20110727reconsideration_order_no_32302.pdf

Office of the Secretary
Service Date
July 27,2011
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )PACIFICORP DBA ROCKY MOUNTAIN POWER )CASE NO.PAC-E-Il-0i
FOR A DETERMINATION REGARDING A )
FIRM ENERGY SALES AGREEMENT )
BETWEEN ROCKY MOUNTAIN POWER AND )
CEDAR CREEK WIND,LLC (RATTLESNAKE )CANYON PROJECT))
___________________________________________________________________________________________
)IN THE MATTER OF THE APPLICATION OF )PACIFICORP DBA ROCKY MOUNTAIN POWER )CASE NO.PAC-E-1 1-02
FOR A DETERMINATION REGARIMNG A )
FIRM ENERGY SALES AGREEMENT )
BETWEEN ROCKY MOUNTAIN POWER AND )
CEDAR CREEK WIND,LLC (COYOTE HILL )
PROJECT))
___________________________________________________________________________________________
)IN THE MATTER OF THE APPLICATiON OF )PACIFICORP DBA ROCKY MOUNTAIN POWER )CASE NO.PAC-E-11-03
FOR A DETERMINATION REGARDING A )
FIRM ENERGY SALES AGREEMENT )
BETWEEN ROCKY MOUNTAIN POWER AND )
CEDAR CREEK WIND,LLC (NORTH POINT )
PROJECT))
__________________________________________________________________________________________________
)IN THE MATTER OF THE APPLICATION OF )PACIFICORP DBA ROCKY MOUNTAIN POWER )CASE NO.PAC-E-i1-04
FOR A DETERMINATION REGARDING A )
FIRM ENERGY SALES AGREEMENT )BETWEEN ROCKY MOUNTAIN POWER AND )
CEDAR CREEK WIND,LLC (STEEP RIDGE )
PROJECT))
__________________________________________________________________________________________
)IN THE MATTER OF THE APPLICATION OF )PACIFICORP DBA ROCKY MOUNTAIN POWER )CASE NO.PAC-E-l1-05
FOR A DETERMINATION REGARDING A )
FIRM ENERGY SALES AGREEMENT )
BETWEEN ROCKY MOUNTAIN POWER AND )ORDER NO.32302
CEDAR CREEK WIND,LLC (FIVE PINE )PROJECT))
On January 10,2011,PacifiCorp dba Rocky Mountain Power filed five Applications
each requesting acceptance or rejection of a 20-year Firm Energy Sales Agreement
ORDER NO.32302
(“Agreements”)between Rocky Mountain Power and Cedar Creek Wind,LLC,for its
Rattlesnake Canyon,Coyote Hill,North Point,Steep Ridge and Five Pine wind projects
(collectively “the Projects”).On February 24,2011,the Commission issued a consolidated
Notice of Application and Notice of Modified Procedure for the five Applications.Timely
comments in response to the Notice of Modified Procedure were filed by the Commission Staff
and the Projects.On March 31,2011,Rocky Mountain Power filed reply comments.On June 8,
2011,the Commission issued a consolidated final Order disapproving each of the five
Agreements.The Commission found that the Agreements “were not fully executed (signed by
both parties)prior to December 14,2010”—the date that the Commission lowered the eligibility
cap for the published avoided cost rate from 10 aMW to 100 kW.Order No.32260 at 10.Thus,
the Agreements contained an essential term that was no longer available to the Projects.Id.
On June 29,2011,the Projects timely filed a Joint Petition for Reconsideration of the
Commission’s final Order.The Projects allege that the Commission’s final Order is erroneous
and is not in conformity with the law because a legally enforceable obligation existed between
Rocky Mountain Power and the Cedar Creek projects prior to December 14,2010.As a result,
Cedar Creek maintains that they are entitled to published avoided cost rates under the previous
10 aMW eligibility cap.The Projects further argue that not considering grandfathering criteria is
a departure from the Commission’s past precedent and the Commission did not give proper
notice to the parties regarding its intent to depart from precedent.
On July 6,201 1,Rocky Mountain Power filed an answer to the Projects’Petition.
Rocky Mountain Power maintains that the Commission’s final Order is consistent with federal
and state law.Rocky Mountain Power contends that the Commission had good cause to act as it
did.Further,the Commission was acting within its discretion and,therefore,reconsideration
should be denied.
This matter was fully submitted for the Commission’s consideration on the July 11,
2011,decision meeting agenda.On July 12,2011,the Projects filed a reply to Rocky Mountain
Power’s answer.On July 21,2011,Rocky Mountain Power filed a sur-reply to the Projects’
reply.The Commission finds that the record in this case closed on July 11,2011,when the
matter became fully submitted.Furthermore,Commission Rule 331 does not provide parties the
opportunity for a reply and sur-reply to the initial petition for reconsideration and answer.
