20210104Petition for Reconsideration.pdf

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Gregory M. Adams (ISB No. 7454)
Peter J. Richardson (ISB No. 3195)
Richardson Adams, PLLC
515 N. 27tr Steet
Boise,Idaho 83702
Telephone: [phone]
Fax: [phone]
greg@richardsonadams. com
peter@richardsonadams. com
Attorneys for Coleman Hydroelectri c, LLC
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
APPROVAL OR REJECTION OF AN
ENERGY SALES AGREEMENT WITH
COLEMAN HYDROELECTRIC LLC, FOR
THE SALE AND PURCHASE OF ELECTRIC
ENERGY FROM THE COLEMAN TIYDRO
PROJECT
CASE NO. IPC-E-20-27
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COLEMAN HYDROELECTRIC, LLC'S
PETITION FOR RECONSIDERATION OF
ORDER NO. 34870
INTRODUCTION AND ST]MMARY
Pursuant to Idaho Public Utilities Commission ("IPUC" or "Commission") Rule of
Procedure 331, IDAPA 31.01.01.313, and Idaho Code $ 6l-626, Coleman Hydroelectric,LLC
("Coleman Hydro") hereby respectfully petitions the Commission for reconsideration of Order
No. 34870 (hereafter also referred to as the "Order"). In accordance with Rule 331, this Petition
for Reconsideration sets forth specifically the grounds that Coleman Hydro contends the Order is
unreasonable, unlawful, erroneous or not in conformity with the law, and contains legal briefing
in support thereof. ln support of this Petition, Coleman Hydro is also concurrently submitting
the Supplemental Declaration of Jordan Whittaker and the Declaration of Gregory M. Adams to
supply additional information implicated by the findings and reasoning of the Order. Although
COLEMAN HYDROELECTRIC, LLC'S PETITION FOR RECONSIDERATION OF ORDER
NO.34870
TPC-B-20-27 _PAGE I
Coleman Hydro submits that this Petition should be granted without further proceedings,
Coleman Hydro will offer evidence at hearing or additional argument should the Commission
deem it necessary to resolve the issues presented herein.
For the reasons set forth below, Coleman Hydro requests that the Commission reconsider
the Order and issue a new order approving the Energy Sales Agreements ("ESA") entered into
between Coleman Hydro and Idaho Power Company ("Idaho Power") containing the published
avoided cost rates established by Order No. 34350 and in effect prior to June 1, 2020 (the "Order
No. 34350 rates"), as submitted by ldaho Power in this proceeding. As explained below,
although the parties' wriffen agreement was not finally executed prior to June l, 2020, Coleman
Hydro perfected its entitlement to the Order No. 34350 rates prior to June 1,2020. Despite the
Order's conclusion, this Commission has consistently approved ESAs executed after the
expiration of the published rates contained therein in similar circumstances. Indeed, Coleman
Hydro has located 20 such instances where the Commission approved of ESAs with an
"Effective Date" occurring after expiration of the contracted rates. Accordingly, the
Commission's Order No. 34870 erred to reject inclusion of the Order No. 34350 rates in the
Coleman Hydro ESA and, especially when considering the substantial expenditure Coleman
Hydro already incurred in reliance on those rates, the Commission should approve use of those
rates in the Coleman Hydro ESA.
BACKGROUI\D
The Coleman Hydro Project is a planned hydroelectric project that will harness the
waterpower potential of an existing irrigation pipeline, which is currently unused and wasted.
See Wittaker Declaration at\ 3. The project would be located near Leadore, Idaho, in Lemhi
County, and would have a maximum capacity of 800 kilowaffs ("kW").
COLEMAN HYDROELECTRTC, LLC'S PETITION FOR RECONSIDERATION OF ORDER
NO.34870
rcc-E-20-27 -PAGE2
The developers of the Coleman Hydro Project had been in discussions with Idaho Power
for over ayeff prior to expiration of the Order No. 34350 rates and incurred substantial expense
in the expectation that Coleman Hydro's energy would be sold under those rates. Id. atll4-ll.
Coleman Hydro representatives initially completed Idaho Power's ScheduleT3 application for
quali$ing facilities ("QF") for the project's current configuration and submitted it to Idaho
Power on May 8,20L9. Id. atl9. In subsequent discussions, Coleman Hydro revised the
initially proposed Scheduled Operation Date, clarified that Coleman Hydro sought the seasonal
hydropower rates since it will only produce energy in the irrigation season, and provided
additional information requested for the purpose of completing the Energy Sales Agreement by
Idaho Power's representative, Jerry Jardine. Id. at\ 9. As of May 19,2020, Coleman Hydro had
agreed to all terms and conditions of the Energy Sales Agreement and communicated to Idaho
Power that Coleman Hydro was ready to execute the agreement. Id. at fl I l; accord ldaho
Power's Reply Comments atp.2.
Both Idaho Power and Coleman Hydro agree that all material terms were resolved and all
that remained as of May 19,2020, was the mere formality of affixing signatures to the ESA.
Coleman Hydro' s representative, Jordan Whittaker, attested:
As of May 19,2020.I understood that we had completed negotiation of the
Energy Sales Agreement, including the rates contained therein, and both parties
were committed to that agreement. Idaho Power's Reply Comments state that the
only element absent at the time of the June 1 rate change was the actual signatures
on the ESA, which occurred on June 8, and June 19. 2020.I agree that both
parties had resolved all material terms before June I and all that remained was the
actual signatures on the written agreement.
Whittaker Declaration at fl 10. Likewise, Idaho Power explained:
The only element absent at the time of the June 1 rate change was the actual
signatures on the ESA, which occurred on June 8, and June 19, 2020.The project
had been pursuing an ESA since May of 2018 and there were no material terms in
COLEMAN HYDROELECTRIC, LLC'S PETITION FOR RECONSIDERATION OF ORDER
NO.34870
|Pc-E-20-27 - PAGE 3
dispute. Under these facts, and under PURPA's mandatory purchase obligation,
Idaho Power did not believe it could refuse to sign the contract.
Idoho Power's Reply Comments atp.4.
