.,
98 ldaho 249, 252, 561 p.2d 391, 394 (1gTT)); McNeal v. tdaho pubtic tJtitities
commission, 142 ldaho 6g5, 132 p.3d 442 (2006); tdaho power co. v. New Energy
Two, LLC, 156 ldaho 462, g2g p.3d 442 (2014).
Both the Rock Creek #2's and Lowlin e #2's FESAs contain similar language
regarding Commission jurisdiction. Paragraph 7.3 of Rock Creek #2,s and Lowline #2,s
FESAs each provide for the continuing jurisdiction of the Commission, are tifled as
such, and are nearly identical to each other and to language from the New Energy
contract.T Paragraph 7.3 of Rock creek #2's FESA states:
_ This Agreementis a special contract and as sucrr, ttre rates, terms andconditions contained in this Agreement will be construed inaccordance with ldaho power company v. ldaho public
utirities comm'n and Afton Energy, tn'c., io7 rdaho 7g1, 6gaP.2d 427_ (1994), rdaho powei-company v. rdaho pubric
utirities_comm'n, _ rdaho _, osis p.2d 1261 rrgg5l,ldaho lower company v. rdaho pubtic tJtitities comm'n an'dAfton F!9lgV,!nc., _ tdaho _, _ p.2d _(Sfip Op No155, 1986), section 210 of tre puutic utirity'n"grritoryPoticies Act of 1978 and 18 CFR 5292.303_308.
Paragraph 7.3 of Lowline #2,s FESA states:
7 Paragraph 7'7 of New Energy's FESA states: "Continuing Jurisdiction of the Commission. ThisAgreement is a special contract and, as such, the rates, teims ano conoitions contained in thisAgreement will be construed in accordance with ldaho i;;r c;p-'"ny r. tdaho pubtic Utititiescommission and Afton Energv, rnc., 107 rdaho_781, 693 !.-iaiii fisti+;, toano powei corprny r.ldaho Pubric Utirities commission, 107 rdaho l:.21'g_s.sl.zitiai irgs6), Afto" er"igvl'ir". v. rdahoPowercompany, 111 ldaho925,72gP.2d4o.o(rsiao),s"ctionzio'ofthepubticUtitityRegutatory
Policies Act of 1978 and 18 CFR 5292.303-308.,
IDAHO POWER COMPANY'S ANSWERTO CROSS-RESPONDANTS'MOITIONS TO DISMISS - 12
continuinq Jurisdiction of the commission - This Agreement
i the rates' terms and
conditions contained in this Agreement will be construed in
ac"otO"nce with ldaho Power Company v, l!a.h.o. Public
tltitities Comm'n and Afton Energy, lnc', 106 [sic] ldaho--'
ogd iza 427 (1s84\, tdaho Poier Companv .v' t!1lo.l1totic
tJtilities Comm'n, ldaho
-,
695 P'2d 1261 (1985)'
S""tion 210 ol the-Public Utilffiegulatory Policies Act of
1978 and 18 CFR 5292.303-308'
Articre XXil of both Rock creek #2's and Lowrine #2's FESA arso provides, "This
Agreement is subject to the jurisdiction of those governmental agencies having control
over either party of this Agreement." Additionally, Paragraph 21'1 of Rock Creek #2's
FESA conclusively demonstrates that the parties have agreed to the commission's
jurisdiction regarding any and all disputes, providing that all disputes relating to the
interpretation of the terms and conditions of the Agreement will be submitted to the
Commission
Disputes-Alldisputesrelated.toorarisingunderthis
frr:"",""nt, including but not limited to the interpretation of
th-e terms and conditi-ons of this Agreement, will be submitted
to the Commission for resolution'
Again, this is the exact same language considered by the Court in the New Energy
case.s Lowline #2's FESA does not contain this paragraph.e
ltisclearthatRockCreek#2,sFESAwasenteredintobythepartieswiththe
very express understanding that all disputes or interpretation would be submitted to the
commission, and that both Rock creek#2 and Lowline #2 agree to the jurisdiction of
8 Paragraph 19.1 of the New EnergyFESAstates, ..Disouteg - All disputes
Aoreement, including, tut not limit;d to, the interpretation of the terms and
*ii ue iuumitted to i-he Commission for resolution'"
related to or arising under this
conditions of this Agreement'
e paragraph 21.1 of Wood Hydro/Mile 28's FESA contains the same language' "Disoutes - All disputes
related to or arising under this Agreement,.in"frJing, Ort not.limited to, tie interfretation of the terms and
conditions of this Agreement, will ue suumitteo to'i[ebommission for resolution." wood Hydro/Mile 28
does not contest the Commission's jurisdiction'
IDAHO POWER COMPANY'S ANSWER
16 Cnoss-RESPoNDANTS'MolrloNs To DlsMlss - 13
the Commission, placing them solidly within the Court's precedent finding proper
commission jurisdiction from Afton, McNeal, and Netv Energy.