ORDER NO.32302 2
Therefore,the Commission will not consider the arguments addressed in the Projects’July 12
reply or Rocky Mountain Power’s July 21 sur-reply.
BACKGROUND
A.The Agreements
On December 22,2010,Rocky Mountain Power and the five wind projects entered
into their respective Agreements.Under the terms of the Agreements,each wind project agrees
to sell electric energy to Rocky Mountain Power for a 20-year term using the 10 aMW non
levelized published avoided cost rates.Applications at 8-9.The Applications recite that
Rattlesnake Canyon,Coyote Hill and North Point will each have a maximum capacity of 27.6
MW,and Steep Ridge and Five Pine will each have a maximum capacity of 25.2 MW.Under
normal and/or average conditions,each QF will not generate more than 10 aMW on a monthly
basis.Rocky Mountain Power warrants that the Agreements comport with the terms and
conditions of the various Commission Orders applicable to PURPA agreements for a wind
resource.Id.at ¶6 citing Order Nos.30415,30488,30738 and 31025.
The projects all selected October 1,2012,as the Scheduled Commercial Operation
Date.Applications at 9.Rocky Mountain Power asserts that various requirements have been
placed upon the projects in order for Rocky Mountain Power to accept the project’s energy
deliveries.Rocky Mountain Power states that it will monitor each project’s compliance with
initial and ongoing requirements through the term of the Agreement.The parties have each
agreed to liquidated damage and security provisions.Agreements ¶J 2.5.1,11.1.2.
Rocky Mountain Power asserts that it advised each project of the project’s
responsibility to work with Rocky Mountain Power’s delivery transmission unit to ensure that
sufficient time and resources will be available for the delivery unit to construct the
interconnection facilities,and transmission upgrades if required,in time to allow the projects to
achieve their October 1,2012,Scheduled Commercial Operation Date.The Applications state
that the projects have been advised that delays in the interconnection or transmission process do
not constitute excusable delays and if a project fails to achieve its Scheduled Commercial
Operation Date,delay damages will be assessed.Applications at 11.The Applications further
maintain that each project has acknowledged and accepted the risk inherent in proceeding with
its Agreement without knowledge of the requirements of interconnection and possible
transmission upgrades.Id.
ORDER NO.32302 3
Rocky Mountain Power states that each project has also been made aware of and
accepted the provisions in each Agreement regarding curtailment or disconnection of its facility
should certain operating conditions develop on Rocky Mountain Power’s system.Agreements ¶
0”,.
By their own terms,the “effective date”of each agreement is “after execution by both
parties and after approval by the Commission.”Agreement ¶2.1;1.13.The Agreements are
dated December 22,2010.Id.at p.1.The Agreements further provide that the Agreements will
not become effective until the Commission has approved all of the terms and conditions and
declares that all payments made by Rocky Mountain Power to each project for purchases of
energy “are just and reasonable,in the public interest,and that the costs incurred by [Rocky
Mountain Power]for purchases of capacity and energy from [Cedar Creek]are legitimate
expenses,all of which the Commission will allow [Rocky Mountain Power]to recover in rates in
Idaho in the event other jurisdictions deny recovery of their proportionate share of said
expenses.”Agreements ¶2.1.
B.The Utilities’Joint Petition
On November 5,2010,prior to the date that Rocky Mountain Power and the Projects
entered into their Agreements,Idaho Power,Avista Corporation,and PacifiCorp dba Rocky
Mountain Power filed a Joint Petition requesting that the Commission initiate an investigation to
address various avoided cost issues related to the Commission’s implementation of PURPA.
Case No.GNR-E-10-04.On December 3,2010,the Commission issued Order No.32131
declining a motion made by the utilities to immediately reduce the published avoided cost rate
eligibility cap from 10 aMW to 100 kW.Order No.32131 at 5.However,the Order did notify
parties that the Commission’s decision regarding whether to reduce the published avoided cost
eligibility cap would become effective on December 14,2010.Id.at 5-6,9.
Section 210 of PURPA generally requires electric utilities to purchase power
produced by QFs at “avoided cost”rates set by the Commission.“Avoided costs”are those costs
which a public utility would otherwise incur for electric power,whether that power was
purchased from another source or generated by the utility itself.”18 C.F.R.§292.l0l(b)(6).
Order No.32176 at 1.Under PURPA regulations issued by the Federal Energy Regulatory
Commission (FERC),the Commission must “publish”avoided cost rates for small QFs with a
design capacity of 100 kW or less.Order No.32176 at 1.However,the Commission has the
ORDER NO.32302 4
discretion to set eligibility for the published avoided cost rate at a higher capacity amount —
commonly referred to as the eligibility cap.”18 C.F.R.§292.304(c)(l-2).When a QF project
is larger than the Commission-established eligibility cap the avoided cost rate for the project
must be individually negotiated by the QF and the utility using the Integrated Resource Plan
(IRP)Methodology.Order No.32176.