After Coleman commiffed to the terms of the ESA on May 19, 2020,Idaho Power
controlled finalization of the document for signatures. First, Idaho Power routed the agreement
through its Sarbanes-Oxley compliance review, which Idaho Power appears to assert was not
completed until May 27,2020. Idaho Power's Reply Comments atpp.2-3. Notably, unlike
some other utilities in the Northwest, Idaho Power still uses physical paper and ink signatures for
its ESAs, which in this case guaranteed the execution process would not be complete before June
1,2020.1 The parties were physically separated by quite a distance - with Idaho Power
personnel being located in Boise and Coleman Hydro's representative being located
approximately a four-and-half-hour drive away in Leadore - and Idaho Power placed the
executable agreement in the mail to Coleman Hydro. Whittaker Declaration at fl I 1. Coleman
Hydro's representative, Mr. Whittaker, attested that he received and executed the agreement on
June 8, 2020, and mailed it back to Idaho Power. Id. Idaho Power executed the agreement on
June 19, 2020,with full knowledge that it contained the rates in effect only until June 1, 2020, n
the ESA's Exhibits E and F - which directly cite to Order No. 34350 as the source of the rates.
See ESA at $$ 7.3-7.5 & Exs. E & F.
As the evidence submitted to the Commission further demonstrates, the developers of
Coleman Hydro expended substantial sums to develop the facility prior to the Effective Date of
I See, e.g., Rocky Mountain Power's Applicationfor Approval of Power Purchase Agreement
Between PacffiCorp and Birch Hydro Company,IPUC Case No. PAC-E-20-07, at Agreement p. 39 (filed
June 3, 2020) (containing the electronic signature of PacifiCorp's representative dated May 18, 2020, just
one day before the signature of the Seller's representative dated May 19, 2020, thus ensuring full
execution prior to the same June l, 2020 rate change at issue here).
COLEMAN HYDROELECTRIC, LLC'S PETITION FOR RECONSIDERATION OF ORDER
NO.34870
IPC-8,-20-27 _PAGE 4
the rate change on June I,2020. Before June 1, 2020, the developers of the project had
expended approximately $2.35 million in the completing the development of this 800 kW
facility. Whittaker Declaration at'lffl 4-5, 8, & Ex. 1. Such development included completion of
the following critical development steps: installation of six miles of 24-inch penstock; purchase
of the Pelton turbine, generator, and switch gear; completion of construction of the project's
powerhouse; and coflrmencement of construction of the privately owned segments of the
interconnection tie line, which is almost completed. Id. The interconnection study process had
also advanced to the final step of executing the Generator Interconnection Agreement and
funding Idaho Power's interconnection construction with an additional $300,000 expenditure to
timely bring the facility online once the ESA was approved. Id. atl7. Additionally, the project
obtained necessary approval from the Federal Energy Regulatory Commission ("FERC") of its
status as a qualiffing in-conduit hydropower facility exempt from the lengthy licensing process
under the Federal Power Act. Id. atil[ 6. [n short, Coleman Hydro merely awaited the
Commission's timely approval of the Energy Sales Agreement to complete construction and
place the facility in service by the ESA's Scheduled Operation Date of June 1,2021.
However, in Order No. 34870, issued on December 17,2020,the Commission rejected
the Coleman Hydro ESA's use of the Order No. 34350 rates, and the Order instead conditioned
approval of the ESA on the use of the substantially lower rates contained in Order No. 34683.
As a basis for this conclusion, Order No. 34780 provided the following reasoning:
The mutually negotiated ESA has an Effective Date of June 19,2020.If the
Company and Seller had intended a different Effective Date, they could have
negotiated one. Because the ESA's Effective Date is after the June 1, 2020 rate
change, the Seller is not entitled to the previously effective rates.
COLEMAN HYDROELECTRTC, LLC'S PETITION FOR RECONSIDERATION OF ORDER
NO.34870
IPC-E-20-27 _PAGE 5
OrderNo. 34780 at 7 (citing A.W. Brown Co., v. Idaho Public Utilities Commission, 121 Idaho
8 12, 8 16-8 I 8, 828 p.2d 84t, 945-847 (t992)).
The Commission further rejected Coleman Hydro's citation to extensive federal and state
precedent establishing that a QF may lock in its entitlement to extant rates prior to execution of a
formal written contract under FERC's legally enforceable obligation (or "LEO") rule. The
Commission reasoned as follows:
Notwithstanding the arguments made in this case, we accept the parties'
representations in their contract - that they intended the "Effective Date" to be
when the ESA was fully executed by both parties on June 19,2020. Furthermore,
a LEO argument is inappropriate based on the facts of this case. The parties
entered negotiations that, ultimately, resulted in an agreement. Neither party
asserts that the other caused undue delay. FERC's LEO standards, prior to the
issuance of Order No. 872 and after it, are intended to prevent intransigence and
undue delay by a utility in negotiating with a QF. None of those circumstances
apply here.
Id.
The consequence of the Commission's Order is that Coleman Hydro's 800 kW facility
will be subjected to the much lower rates upon which it did not rely in expending $2.35 million
developing a hydro facility with the expectation it would receive the Order No. 34350 rates.
Coleman Hydro now respectfully petitions for reconsideration.
STATEMENT OF GROUI\DS FOR RECONSIDERATION
This Petition for Reconsideration is based upon the following grounds:
The Commission's Order is not in conformity with, and unlawfully applied,
controlling federal law under the Public Utility Regulatory Policies Act of 1978
("PURPA"; and the applicable FERC regulation, 18 C.F.R. $ 292.304(d)(2XiD, under
which the Commission should have approved Coleman Hydro's entitlement to the
Order No. 34350 rates.
II.The Commission's Order is arbitrary and capricious, and not in conformity with state
law, because it ignores, and fails to properly apply, the Commission's own
longstanding precedent applying l8 C.F.R. 5 292.304(dx2xii), under which the
COLEMAN HYDROELECTRIC, LLC'S PETITION FOR RECONSIDERATION OF ORDER
NO.34870
IPC-E-20-27 -PAGE 6
I.
Commission has consistently approved of QFs' right to rates in effect prior to the
Effective Date of a written Energy Sales Agreement under similar circumstances.
m The Commission's Order rests on an erroneous finding of fact, supported by
insufficient evidence, that Coleman Hydro and Idaho Power intended the Effective
Date of the executed Energy Sales Agreement to override the Order No. 34350 rates
included in the Agreement.
IV The Commission should reconsider its Order because it results in an unreasonable and
unjust result for Coleman Hydro, which invested substantial sums with the reasonable
expectation it would be paid the Order No. 34350 rates.