C. The Commiss=iol,s ,
Eunctions
=
and lts= lmplem=enta.tiol
nrtnrritv,frr= !lr.Resulated Pubtic Utilitv and a pURpA eF.
The Commission rightly has jurisdiction over interpretation and enforcement of
contracts relating to utility rates, which contracts, when entered into pursuant to
PURPA, it is required to implement and oversee under a federal regulatory scheme and
pursuant to stiate law. The Commission is granted the requisite authority under both
ldaho and federal law to do so.
ldaho Code S 61-501 provides the Commission with authority to supervise and
regulate utilities and to do "all things necessary to carry out the spirit and intent,, of the
act. ldaho Code S 61-129 states that utilities are subject to the jurisdiction, control, and
regulation of the Commission. ldaho Code S 61-502 provides jurisdiction over rates,
including rates "or contracts . . . affecting such rates." The Commission is also granted
the power "upon its own motion or upon complaint, to investigate a single rate . .
contract or practice." ldaho Code S 61-503. The FESAs at issue are utility contracts
which affect rates as defined under tdaho Code S 61-502 and which the Commission
has specific authority to investigate under tdaho Code S 61-503. The payments made
by ldaho Power, as well as any damages collected under the FESA, are direcly
assigned to ldaho Power's many customers through rates on an annual basis through
the Power Cost Adjustment ('PCA"). As such, the contractual matters affecting the
same fall directly under the express grant of authority to the commission.
IDAHO POWER COMPANY'S ANSWER
TO CROSS.RESPONDANTS'MOITIONS TO DISMISS - 14
Additionally, this Court has stated, "the Commission has jurisdiction to hear
complaints against utilities alleging violation of any provision of law," which includes
common law contract issues. A.W. Brown, 121 ldaho at 819, 828P'2d at 848' "l'C'S
61-612 gives the commission jurisdiction to hear complaints against utilities alleging
violations of rules, regulations or any provision of law." Afton Energy, lnc' v' ldaho
Power co.,1o7 ldaho 781,784,693 P.2d 427,43O (1984) (Afton l/lll). ldaho code $
61-621 provides that "Any public utility shall have a right to complain on any of the
grounds upon which complaints are allowed to be filed by other parties" ' '"
Furthermore, pURPA itself grants the Commission jurisdiction over the
implementation of the federal statute. Afton t/ttt, 1o7 ldaho at 784-85, 693 P'2d at 430-
31. The Court recites the utility's federal obligations, which require that "each State
regulatory authority shall . . . implement such rule." /d. (citing PURPA S 210(f))' This
court states that ,,it is clear that PURPA was intended to confer upon state regulatory
commissions responsibilities not conferred under state law." Afton l/lll, 107 ldaho at
7g4-g5, 693 p.2d at 430-31. "Moreover, the United states supreme court has
interpreted puRpA as imposing requirements on state regulatory authorities in excess
of their duties under state law." ld. The Federal Energy Regulatory Commission
(.FERC") itself states that "state 'implementation may consist of the issuance of
regulations, an undertaking to resolve disputes between qualifying facilities and electric
utilities arising under Subpart C, or any other action reasonably designed to implement
such subparl;" ld., citing 18 CFR S 292.401(aX1980)'
This establishes a clear grant of authority to the Commission that confers upon it
the express jurisdiction and authority to interpret and enforce utility contracts effecting
IDAHO POWER COMPANY'S ANSWER
TO CROSS-RESPONDANTS'MOITIONS TO DISMISS - 15
customer rates and establishes responsibilities under PURPA that are "in excess,, of
those that were granted under state law alone, and one which was anticipated to
resolve disputes between QFs and utilities regarding PURPA matters. The present
disputes between a utility and QFs over a PURPA matter is seemingly precisely what
FERC envisioned when it promulgated 18 C.F.R. g 292.a01(a). The Afton t/t1 Courl
cited language from the United States Supreme Court and federal laws that creates an
additional basis of authority for the Commission's jurisdiction in these cases. This,
combined with the specific state authority previously discussed, creates an expticit grant
of authority to the Commission to interpret a PURPA contract, and payment terms in
particular are squarely within that interpretive authority.