The purpose of utilizing the IRP Methodology for large QF projects is to more
precisely value the energy being delivered.Id.at 10.The IRP Methodology recognizes the
individual generation characteristics of each project by assessing when the QF is capable of
delivering its resources against when the utility is most in need of such resources,The resultant
pricing is reflective of the value of QF energy to the utility.Utilization of the IRP Methodology
does not negate the requirement under PURPA that the utility purchase the QF energy.
Based upon the record in the GNR-E-10-04 case,the Commission subsequently
found that a “convincing case has been made to temporarily reduce the eligibility cap for
published avoided cost rates from 10 aMW to 100 kW for wind and solar only while the
Commission further investigates”other avoided cost issues.Order No.32176 at 9 (emphasis
original).On reconsideration,the Commission affirmed its decision to temporarily reduce the
eligibility cap for published avoided cost rates from 10 aMW to 100 kW.Order No.32212.
Thus,the eligibility cap for the published avoided cost rate for wind and solar QF projects was
set at 100 kW effective December 14,2010.No party appealed from the Orders in Case No.
GNR-E-10-04.
C.The Prior Final Order in this Case
On June 8,2011,the Commission issued Order No.32260 disapproving the
Agreements between Rocky Mountain Power and each of the five wind projects —Rattlesnake
Canyon,Coyote Hill,North Point,Steep Ridge and Five Pine.’The Commission determined
that the Agreements were not fully executed (signed by both parties)prior to December 14,
2010,the date upon which the eligibility for published avoided cost rates changed from 10 aMW
to 100 kW for wind and solar projects.Consequently,the Commission found that the rates
contained in the Agreements did not comply with Order No.32176 because each of the projects
l The five projects had previously filed consolidated comments because the relevant facts for each of these fiveprojectsaresubstantiallysimilar.Consequently,the Commission found it reasonaNe and appropriate to consolidatethecasesandissueaconsolidatedfinalOrder.Order No.32260 n.I.
ORDER NO.32302 5
requesting published avoided cost rates is in excess of 100 kW.Order No.32260 at 10.The
“old”10 aMW published rate is available only to non-wind and non-solar QFs.
The Projects signed the Agreements on December 13,2010,and Rocky Mountain
Power signed on December 22,2010.The Commission noted that the Agreements contain
language regarding the effective date.The terms of the Agreements unequivocally state that the
“Effective Date”of the Agreements is “after execution by both Parties and after approval by the
Commission.”Agreements ¶1.13,2.1 (emphasis added).The Agreement is dated “this 22
day of December,2010”and Rocky Mountain Power stated that it executed the Agreements on
December 22,2010.Applications at ¶9;Reply Comments at 4.We stated that “[tihe
Commission does not consider a utility and its ratepayers obligated until both parties have
completed their final reviews and signed the agreement.”Order No.32260 at 9.We found that
“a thorough review is appropriate and necessary prior to signing Agreements that obligate
ratepayers to payments in excess of $685 million”over the 20-year term of the Agreements.Id.
at 8.The Commission established a bright line rule that for a wind or solar QF larger than 100
kW to be eligible for published avoided cost rates,a Firm Energy Sales Agreement/Power
Purchase Agreement must have been executed,i.e.,signed by both parties,prior to the December
14,2010,effective date oft he change in eligibility criteria.Id.at 10.The Commission
additionally found that it was “not in the public interest to allow parties with contracts executed
on or after December 14,2010,to avail themselves of an eligibility cap that is no longer
applicable.”Id.at 9.
PETITION FOR RECONSIDERATION
On June 29,2011,the Projects filed a timely Joint Petition for Reconsideration.
Idaho Code §61-626.The Projects allege that the Commission’s Order is erroneous and violates
federal and state law.Specifically,the Projects argue that (1)the Commission’s bright line rule
requiring an executed contract in order for a wind facility to qualify for a 10 aMW eligibility cap
violates federal law;(2)the Commission arbitrarily departed from past precedent by not utilizing
grandfathering criteria to allow projects an opportunity to qualify under the 10 aMW eligibility
cap;and (3)the Commission did not give proper notice prior to deviating from past precedent
with regard to grandfathering.Ultimately,the Projects contend that their Agreements should be
approved because a legally enforceable obligation existed prior to December 14,2010.The
Projects request that the Commission “expeditiously grant this petition for reconsideration and,
ORDER NO.32302 6
by August 5,2011,approve the Agreements without further briefing,hearing,or other
proceedings.”Reconsideration at 18.
Rocky Mountain Power filed an answer to the Projects’Petition for Reconsideration.