ARGUMENT ON RECONSIDERATION
The Commission should approve the Energy Sales Agreement containing the Order No.
34350 rates, as submitted by Idaho Power in this proceeding. The facts presented in the record
warant a finding that Coleman Hydro is entitled to those rates.
I. The Commission's Order is not in conformity with, and unlawfully applied,
controlling federal law under PURPA and the applicable regulation, 18
C.F.R. S 292.304(dx2)(ii), under which the Commission should have
acknowledged Coleman Hydro's entitlement to the Order No. 34350 rates.
The Commission should reconsider the Order because it misunderstands and incorrectly
applies FERC's LEO rule. Under any fair application of the LEO rule, the Commission should
approve the ESA as submitted by Idaho Power with the Order No. 34350 rates.
A. The Order misunderstands the LEO rule.
Focusing solely on the "Effective Date" written on the Coleman Hydro ESA, the Order
mistakenly concludes that the ESA necessarily revokes any previously created entitlement to the
Order No. 34350 rates. In doing so, the Order misunderstands the LEO rule.
FERC's LEO rule allows a QF to form a "legally enforceable obligation" to the long-term
avoided cost rates calculated at the time that it commits itself to sell power to the utility. See 18
C.F.R. S 292.304(dx2xii). FERC has made unequivocally clear that a LEO - and the date on
COLEMAN HYDROELECTRIC, LLC'S PETITION FOR RECONSIDERATION OF ORDER
NO.34870
IPC-E-20-27 _PAGE7
which a vintage of rates is locked in - can predate the execution of the written contract, and that
the subsequent execution of a written contract does not nulliff the right to such vintage of rates
locked in through the LEO rule. The Order incorrectly assumes that there is a strict dichotomy
between a legally enforceable obligation under FERC's rules and fully executed contracts.
Instead, FERC has explained that in creating the LEO concept, it used the "terms 'contract' and
'legally enforceable obligation' in the disjunctive to demonstrate that a legally enforceable
obligation includes, but is not limited to, a contract." Cedar Creek Wind, LLC,137 FERC fl
61,006, at P 35 (2011). The Commission's order incorrectly determines that the executed
contract necessarily negates any prior commitment to the Order No. 34350 rates - even where
that executed contract contains the LEO rates to which both parties agreed.
ln a line of cases where this Commission relied on the use of an "Effective Date" in
written contracts to deny QFs the right to LEOs formed prior to execution of such contracts,
FERC unequivocally rejected such application of the LEO rule. See Grouse Creek Wind Park,
LLC,l42 FERC fl 61,187 (2013); Murphy Flat Power, LLC,l4l FERC tT 61,145 (2012);
Rainbow Ranch Wind, LLC,139 FERC n 61,077 (2012); Cedar Creek Wind, LLC,137 FERC fl
61,006. FERC repeatedly "found that the Idaho Commission's limitation on the conditions for
legally enforceable obligation formation overlooked 'the fact that a legally enforceable
obligation may be incurred before the formal memorialization of a contract to writing."' Grouse
Creek Wind Park, LLC,142 FERC fl 61,187, at P 36 (quoting Cedar Creek Wind, LLC,137
FERC fl 61,006 at P 36). FERC stressed that "the phrase legally enforceable obligation is
broader than simply a contract[.]" Id. (intemal quotation omitted). FERC declared:
The Idaho Commission's June 8,2011 rejection [of entitlement to previously
effective rates] rests on the fact that neither party signed the Agreements, and thus
no Agreement existed, until after the December 14,2010 deadline. As our
COLEMAN HYDROELECTRIC, LLC'S PETITTON FOR RECONSIDERATION OF ORDER
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IPC-E-20-27 _ PAGE 8
decisions in Cedar Creek, Rainbow Ranch, and, Murphy Flat pornt out, however, a
legally enforceable obligation between a QF and a utility may exist regardless of
the existence of a contract. The Idaho Commission's June 8 Order is thus
defective under PURPA and our PURPA precedent.
Id. atP 38
The Commission's Order here also incorrectly asserts that the LEO rule may only be used
in cases where the QF proves the utility caused a delay in execution of a written agreement. But
this same line of reasoning was rejected by FERC as inconsistent with the LEO rule in the
following passage:
In order to protect the rights of a QF, once a QF makes itself available to sell to a
utility, a legally enforceable obligation may exist prior to the formation of a
contract. A contract serves to limit and/or define bilaterally the specifics of the
relationship between the QF and the utility. A contract may also limit and/or
define bilaterally the specifics of the legally enforceable obligation at the heart of
that relationship. But the obligation can pre-date the signing of the contract.
Moreover, the tool of "seek[ing] state regulatory authority assistance to enforce
the PURPA-imposed obligation" does not mean that seeking such assistance is a
necessary condition precedent to the existence ofa legally enforceable obligation.
The Idaho Commission's requirement that a QF formally complain
"meritoriousfiy]" to the Idaho Commission before obtaining a legally enforceable
obligation would both unreasonably interfere with a QF's right to a legally
enforceable obligation and also create practical disincentives to amicable contract
formation. Such obstacles to QFs are at odds with the Commission's regulations
implementing PURPA. They are not reasonable conditions for a state PURPA
process.
Id. atP 40 (footnotes omitted). As in that case, the Order here unlawfully requires Coleman
Hydro to forego execution of a mutually agreeable ESA containing the rates to which both
parties understood Coleman Hydro to be entitled and instead litigate against Idaho Power.
As resolution of the dispute in those prior cases, this Commission formally agreed that a
LEO may be formed prior to execution of a written agreement. The stipulated dismissal and
memorandum of understanding filed in federal court states as follows: "The ldaho PUC
acknowledges that a legally enforceable obligation may be incurred prior to the formal
COLEMAN HYDROELECTRIC, LLC'S PETITTON FOR RECONSTDERATION OF ORDER
NO.34870
TPC-E-20-27 - PAGE 9
memorialization of a contract to writing." FERC v. Idaho PUC, Case 1:13-cv-00141-EJL-REB,
Doc. No. 49-1 (D. Ct. Id., Dec.24,2013). Yet now the Commission's Order asserts in this case
that the Coleman Hydro ESA negates any previous entitlement to the Order No. 34350 rates
because it was physically signed after such rates became unavailable. But that cannot be correct.