This Court in Afton l/lll analogized FERC v. Mississrppi, 102 S.Ct. 2126,21g7
(1982) to this situation, concluding that the Commission's actions of reviewing a dispute
over a PURPA contract were:
similar to its everyday ratemaking functions which
necessarily entail reviewing contracts and transactions which
affect those rates. l.c. S 61-307. contracts entered into bvprblic ,tilities. *ith cSpp" or decisions by ,tilities not to
contract with CSPPs have a verv real effect on the rates paid
bv consumers both at present and in the future
Afton l/111,107 ldaho at 789, 693 P.2d at 435 (emphasis added).
It cannot be disputed that the long-term, levelized rate FESAs in this case have a
significant effect on customer rates. The very provisions that are disputed exist
because of the nature of PURPA's legally enforceable obligation, mandatory purchase
requirements which required the long-term lock in of rates for the duration of the
contract estimated at the time of contracting or in creation of the legally enforceable
obligation. Additionally, when such long-term, estimated, avoided cost rates are
IDAHO POWER COMPANY'S ANSWER
TO CROSS-RESPONDANTS' MOITIONS TO DISMISS. 16
Ievelized, the Commission employs mechanisms to protect customers for the entire
duration of the contract, such as the Lump Sum Repayment and Liquidated Damages
provisions of these FESAs, to ensure customers are made whole in their advancement
of avoided cost rates during the levelization period. This is inherently and undeniably a
rate-making function mandated and authorized by state law and required by PURPA
which is within the exclusive jurisdiction and authority of the Commission. The
Commission's express statutory grant of authority over ratemaking functions and
authority to hear complaints arising pursuant to "any provision of law," including
common Iaw contract issues, creates a duty for the Commission to hear the present
disputes.
lll. coNcLUSION
The Commission properly has jurisdiction over these matters. Such a finding is
consistent with state and federal law and prior decisions of the ldaho Supreme Court.
The Commission has jurisdiction to hear these matters based upon the express
agreement of the parties, and the Commission's express, statutory authority under state
and federal law. These contracts including the rates, terms and conditions therein were
mandated and approved by the Commission under its regulatory authority over ldaho
power, pursuant to federal law under PURPA, and pursuant to its rate-making authority
and functions to protect retail customers.
ldaho Power respectfully requests that the Commission: deny Cross-
Respondents' Motions to Dismiss; proceed to address the relevant contract provisions
relating to Annual Net Energy Amounts, Permanent Curtailment of the Annual Net
Energy Amounts, Lump Sum Repayment Amounts, and any other necessary
IDAHO POWER COMPANY'S ANSWER
TO CROSS-RESPONDANTS'MOITIONS TO DISMISS - 17
contractual provisions for all three Cross-Respondents; and provide direction to ldaho
Power and the QF Cross-Respondents as to the proper interpretation of the contractual
provisions as they relate to the Commission's implementation of PURpA's mandatory
purchase, Iegally enforceable obligations as represented by the long-term, levelized-
rate FESAs.
Respectfully submitted this 1st day of October 2020.
Mail*q
DONOVAN E. WALKER
Aftorney for ldaho Power Company
IDAHO POWER COMPANY'S ANSWER
TO CROSS.RESPONDANTS'MOIT]ONS TO DISMISS - 18
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 1st day of October 2020, I served a true and
correct copy of IDAHO POWER COMPANY'S ANSWER TO CROSS-RESPONDENTS'
MOTION$ TO DISMISS upon the following named parties by the method indicated
below, and addressed to the following:
Wood Hydro, LLC
C. Thomas Arkoosh
ARKOOSH LAW OFFICES
802 w. Bannock St. Suite LP 103
P.O. Box 2900
Boise, ldaho 83701
Email [e-mail]
[e-mail]
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Mail
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ldaho Public Utilities Commission Staff
Edward Jewell
Deputy Attomey General
Email: [e-mail]
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Enel Green Power North America, lnc.
Gregory M. Adams
Richardson Adams PLLC
515 N.27th Street
Boise, lD 83702
Email : [e-mail]
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Randald Bartlett
Sr. Director, Hydro O&M
Email: randald bartlett@e com
[e-mail]
IDAHO POWER COMPANY'S ANSWER
TO CROSS.RESPONDANTS'MOITIONS TO DISMISS - 19
Central Rivers Power US, LLC
Preston N. Carter
Givens Pursley LLP
601 W. Bannock St.
Boise, lD 83702
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Matthew Stanley
VP and General Manager
Email : mstanley@centralriverspower. com
Christy Davenport, Legal Secretary
IDAHO POWER COMPANY'S ANSWER
TO CROSS-RESPONDANTS' MOITIONS TO DISMISS - 20