Rocky Mountain Power states that the Commission properly applied the controlling legal
standard for determining when a legally enforceable obligation arises under Idaho and federal
law.Rocky Mountain Power asserts that “there is no contract until Rocky Mountain Power has
completed its internal review,and signified its acceptance by executing the Agreement.”
Answer at 16.The Company maintains that it executed the Agreement after the eligibility cap
was reduced to 100 kW —i.e.,on December 22,2010.Id.at 15.The Company further argues
that the Commission may,in its discretion,determine whether to utilize grandfathering criteria.
Finally,Rocky Mountain Power maintains that the Projects have failed to demonstrate that the
Commission’s Order is legally flawed.
ISSUES ON RECONSIDERATION
A.Legal Standards
Reconsideration provides an opportunity for a party to bring to the Commission’s
attention any question previously determined and thereby affords the Commission an opportunity
to rectify any mistake or omission.Washington Water Power Co.v.Koolenai Environmental
Alliance,99 Idaho 875,879,591 P.2d 122,126 (1979).The Commission may grant
reconsideration by reviewing the existing record,by written briefs,or by evidentiary hearing.
IDAPA 31.01.01.31 1.03.If reconsideration is granted,the Commission must complete its
reconsideration within 13 weeks after the deadline for filing petitions for reconsideration.Idaho
Code §61-626(2).
Consistent with the purpose of reconsideration,the Commission’s Rules of Procedure
require that petitions for reconsideration “set forth specifically the ground or grounds why the
petitioner contends that the order or any issue decided in the order is unreasonable,unlawful,
erroneous or not in conformity with the law.”Rule 331.01,IDAPA 31.01.01.331.01.Rule 331
further requires that the petitioner provide a “statement of the nature and quantity of evidence or
argument the petitioner will offer if reconsideration is granted.”Id.
B.Legally Enforceable Obligation
The Projects argue that,pursuant to 18 C.F.R.§292.304(d)(2),a QF is entitled to the
rates that are in effect on the date the QF incurred a legally enforceable obligation to provide
ORDER NO.32302 7
energy.The Projects maintain that the key consideration is “whether,as was true here for Cedar
Creek,the QF has committed through a legally enforceable obligation to sell power to the utility
or,as also was the case here for Rocky Mountain Power,the utility is committed to entering into
a legally enforceable obligation to buy that power.”Reconsideration Petition at 5.The Projects
argue that the Commission committed reversible error by requiring a fully executed contract to
establish a legally enforceable obligation.
Commission Findings:The Idaho Supreme Court has held that “[tjhe
implementation of PURPA as it relates to cogeneration and small power producers,and the
regulations promulgated by FERC,have been largely left to the regulatory authorities of the
individual states.”A.W.Brown Company,Inc.v.Idaho Power Company,121 Idaho 812,816,
828 P.2d 841,845 (1992).“FERC regulations grant the states latitude in implementing the
regulation of sales and purchases between QFs and electric utilities.”Order No.32262 citing
Federal Energy Regulatory Commission v.Mississippi,456 U.S.742,102 S.Ct.2126,72
L.Ed.2d 532 (1982).As we stated in our final Order,“[ajccording to the FERC,‘it is up to the
States,not [FERCJ to determine the specific parameters of individual QF power purchase
agreements,including the date at which a legally enforceable obligation is incurred under State
law.”Order No.32260 at 9 citing Rosebud Enterprises v.Idaho PUC,128 Idaho 609,623-624,
917 P.2d 766,780-781 (1996)citing West Penn Power Co.,71 FERC ¶61,153 (1995).
The premise of the Projects’argument is correct:QFs have the right to choose to
have rates calculated at the time that a legally enforceable obligation is incurred.
Reconsideration at 5.However,this Commission determined that the parties entered into a
legally enforceable obligation at the time that both parties executed the power purchase
agreement.We find that,for each of these five projects,a legally enforceable obligation was
incurred on December 22,2010—the date that Rocky Mountain Power executed the Agreements.
By their very terms the Agreements were not effective until December 22,2010,and after
approval by this Commission.Agreements ¶f 1.13,2.1.On December 14,2010,wind projects
larger than 100 kW were no longer entitled to the 10 MW published avoided cost rate.In
determining when the parties incurred a legally enforceable obligation,we properly exercised the
authority granted us by FERC.“For purposes of [FERC]regulations,the critical date is the date
on which a legally enforceable obligation is incurred,and choosing that date for a specific QF is
ORDER NO.32302 8
the responsibility of the States,not of [FERCJ.”West Penn Power Co.,71 FERC ¶61153,
61495 (1995).