If the written contract - which is necessary for purposes of documentation and practicality -
negates the right to the vintage of rates in a previously formed LEO, the LEO rule would be
useless. Such a rule "unreasonably interfere[s] with a QF's right to a legally enforceable
obligation and also create[s] practical disincentives to amicable contract formation." Grouse
Creek Wind Park, LLC,l42 FERC fl 61,187 at P 40.
Furthermore, FERC's recently issued Order No. 872 reaffirmed its prior LEO precedent
quoted above and confirmed that a QF may be entitled to previously effective avoided costs
before finalization of an executed written contract. See Qualifying Facility Rates and
Requirements; Implementation Issues Under the Public Utility Regulatory Policies Act of 1978,
Order No. 872, 172 FERC fl 61,041, at P 685 (July 16, 2020).2 FERC specifically cited Grouse
Creek Wind Park, LLC,142 FERC fl 61,187, at P 40 (2013), for the proposition that requiring the
QF to file a complaint proving the utility caused the delay is an unlawful condition for a LEO.
Id. atP 689. The Order here ignores that FERC has repeatedly rejected the requirement it
imposes on Coleman Hydro.
The Order's reliance on the ESA's "Effective Date" also leaves QFs without a
contracting right that exists even outside the context of PURPA where parties may be bound
2 Order No. 872 states that the new rules become effective 120 days after publication of the Order
in the Federal Register, but it is relevant to the continued applicability of the prior FERC precedent
discussedherein. Id. atP 753.
COLEMAN HYDROELECTRTC, LLC'S PETITION FOR RECONSIDERATION OF ORDER
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[PC-E-20-27 -PAGE 10
before formal memorialization of an agreement to an executed written document. See Cedar
Creek Wind LLC,137 FERC fl 61,006 at P 36 & n.62 (citing contract formation rules). For
example, rn First National Mortgage Co. v. Federal Realty Investment Trust, the Ninth Circuit
held that a "Final Proposal" was binding because it clearly stated that its terms "are hereblt
acceptedby the parties subject only to approval of the terms and conditions of a formal
agreement." 631 F.3d 1058, 1065 (96 Cir. 2011) (emphasis in original). Unless an oral
agreement is merely an "agreement to agree" without specification of material terms, it is
binding even before formal memorialization to an executed written format and indeed even if it
is never formally executed. Id.; accord Evco Sound & Electronics, Inc. v. Seaboard Surety
Company, 1 48 Idaho 357, 365, 223 P.3d 7 40, 7 48 (2009).
In this case, there was unequivocally far more than a mere agreement to make an
agreement before June 1, 2020. After months of discussion, Coleman Hydroelectric had fully
committed itself to all material terms of the final written ESA drafted by Idaho Power on May
19,2020, and the parties subsequently executed those previously agreed-to terms and conditions
Yet the Order deprives Coleman Hydro of the right to form a binding commitment prior to final
execution of documents - even though the parties subsequently formalized their agreement by
executing the written document in the same form to which they previously agreed. That result
tums the purpose of FERC's LEO rule on its head. FERC's LEO rule is intended to make
contracting easier on QFs that must attempt to negotiate with a reluctant utility purchaser.
In sum, therefore, the Order here violates FERC's LEO rule. Under the LEO rule, the
Commission cannot deny a LEO on the grounds used in the Order, which are instead
unreasonable barriers to amicable contract formation by a QF and a utility.
COLEMAN HYDROELECTRIC, LLC'S PETITION FOR RECONSIDERATION OF ORDER
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[PC-E-20-27 -PAGE 1r
B. Under any fair application of the LEO rule, the Commission should approve
the Energy Sales Agreement executed by Coleman llydro and Idaho Power
containing the Order No.34350 rates.
In this case, under any fair application of FERC's LEO rule, Coleman Hydro its
entitlement to the Order No. 34350 rates prior to June 1,2020, and the Commission should
approve the Energy Sales Agreement as executed and submitted by Idaho Power in this
proceeding. As noted above, the Energy Sales Agreement was fully negotiated prior to the rate
change. Coleman Hydro's representative, Jordan Whittaker, understood that Idaho Power and
Coleman Hydro had completed negotiation of the Energy Sales Agreement, including the rates
contained therein, and both parties were corlmitted to that agreement prior to June 1,2020.
Wittaker Declaration at ![fl 9-10. The only element absent at the time of the June 1 rate change
was the actual signatures on the Energy Sales Agreement, which occurred shortly thereafter on
June 8, and June 19,2020. Id. All that remained to be done as of the last days before the rate
change occurring on June 1,2020, was the mere "formality of executing the written agreement,
including the rates, to which both parties had previously agreed." Id. atfl I 1. Those facts are
undisputed in the record.
Furthermore, Coleman Hydro even satisfies FERC's more stringent test for proof of
commercial viability and commitment to construct the facility in Order No. 872, which was not
even yet in effect as the date of the LEO in this case. Order No. 872, 172 FERC fl 61,041, at PP
685-687. Coleman Hydro's developers had expended $2.35 million dollars in development of
the facility and had already purchased all major equipment aside from the interconnection
equipment that must be installed by Idaho Power. Wittaker Declaration at'illl![ a-8.
The lack of a fully executed written agreement prior to June 1, 2020,was solely due to
the mechanics of executing the document, which was a matter largely beyond Coleman Hydro's
COLEMAN HYDROELECTRIC, LLC'S PETITION FOR RECONSIDERATION OF ORDER
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IPC-E-20-27 _PAGE T2
control. As noted above, there is no requirement under FERC's LEO rule to demonstrate Idaho
Power caused the agreement to be executed after June 1,2020, but even if such a requirement
could lawfully be imposed, the record demonstrates that the delay in final execution was
affributable to Idaho Power's lengthy execution process. Coleman Hydro communicated that it
approved and was ready to execute the final ESA on May 19, 2020. Idaho Power's Reply
Comments atpp.2-3. However, Idaho Power controlled finalization of the document for
signatures, and Idaho Power's process took an entire month. First, Idaho Power took over a
week to complete its Sarbanes-Oxley compliance review before sending the document to
Coleman Hydro on May 27,2020. Id. Even so, had Idaho Power emailed the document for
signature, as is done by some other utilities, it could have easily been fully executed before June
1,2020. However, Idaho Power used physical paper and ink signatures for the ESA, which in
this case guaranteed the execution process would not be complete before June 1, 2020, because it
took another 11 days for the document to reach Coleman Hydro through the mail on June 8,
2020. Whittaker Declaration at fl I l. Coleman Hydro could not execute the document before it
received the document on June 8,2020, but it was executed upon receipt. Id. ldaho Power
executed the agreement on June 19, 2020,which was again an 1l-day delay due to the time to
mail the physical document from Leadore, Idaho, to Boise, Idaho during a global pandemic.
In sum, the record is undisputed that all material terms of the ESA were agreed to prior to
June 1, 2020, and that both parties understood themselves to be committed to the OrderNo.
34350 rates. Under these facts, Idaho Power itself "did not believe it could refuse to sign the
contract." Idaho Power's Reply Comments atp.4. Coleman Hydro agrees with that assessment.
Therefore, under any reasonable application of the LEO rule, the Commission should reconsider
its Order and approve the ESA as submitted by Idaho Power.
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LPC-E-20-27 -PAGE 13
II. The Commission's Order is arbitrary and capricious, and not in conformity
with state law, because it ignores, and fails to properly apply, the
Commission's own longstanding precedent applying 18 C.F.R. S
292.304(d)(2xii), under which the Commission has consistently approved of
QFs' right to rates in effect prior to the Effective Date of a written Energy
Sales Agreement under similar circumstances.
The Commission should reconsider the Order because it fails to apply the Commission's
precedent implementing the LEO rule. As explained below, the Commission has an extensive
line of precedent - including at least 20 prior orders - where it has approved of QFs' entitlement,
under FERC's LEO rule, to rates in effect prior to the Effective Date of the subsequently
executed wriffen Energy Sales Agreement. The Order arbitrarily ignores this precedent in
denying approval of the Coleman Hydro ESA. It is a basic tenet of administrative law that an
administrative agency must supply a reasoned and non-arbitrary basis to depart from its past
precedent. Yet in this case, the Order supplies no basis to ignore the Commission's own past
precedent, and indeed there is no non-arbitrary basis to do so.
The Idaho Supreme Court has held the Commission "must explain the reasoning
employed to reach its conclusions in order to ensure that the IPUC has applied relevant criteria
prescribed by statute or its own regulations and thus has not acted arbitrarily or capriciously."
Rosebud Enterprises, Inc. v. Idaho Pub. Utils. Comm'n,I28Idaho 609, 618,917 P.2d766,775
(1996). Although the Commission is not is "not so rigorously bound by the dochine of stare
decisis that it must decide all future cases in the same way[,]" the Commission must at least
"adequately explained the departure from prior rulings so that a reviewing court can determine
that the decisions are not arbitrary and capricious." Id. Simply put, o'the discretion given the
Commission is not absolute[,]" and the Commission may not act "arbitrarily or on an ad hoc
COLEMAN HYDROELECTRIC, LLC'S PETITION FOR RECONSIDERATION OF ORDER
NO.34870
TPC-E-20-27 _ PAGE 14
basis." Washington Water Power v. Idaho Pub. Utils. Comm'n, l0l Idaho 567, 575, 617 P. 2d,
1242, 1250 ( 1 980) (internal quotation omitted).
There is a long line of precedent that approves entitlement to rates in effect prior to the
"Effective Date" on which the final written agreement is executed. These cases often refer to
such treatment as "grandfathering" treatment. However, as the Supreme Court has explained,
"[c]onferment of grandfathered status on qualiffing facility is essentially an IPUC finding that a
legally enforceable obligation to sell power existed by a given date." Rosebud Enterprises,l2S
Idaho at624,917 P.2dat78l. Thus, these "grandfathering" cases are simply application of
FERC's LEO rule, and they should be applied here to approve the Coleman Hydro ESA.
Contrary to the Order's reliance on the "Effective Dateo'in the Coleman Hydro ESA, the
Commission has previously approved entitlement to a LEO and rates in effect prior to the
executed agreement's "Effective Date" on at least 20 different occasions. In several cases, the
Effective Date of the ESA has been over ayear after the date the approved rates expired - far
more than the 19 days it took to get the agreement executed during a global pandemic in this
case. The following table demonstrates the "Effective Date" of the wriffen agreement does not
override the rates included in the agreement under the Commission's precedent applying the
LEO rule.
COLEMAN HYDROELECTRIC, LLC'S PETITION FOR RECONSIDERATION OF ORDER
NO.34870
TPC-8,-20-27 -PAGE I5
Docket Number Effective
Date
Rates Approved for
Agreement
Days b/w
Expiration of
Rates and
Effective Date
IPC-E-05-30
Milner Dam
10114/2005 Order No. 29646 rates
Unavailable 814/2005
(See Order No. 29948. pp. l-2)
71 days
IPC-E-05-31
Lava Beds Wind
t0lt4l200s OrderNo. 29646 rates
Unavailable 814/2005
(See Order No. 29949. pp. 1-2)
71 days
IPC-E-0s-32 t0lt4l200s OrderNo. 29646 rates 71 days
Notch Butte Wind Unavailable 814/2005
$ee Order No. 29950" pp. l-2)
rPC-E-05-33
Salmon Falls
Wind
t0/t4/2005 OrderNo. 29646 rates
Unavailable 81412005
(See Order No. 29951" op. 1-2)
71 days
rPC-E-06-10
Cassia Wind
4107t2006 Order No. 29646 rates
Unavailable 81412005
6ee Order No. 30086. pp. 1-2)
246 days
rPC-E-06-11
Cassia Gulch
Wind Park
4/0712006 Order No. 29646 rates
Unavailable 814/2005
(,See OrderNo. 30087, pp. l-2)
246 days
rPC-E-06-26
Magic Wind
t0/rt/2006 OrderNo. 29646 rates
Unavailable 81412005
(See Order No. 30206, pp. 1-2, 5)
433 days
IPC-E-06-34
Hot Springs Wind
t212012006 Order No. 29646 rates
Unavailable 8/412005
(See Order No. 30246, pp. 1-2)
503 days
IPC-E-06-35
Bennett Creek
Wind
t212012006 Order No. 29646 rates
Unavailable 81412005
(,See Order No. 30245, pp.2,9\
503 days
rPC-E-06-36
Alkali Wind
t2/1212006 OrderNo. 29646 rates
Unavailable 81412005
(See Order No. 30253, pp. 1, 7)
495 days
rPC-E-10-15
Cargill
514120t0 Order No. 30744 rates
Unavailable 3/1612010
(See Order No. 32024. DD. 1.2)
49 days
rPC-E-10-16
Rock Creek Darry
st24t2010 Order No. 30744 rates
Unavailable 3116/2010
(See Order No. 32025. pp. 1. 2)
69 days
IPC-E-10-17
Swagger Farms
Dairv