In their Petition for Reconsideration,the Projects reference FERC regulations and JD
Wind 1,LLC,130 FERC ¶61,127 (2010),in support of their proposition that an executed
contract is not necessarily required in order for a legally enforceable obligation to exist.In JD
Wind,six separate QFs developed by John Deere Renewables petitioned FERC to overturn a
Texas PUC decision denying the projects long-term contracts at avoided cost rates calculated at
the beginning of the contract,The Texas PUC found that wind QFs were not entitled to long-
term legally enforceable obligations because of the intermittent,or non-firm,nature of the
resource.FERC concluded that the Texas PUC’s Order,limiting the award of a legally
enforceable obligation to only those QFs that provide firm power,was inconsistent with FERC
regulations implementing PURPA.JD Wind does not consider or analyze when a legally
enforceable obligation is incurred under PURPA.The Projects’use of this FERC case as
instructive on the issues of contract formation and timing of a legally enforceable obligation is
misleading and without merit.JD Wind contemplates whether a legally enforceable obligation
must be entered into by a utility for intermittent/non-firm resources —nothing more.
Nothing cited by the Projects demonstrates that the Commission’s Order is erroneous
or inconsistent with federal law.On the contrary,the Projects admit,“[nb doubt,FERC leaves
it to the discretion of state commissions to establish the date on which a legally enforceable
PURPA obligation is created.”Reconsideration at 6 (emphasis in original).We find that,in this
case,a legally enforceable obligation was incurred when the contracts were fully executed —
upon obtaining the signature of both parties —December 22,2010.Rocky Mountain Power
executed the Agreements on December 22,2010.Applications at ¶9;Reply Comments at 4;
Answer at 16.This finding is based on substantial and competent evidence and supported by the
record.The Commission’s finding is also in the public interest and strikes a balance between
“the local public interest of a utility’s electric consumers and the national public interest in
development of alternative energy sources.”Rosebud Enterprises,128 Idaho at 613,917 P.2d at
770.Allowing a project to avail itself of an eligibility cap (and therefore published rates)that is
no longer applicable could cause ratepayers to pay more than the utility’s avoided cost which
“would be in direct violation of PURPA policies.”A.W.Brown Company v.Idaho Power
ORDER NO.32302 9
Company,121 Idaho 812,818,828 P.2d 841,847 (1992).Based on the foregoing,the Projects’
request for reconsideration on this issue is denied.
Prior to signing,Rocky Mountain Power performs a thorough review of the terms of
the contract.As we stated in our final Order,a comprehensive review of a power purchase
agreement is consistent with this Commission’s directive to utilities that they assist the
Commission in its gatekeeper role when reviewing QF contracts.Order No.32260 at 8.We find
that it is reasonable and consistent with the authority granted us under PURPA,and that the
public interest requires that each party have a full and final review of the contract before signing
and obligating the utility and its ratepayers to hundreds of millions of dollars in energy payments
over the 20-year life of the Agreements.The Projects were given unrestricted time to adequately
review the contracts before signing.Rocky Mountain Power is obligated to be as diligent in its
review prior to asking the Commission to commit ratepayer dollars.
We further note that,unlike standard offer and acceptance contracts,PURPA
agreements are subject to review and approval by this Commission pursuant to Idaho statutes.
Idaho Code §S 61-502 and 6 1-503.“The Commission,as part of its statutory duties,determines
reasonable rates and investigates and reviews contracts.”A.W.Brown Company v.Idaho Power
Company,121 Idaho 812,816,828 P.2d 841,845 (1992).The Agreements acknowledge this
statutory duty of the Commission by providing that each Agreement will not become effective
until the Commission has approved all of the terms and conditions and declares that all payments
made by Rocky Mountain Power to the Projects for purchases of energy are just and reasonable
and in the public interest.Agreements ¶2.1.An effective date based on Commission approval
of the Agreement has been supported on Idaho Supreme Court review.2 Here,no one has argued
that the legally enforceable obligation arises only after the Commission has approved the
Agreements.Therefore,based upon this record and pursuant to the discretion granted us by
PURPA and FERC regulations,we find that a legally enforceable obligation was incurred
between Rocky Mountain Power and the Projects on the date that the parties executed the
Agreements and agreed to be bound by the terms contained therein.Our Order presented
2,...Rosebud is not entitled to a lock-in of an avoided cost rate until it has entered into a legally enforceable and
IPUC approved obligation for the delivery of energy and capacity.”Rosebud Enterprises,128 Idaho at 620,917
P.2d at 777 (emphasis added).
ORDER NO.32302 10
sufficient facts to show that we did not act arbitrarily.Furthermore,the Projects have failed to
demonstrate that we were not regularly pursuing our authority.
C.Application of Grandfathering Criteria
The Projects also argue that the Commission’s decision to not consider the
application of grandfathering criteria is erroneous and contrary to Commission precedent.