512412010 OrderNo. 30744 rates
Unavailable 3116/2010
(See Order No. 32026. pp. l. 4)
69 days
rPC-E-10-18
Double B Dairy
sl24l20t0 OrderNo. 30744 rates
Unavailable 3/1612010
$ee Order No. 32027. op. 1. 4)
69 days
IPC-E-10-19
Grand View Solar
618/2010 Order No. 30744 rates
Unavailable 3/1612010
6ee Order No. 32068" pp. 1. 5)
84 days
tPC-E-10-22
Yellowstone
Power
712812010 Order No. 30744 rates
Unavailable 3116/2010
(,See Order No. 32104" p. 2)
134 days
rPC-E-10-26
AgPower Jerome
tolrs1201,0 OrderNo. 30744 rates
Unavailable 3116/2010
(,See Order No. 32138. p. 3)
213 days
COLEMAN HYDROELECTRIC, LLC'S PETITION FOR RECONSIDERATION OF ORDER
NO.34870
TPC-E-20-27 _PAGE 16
PAC-E-I1-02
Coyote Hill PPA
t2/14/20t1 OrderNo.31025 rates
Unavailable 12 I | 4 I 2010
(^See Order No. 32419 at pp. 3, 6)
395 days
PAC-E-11-03
North Point PPA
t2lt4l20tl OrderNo.31025 rates
Unavailable l2l 14/2010
(See Order No. 32419 at pp. 3, 6)
395 days
PAC-E-11-05
Five Pine PPA
t2lr4120tl OrderNo. 31025 rates
Unavailable 12/1412010
(See Order No. 32419 at pp. 3, 6)
395 days
The relevant documents in these prior cases are included in the accompanying Declaration of
Gregory M. Adams for inclusion in the record in this proceeding.
The Commission's reasoning in these prior decisions directly contradicts the reasoning
supplied in the Order in this proceeding. For example, in the case of the Cargill ESA, Idaho
Power represented that "approximately l0 days prior to March 16,20101, the date of the rate
change,] Idaho Power's management started the process of reviewing the agreed-upon draft for
final approval and execution." Order No. 32024 at 3. However, unlike Coleman Hydro, "[t]he
final Sarbanes-Oxley review process and the routine internal approval had not been completed as
of [the date of the rate change]." Id. Nevertheless, the Commission approved the subsequently
executed ESA with the previously effective rates, stating as follows:
On the May 4,2010 date of contract signing the higher contract rates of Order No.
30744 had been replaced by the lower rates of OrderNo. 30125 (Case No. GNR-
10-01) approved by the Commission on March 16, 2010. We find that the
Company has fairly represented our past grandfathering criteria requirements. We
further find the Company's approach in this case regarding contract rates to be in
concert with the spirit of those prior grandfathering cases. See A. W Brown v.
Idaho Power, I 2 1 Idaho 812, 828 P .2d 841 (1992); Order No. 2987 2, Case No.
rPC- 05-22.
In this case, Idaho Power and Staffbelieve that Cargill is entitled to
grandfathering and the rates of OrderNo.30744.Idaho Power represents that all
outstanding contract issues had been resolved prior to March 16,2010, and that
but for the internal review process of the Company a contract would have been
COLEMAN HYDROELECTRIC, LLC'S PETITION FOR RECONSIDERATION OF ORDER
NO.34870
TPC-E-20-27 -PAGE 17
signed prior to March 16. Based on the record established in this case, we find
that Cargill is entitled to the grandfathered rates of Order No. 30744.
Order No. 32024 at 4. The "Effective Date" of the executed Cargill ESA was after the date of
the rate change, but the Commission nevertheless approved the executed agreement and
entitlement to the rates no longer in effect as of the agreement's "Effective Date." As the above
table and sources cited therein demonstrate, this has in fact occurred at least 20 different times.
Given this longstanding precedent, the Order is incorrect to invoke the "Effective Date"
of the executed Coleman Hydro ESA as the basis to deny entitlement to the Order No. 34350
rates. The Order fails to even discuss the extensive prior precedent, and it certainly does not
"adequately explained the departure from prior rulings so that a reviewing court can determine
that the decisions are not arbitrary and capricious." Rosebud Enterprises, l2S Idaho at 618,917
P.2d, at 775. Moreover, it would not be possible to supply such an adequate explanation because
the result here is arbitrary, ad hoc, and therefore unlawful.
As previously noted in Comments, in addition to typical delays in the utility's execution
process, this Commission has looked to the maturity of the project and level of commitment of
the QF developer to completion of the project in determining whether to approve the use of pre-
existing rates. See In the Matter of Cassia Wind to Determine Exemption Status, Case No. IPC-
E-05-35, Order No. 29954, 2-4 (2006). For example, in Cassia Wind, the Commission found
that a QF was entitled to pre-existing rates based on the maturity of development of the project
when it had merely submitted a completed application for interconnection study, including the
applicable fee, and had performed wind studies, commenced preliminary permitting and
licensing activities, and made efforts to secure sites to place turbines. Id. ln that case, the
"Effective Date" in the executed agreements was ultimately 246 days after the date that the rates
COLEMAN HYDROELECTRIC, LLC'S PETITION FOR RECONSIDERATION OF ORDER
NO.34870
TPC-E-20-27 _PAGE 18
became no longer available. Coleman Hydro has advanced its development further than most of
these prior QFs and had committed to all final terms of the ESA prior to the rate change, yet the
Order here ignores this prior precedent in rejecting approval of its ESA.
In sum, the Commission should reconsider the Order and correctly apply its own past
precedent to conclude that Coleman Hydro - just like the 20 other QFs cited in the table above -
is entitled to the rates in its executed ESA.
III. The Commission's Order rests on an erroneous finding of fact, supported by
insufficient evidence, that Coleman Hydro and Idaho Power intended the
Effective Date of the executed Energy Sales Agreement to override the Order
No.34350 rates included in the Agreement.