Specifically,the Projects argue that.‘when previously considering whether QFs were eligible to
receive published avoided cost rates,the Commission identified indicative criteria to determine
whether such a legally enforceable obligation existed prior to the effective date of its decision on
the eligibility cap.”Reconsideration at 7 (emphasis in original).In cases where the criteria were
met,projects were grandfathered and permitted to use rates previously in effect.The Projects
contend that they satisfied the requirements of the Commission’s grandfathering precedent
before the effective date of the eligibility cap reduction.
Commission Findings:The Projects’reliance on previously utilized grandfathering
criteria is misplaced.First,this Commission has explicitly stated that “we look at the totality of
the facts”in assessing entitlement to grandfathering status.Order No.29954 at 2.In these
Agreements,the “effective date”of each Agreement —the date when both parties executed the
Agreement and agreed to be bound by its terms —is well after the Commission lowered the
eligibility cap for the published avoided cost rate to 100 kW.Thus,the Projects’Agreements do
not support that use of grandfathering.Second,the Idaho Supreme Court has stated that
“[c]onferment of grandfathered status on [a]qualifying facility is essentially an IPUC finding
that a legally enforceable obligation to sell power existed by a given date.Such a finding is
within the discretion of the stale regulatory agency.”Rosebud Enterprises,128 Idaho 624,917
P.2d at 781 (emphasis added).In this consolidated case,we found that each of the five projects
incurred a legally enforceable obligation on December 22,2010.Thus,there is no occasion to
resort to the use of grandfathering criteria.We further find that the time Rocky Mountain Power
took to complete its final review of the Agreements was reasonable.This finding is consistent
with our authority under federal and state law.
Third,our Supreme Court has noted,“Because regulatory bodies perform legislative
as well as judicial functions in their proceedings,they are not so rigorously bound by the
doctrine of stare decisis that they must decide all future cases in the same way as they have
decided similar cases in the past.”Rosebud Enterprises v.Idaho PUC,128 Idaho 609,618,917
ORDERNO.32302 II
P.2d 766,775 (1996)citing Intermountain Gas Co.v.Idaho PUC,97 Idaho 113,119,540 P.2d
775,781 (1975).“So long as the Commission enters sufficient findings to show that its action is
not arbitrary and capricious,the Commission can alter its decisions.”Washington Water Power
v.Idaho PUC,101 Idaho 567,579,617 P.2d 1242,1254 (1980).Therefore,simply because
grandfathering criteria have been used in consideration of QF eligibility to published rates in the
past does not mean that this Commission must decide all future QF eligibility cases in the same
manner.
Regardless of whether it is a change in the eligibility cap for access to published rates
or a change in the rates themselves,the Commission is not bound by prior grandfathering
treatment decisions so long as our decision is based on substantial and competent evidence in the
record and we enter sufficient findings to demonstrate that is the case.The decision of whether
to use grandfathering criteria is within the Commission’s discretion.In contrast to the change in
eligibility for published rates in 2005,no criteria were enunciated or established by this
Commission to determine project eligibility through the use of grandfathering for QF agreements
executed on or after December 14,2010.As stated in our final Order,it is adverse to the public
interest to allow parties who have not executed contracts to avail themselves of an eligibility cap
that is no longer in place.Order No.32260 at 9.Grandfathering contracts that were executed on
or after December 14,2010,and allowing them to utilize an eligibility cap that is no longer
applicable would be contrary to our determination regarding what the public interest requires.
This finding is supported by substantial and competent evidence in the record and is explained in
our Orders.Because the Commission’s decision to not utilize grandfathering criteria was not
arbitrary and/or capricious,we deny reconsideration on this issue.
D.December 14,2010,Effective Date
The Projects next argue that the Commission did not give proper notice of its
intention to require that QFs have fully executed contracts by December 14,2010,in order for 10
aMW projects to be eligible for published avoided cost rates.Reconsideration at 10.
Specifically,the Projects maintain that the Commission did not “state,imply,or otherwise lead
one reasonably to conclude that the Commission would or even might reject its own precedent,
The Commission outlined criteria that it would consider in determining whether a project was eligible for the
previous,no longer applicable,eligibility cap for published avoided cost rates,i.e.,whether a project would be
“grandfathered”and permitted to utilize the old eligibility cap.Order No.29839.
ORDER NO.32302 12
much less violate PURPA,by requiring that a QF have a fully-executed contract in order to
receive published rates.”Id.at 11.The Projects insist that by failing to provide proper notice,
the Commission has acted in an unreasonable and unlawful manner.
Commission Findings:Contrary to the assertion of the Projects,the Commission
provided actual notice to the Projects on December 3,2010,that its decision regarding the
published avoided cost rate eligibility cap would become effective December 14,2010.Order
No.32131 at 5-6,9,granting Cedar Creek’s Petition to Intervene.The Commission’s Order No.
32131 states that “it is our intent that our decision regarding the ‘Joint Motion’to reduce the
published avoided cost eligibility cap shall become effective on December 14,2010.”hi at 5-6
(emphasis added).Moreover,the ordering section of the Order states:“IT IS FURTHER
ORDERED that the Commission’s decision regarding whether to reduce the published avoided
cost eligibility cap become effective on December 14,2010.”Id.at 9 (capitals in original).
Because this is the very same Order that granted intervention to Cedar Creek,the Projects (i.e.,
Cedar Creek)were provided actual notice.Consequently,we find that the Commission provided
adequate notice to all parties that the eligibility cap was subject to change and that any change
would become effective on December 14,2010.
In the Commission’s final Order in the case establishing the December 14,2010,
effective date for the 100 kW eligibility cap for wind and solar’s access to published rates (GNR
E-10-04),we unequivocally stated that “[a]rguments that the Commission is without authority to
implement its eligibility cap reduction on December 14 are unpersuasive....“Order No.32176
at 10.We noted FERC’s determination that the filed rate doctrine and rule against retroactive
ratemaking do not extend “to cases in which [partiesj are on adequate notice that resolution of
some specific issue may cause a later adjustment to the rate being collected at the time of
service.”Natural Gas Clearinghouse v.FERC,965 F.2d 1066,1075 (D.C.Cir.1992)(emphasis
added).We further confirmed that “[tjhe goals of equity and predictability are not undermined
when the Commission warns all parties involved that a change in rates is only tentative and
might be disallowed.”OXY USA,Inc.,v.FERC,64 F.3d 679,699 (D.C.Cir.1995).
The Projects insist that by failing to provide proper notice,“regardless of whether the
appropriate notice period was simply the 30-day notice required when the Commission is
performing its legislative function of setting rates,or the more extensive notice required under
Idaho’s Administrative Procedure Act,the Commission has acted in an unreasonable and
ORDER NO.32302 13
unlawful manner....“Id.at 12.The Projects’argument regarding notice is without merit for
several reasons.First,as mentioned above,the Projects had actual notice that the Commission
intended the effective date for the lowered eligibility cap to be December 14,2010.The Projects
(i.e.,Cedar Creek)petitioned to intervene in the GNR-E-10-04 case on November 10,2010 —
five days after the three utilities petitioned the Commission to immediately reduce the eligibility
cap from 10 MW to 100 kW and more than a month before the Commission’s stated effective
date.Cedar Creek Wind Petition at 1 (Case No.GNR-E-10-04).Second,“[t]he Commission,as
part of its statutory duties,determines reasonable rates and investigates and reviews contracts.”
A.W.Brown Company v.Idaho Power Company,121 Idaho 812,816,828 P.2d 841,845 (1992)
(emphasis added).These duties are legislative,not adjudicative,in nature.The Commission,as
an agency of the legislative branch of government,exercises delegated legislative powers to
make rates.Id.Idaho Code §61-502 defines “Determination of rates”as
Whenever the commission,after a hearing had upon its own motion or upon
complaint,shall find that ...the rules,regulations,practices,or contracts [by
any public utility]affecting such rates ...are unjust,unreasonable,
discriminatory or preferential,or in any wise in violation of any provision of
law...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 ..
Review of contracts or agreements that contain PURPA rates falls clearly within the
Commission’s ratesetting,i.e.,legislative,function.Moreover,the APA does not apply to
contested cases before the Commission.Idaho Code §67-5240.There is no question that the
Projects and others were contesting the proposed reduction in the eligibility cap.“The APA
specifically does not apply to ‘those in the legislative or judicial branch.’I.C.§67-5201.”A.W
Brown Company v.Idaho Power Company,121 Idaho 812,819,828 P.2d 841,848 (1992).
Finally,Idaho Code §61-625 prohibits collateral attacks of Commission Orders that
are final and conclusive.“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.Intermountain Gas Co.,100 Idaho 368,373,597 P.2d 1028,
1063 (1979).The Projects argue that the Commission’s final Order disapproving the
Agreements retroactively applies the reduced 100 kW eligibility cap without notice or due
process.Reconsideration at 12.This argument amounts to a collateral attack of the
Commission’s prior Order reducing the eligibility cap.No party to the GNR-E-10-04 case that
ORDER NO.32302 14
lowered the eligibility cap —including the Projects —timely appealed the Commission’s decision
to lower the eligibility cap effective December 14,2010.Case No.GNR-E-10-04;Order Nos.
32176 and 32212.Therefore,the Commission’s decision to lower the eligibility cap from 10
aMW to 100 kW for wind and solar projects effective December 14,2010,is a final and
conclusive Order of the Commission that is not subject to collateral attack.The Projects’failure
to appeal the Commission’s decision to temporarily reduce the cap effective on December 14,
2010,cannot be revived by seeking reconsideration of the Commission’s final Order in this case.