The Order's rejection of the parties' agreed-to use of the Order No. 34350 rates rests on
its finding that the parties intended for the "Effective Date" of June 19 , 2020, in the executed
ESA, to override the OrderNo. 34350 rates included in that ESA, but such finding is supported
by insufficient evidence. Specifically, the Order finds as a matter of fact that Coleman Hydro
and Idaho Power "intended the 'Effective Date' to be when the ESA was fully executed by both
parties on June 19,2020" and for that "Effective Date" to override and to invalidate the Order
No. 34350 rates included in the executed agreement. Order No. 34780 at 7. But this finding is
supported by no evidence of such intent.
The Idaho Supreme Court has explained that the Commission's orders must be
"supported by substantial, competent evidence in the record." Rosebud Enterprises,l28 Idaho at
618,917 P.2d at775. The substantial evidence rule requires more than a mere "scintilla" of
evidence and "requires a court to determine whether [the agency's] findings of fact are
reasonable." Idaho State Insurance Fund v. Hunnicutt, 1 10 Idaho 257 , 260, 715 P . 2d 927 , 930
(1985) (internal quotation omitted). The evidence supporting an agency's decision must be
COLEMAN HYDROELECTRIC, LLC'S PETITION FOR RECONSIDERATION OF ORDER
NO.34870
LPC-E-20-27-PAGE 19
"substantial, when viewed in the light that the record in its entirety fumishes, including the body
of evidence opposed to the [agency's] view." Id., 110 Idaho at261,715 P. 2d at93l (internal
quotation omitted).
In this case, the Commission's ultimate finding that the parties intended for the "Effective
Date" of the executed agreement to override and invalidate the vintage of rates that were
intentionally included in the agreement is supported by no evidence. Indeed, such finding
directly contradicts the only evidence addressing the question, which instead firrnly establishes
that both Idaho Power and Coleman Hydro intentionally included the Order No. 34350 rates with
the expectation those rates would apply. Each of the ESA's rate tables directly cite to ooorder
No. 34350, effective June 1, 2019," as the source of the rates. See ESA at Ex. E-l, E-2,F-3,F-t,
F-2, & F-3. The Commission's Order cites no evidence that either party ever intended or
understood for the "Effective Date" to override the use of such rates. No such evidence exists
because that was not either party's intent. As Idaho Power stated, it included the Order No.
34350 rates and executed the agreement containing such rates on the "Effective Date" of June
19,2020, because, under the circumstances here, it "did not believe it could refuse to sign the
contract." Idaho Power's Reply Comments atp.4. There is no evidence that the date of
execution was intended to override the validity of the rates included in Coleman Hydro ESA.
The Order's finding is also illogical and inconsistent with other provisions of the ESA
and this Commission's implementation of PURPA. As with all IPUC-approved PURPA
agreements, the Coleman Hydro ESA states that it is not finally effective and binding on the
parties until after approval by the Commission. Section 21.1 states as follows:
Idaho Power shall file this Agreement for its acceptance or rejection by the
Commission. This Agreement shall only become finally effective upon the
Commission's approval of all terms and provisions hereof without change or
COLEMAN HYDROELECTRIC, LLC'S PETITION FOR RECONSIDERATION OF ORDER
NO.34870
WC-E-20-27 - PAGE 20
condition and declaration that all payments to be made to Seller hereunder shall
be allowed as prudently incurred expenses for ratemaking purposes.
See also Idaho Power's Schedule 37 states at sheet 73-5 (stating, "The prices and other terms
contained in an ESA shall become final and binding upon full execution of such ESA by both
parties and approval by the Commission" (emphasis added)). As with the "Effective Date" of
final execution, Section 21.1 reflects the formalities and process of finalizing a written
agreement, but neither provision can lawfully override entitlement under the LEO rule to
previously effective rates contained in such agreement.
Indeed, in the case of PacifiCorp's Commission-approved contracts, the "Effective Date"
is itself defined as the date that the Commission approves the agreement, not the date the
contract is executed. For example, the Coyote Hill Power Purchase Agreement defines the
"Effective Date" as follows:
This Agreement shall become effective after execution by both Pares and after
approval by the Commission pursuant to a final and non-appealable order
("Effective Date"), that the prices to be paid for energy and capacity are just and
reasonable, in the public interest, and that the cost incurred by PacifiCorp for
purchase of capacity and energy from Seller are legitimate expenses, all of which
the Commission will allow PacifiCorp to recover in rates in Idaho in the event
otherjurisdictions deny recovery oftheir proportionate share of said expenses.
Coyote Hill Power Purchase Agreement at $ 2.1, see also $ 1.15 ("'Effective Date' shall have the
meaning set forth in Section 2.1 of this Agreement.").3 Yet the Commission approved this
agreement with the rates in effect well prior to the agreement's defined "Effective Date" in Order
No. 34219. Thus, there is no basis for any party to assume that the "Effective Date" in an IPUC-
3 The Coyote Hill Power Purchase Agreernent is contained in the Declaration of Gregory M.
Adams at Ex. 18.
COLEMAN HYDROELECTRIC, LLC'S PETITION FOR RECONSIDERATION OF ORDER
NO.34870
wc-E-20-27 -PAGE2t
approved PURPA contract would be understood to override and invalidate the rates contained
therein.
Given that no IPUC PURPA contract is technically "effective" and final until after
Commission approval, it is hard to understand how the Commission could expect Coleman
Hydro to know that the "Effective Date" inserted by Idaho Power on its ESA would impact the
entitlement to the rates contained therein. Instead, Coleman Hydro - and indeed even parties far
more familiar with the Commission's implementation of PURPA - would reasonably expect that
the "Effective Date" stated on the wriffen agreement would not be invoked to deprive the QF of
the rates to which it previously committed. As noted above, the Commission has knowingly
approved at least 20 prior agreements containing an "Effective Date" after the expiration of the
vintage of rates contained in the agreement. Thus, there is no logical basis for the Order here to
assume that Coleman Hydro intended for the "Effective Date" of June 19,2020, in the executed
ESA, to override the Order No. 34350 rates - especially when Coleman Hydro was not even
represented by counsel at the time it accepted the Idaho Power-supplied terms for its 800-kW
small hydro facility. Supplemental Declaration of Jordan Wittaker at flfl 6-7.