Therefore,reconsideration of these issues is denied.
Although in this particular case we have established that Cedar Creek had actual
notice,in the alternative,the Commission,“for good cause shown,may allow changes without
requiring the thirty (30)days’notice herein provided for,by an order specifying the changes so
to be made and the time when they shall take effect....“Idaho Code §61-307.The utilities
had requested an immediate reduction for access to published rates from 10 aMW to 100 kW
claiming that the combined megawatts,the dollar impacts,and the potential adverse
consequences to the system and to customers was enormous.Order No.32131 at 2.On
December 3,2010,the Commission declared that any changes to the published avoided cost rate
eligibility cap would be effective December 14,2010.Id.Although the Commission declined to
immediately reduce QF projects’access to published rates,we declared that any change would
become effective December 14,2010,based on the assertions in the Utilities’Joint Petition.
Absent actual notice,the notice provided would have otherwise met the “good cause”exception
to the 30 days’notice requirement of Idaho Code §6 1-307.
CONCLUSION
The Commission has jurisdiction over PacifiCorp dba Rocky Mountain Power,an
electric utility,and the issues raised in this matter pursuant to the authority and power granted it
under Title 61 of the Idaho Code and the Public Utility Regulatory Policies Act of 1978
(PURPA).The Commission has authority under PURPA and the implementing regulations of
the Federal Energy Regulatory Commission (FERC)to set avoided cost rates,to order electric
utilities to enter into fixed-term obligations for the purchase of energy from qualified facilities
(QFs)and to implement FERC rules.Rosebud Enterprises,Inc.v.Idaho Public Utilities
Commission,128 Idaho 609,612,917 P.2d 766,769 (1996).
ORDERNO.32302 15
Although FERC promulgated the general scheme and rules,it left the actual
implementation of PURPA to the state regulatory authorities.Id,128 Idaho at 614,917 P.2d
771.FERC rules insist that rates for purchases from QFs be just and reasonable to ratepayers,in
the public interest,and not discriminatory against QFs.18 C.F.R.§292.3 04(a)(1).Notably,
PURPA and the implementing regulations require only that published/standard avoided cost rates
be established and made available to QFs with a design capacity of 100 kW or less.18 C.F.R.§
292.304(c).When this Commission reduced wind and solar projects’eligibility to published
avoided cost rates we unequivocally stated that continuing to allow large wind and solar projects
access to published avoided cost rates for projects greater than 100 kW was “clearly not in the
public interest.”Order No.32262.We reaffirmed that determination in the present case by
finding that ‘“it is not in the public interest to allow parties with contracts executed on or after
December 14,2010,to avail themselves of an eligibility cap that is no longer applicable.”Order
No.32260 at 9.The Projects have failed to demonstrate that the Commission’s findings are
unreasonable,unlawful,erroneous,or not in conformity with the law.Rule of Procedure 331,
IDAPA 31.01.01.33 1.01.
The Firm Energy Sales Agreements between Rocky Mountain Power and the five
projects were executed on December 22,2010.The Agreements recite that Rattlesnake Canyon,
Coyote Hill and North Point will each have a maximum capacity of 27.6 MW.Steep Ridge and
Rive Pine will each have a maximum capacity amount of 25.2 MW.Under normal and/or
average conditions,each project will not exceed 10 aMW on a monthly basis.Because the size
of each of these wind projects exceeds 100 kW,they are not eligible to receive the published
avoided cost rate.Nevertheless,the Projects are entitled to PURPA contracts with avoided cost
rates calculated using the IRP Methodology.
ORDER
IT IS HEREBY ORDERED that the Joint Petition for Reconsideration filed by
Rattlesnake Canyon,Coyote Hill,North Point,Steep Ridge and Five Pine wind projects is
denied.
THIS IS A FINAL ORDER ON RECONSIDERATION.Any party’aggrieved by
this Order or other final or interlocutory Orders previously issued in this Case Nos.PAC-E-11-
01,PAC-E-11-02,PAC-E-11-03,PAC-E-11-04,and PAC-E-11-05 may appeal to the Supreme
ORDER NO.32302 16
Court of Idaho pursuant to the Public Utilities Law and the Idaho Appellate Rules.See Idaho
Code §61-627.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of July2011.
KPAULLLANtR,PRESIDENT
MACK A.REDF D,COMMISSIONER
khL L/&
PARSHA H.SMITH,COMMISSIONER
ATTEST:
L
Jftn D.Jewel’li
Commission secretary
O:PAC-E-1 I-OIPAC-E-1 I-O2PAC-E-1 1-O3PAC-E-1 1-O4PAC-E-1 1-05ks3
ORDER NO.32302 17