In sum, the Order unreasonably concludes that the parties intended for the "Effective
Date" of June 19,2020, to override and invalidate the Order No. 34350 rates contained in the
agreement in the absence of any evidence supporting such finding. Therefore, the Commission
should reconsider the Order and approve the executed agreement as submitted by Idaho Power.
COLEMAN HYDROELECTRIC, LLC'S PETITION FOR RECONSIDERATION OF ORDER
NO.34870
DC-E-20-27 _PAGE22
IV The Commission should reconsider its Order because it results in an
unreasonable and unjust result for Coleman lfydro, which invested
substantial sums with the reasonable expectation it would be paid the Order
No.34350 rates.
Aside from this Petition's arguments on the legal requirements of the LEO rule, the Order
should be reconsidered because it results in a patently unfair and unjust result for Coleman
Hydro. To the extent the Commission perceives the determination of which rates should apply
as a decision within its discretion, the equities weigh in favor of approving use of the Order No.
34350 rates.
The Coleman Hydro facility is designed to deliver power only during irrigation season
and would capture the power potential of an existing conduit that is otherwise wasted. The
project will be located on the Whittaker family's ranch and would support the economic viability
of the ranching operations in a rural part of Idaho. Supplemental Declaration of Jordan
Whittaker at !l 3. However, at the lower rates in effect after June 1,2020, the Coleman Hydro
Project would be uneconomic and would provide no economic support to the ranching
operations. Id. atflS.
Coleman Hydro's investment-backed expectation of receiving the OrderNo. 34350 rates
strongly support granting those rates. Similar to the LEO precedents cited above, the
Commission has recently relied on investnoent-backed expectations in granting legacy teafinent
to commercial and industrial net metering facilities, which can easily be of similar generator size
to the small QF at issue here. See Case No. IPUC-E-2O-26, Order No. 34854 at 11 (explaining
such treatment "is based in investment-backed decisions and the reasonable expectations.").
Here, the developers invested $2.35 million in development of the facility prior to the rate
change on June 1,2020, and the vast majority of that investment occurred during period of
COLEMAN HYDROELECTRIC, LLC'S PETITION FOR RECONSTDERATION OF ORDER
NO.34870
PC-E-20-27 _PAGE23
effectiveness of the Order No. 34350 rates with the expectation that facility would receive
payment under those rates. Supplemental Declaration of Jordan Whittaker at fl 4. All that
remained to be completed as of June 1,2020, was completion of the installation of generation
equipment and Idaho Power's completion of the interconnection. The developers would not
have committed such a large sum had they been aware they would ultimately be denied the Order
No. 34350 rates and instead provided the lower rates mandated by the Commission thus far in
this proceeding, which would result in the project berng uneconomic and not profitable. Id. at\
5. Additionally, the commitment of those funds cannot be easily reversed or salvaged because
much of the equipment is specifically designed for the project and already installed, id. at\ 4, -
meaning the result of the Commission's Order is a significant hardship on the developers.
It is also notable that the months leading up to the finalization of these documents were
during the occurrence of a global pandemic and various stages of govemment restrictions on
business activities. tn the weeks during which the ESA was prepared for execution, Governor
Brad Little's Stage Two order was still in effect - placing strong recommendations against
nonessential travel and placing strict restrictions on in-person business activities.a Furthermore,
Mr. Whittaker was not represented by counsel in the transaction with Idaho Power and was not
aware that there was a risk the Commission would reject entitlement to the Order No. 34350
rates if the parties did not fully execute the final documents before June 1, 2020. Supplemental
Declaration of Jordan Whittaker at !f 6. Finally, Idaho Power, not Mr. Whittaker, inserted June
19,2020, as the "Effective Date" of the ESA in its recitals, after Mr. Whittaker had already
executed the agreement, and Coleman Hydro did not understand or intend for the use of the
a State of Idaho Stay Healthy Order (May 16,2020), available at:
https://coronavirus.idaho.goviwp-content/uploads 12020106lstay-healthy-order-stage2.pdf.
COLEMAN HYDROELECTRIC, LLC'S PETITION FOR RECONSIDERATION OF ORDER
NO.34870
LPC-E-20-27 -PAGE24
"Effective Date" of June 19,2020, to override the use of the OrderNo. 34350 rates included in
the agreement that Mr. Whittaker executed. Id. at\7.
Under these circumstances, the equities weigh in favor of finding the Coleman Hydro is
entitled to the OrderNo. 34350 rates as submitted to the Commission by Idaho Power.
CONCLUSION
For the reasons set forth above, Coleman Hydro requests that the Commission reconsider
the Order and issue a new order approving the Energy Sales Agreements entered into between
Coleman Hydro and Idaho Power containing the published avoided cost rates established by
Order No. 34350, as submitted by Idaho Power in this proceeding.
Respectfully submitted this 4th day of January 2021.
RICHARDSON ADAMS, PLLC
M. Adams (ISB No. 7454)
Peter J. Richardson (ISB No. 3195)
515 N. 27ft Steet
Boise,Idaho 83702
Telephone: [phone]
Fax [phone]
greg@richardsonadams. com
p eter@richardsonadams. com
Attorneys for Coleman Hydroelectri c, LLC
COLEMAN HYDROELECTR[C, LLC'S PETITION FOR RECONSIDERATION OF ORDER
NO.34870
wc-E-20-27 -PAGE2'
CERTIFICATE OF SERVICE
I HEREBY certiry that I have on this 4thday of January 2021, served the foregoing
Petition for Reconsideration of Coleman Hydroelectric,LLC and Declaration of Jordan
Whittaker in Case PC-E-20-27, by electronic mail to the following:
JanNoriyuki
Commission Secretary
Idaho Public Utilities Commission
P.O. Box 83720
Boise, D 83720-0074
j an.noriyuki@puc. idaho. gov
John R. Hammond
Deputy Attorney General
Idaho Public Utilities Commission
P.O. Box 83720
Boise, D 83720-0074
j ohn.hammond@puc. idaho. gov
Donovan Walker
Regulatory Dockets
PO Box 70
Boise,ID 83707-0070
dwalker@ idahopower. com
dockets@idahopower. com
Energy Contracts
Idaho Power Company
PO Box 70
Boise,ID 83707-0070
energycontracts @idahopower. com
By:&
Gregory M. Adams (ISB No. 7454)
COLEMAN HYDROELECTR[C, LLC'S PETITION FOR RECONSIDERATION OF ORDER
NO.34870
wc-E-20-27 -PAGE26