20120608Petition for Reconsideration.pdf

Peter J. Richardson
Gregory M. Adams
Richardson & O'Leary, PLLC
515 N. 27th Street
Boise, Idaho 83702
Telephone: [phone]
Fax: [phone]
[e-mail]
greg(Zirichardsonandolearv.com
RE CE IV ED
ZDI2 JUN -8 PM 1:82
JAHL FUBL.•
IJTJL III ES COMM SS , ON
Attorneys for Complainants XRG-DP-7, XRG-DP-8, XRG-DP-9, XRG-DP-10, LLCs
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
XRG-DP-7, XRG-DP-8, XRG-DP-9, XRG-DP-)
10, LLCs, )
Complainants, )
)
VS. )
)
PACIFICORP, DBA ROCKY MOUNTAIN )
POWER, )
Defendant. )
)
)
)
)
)
)
)
Case No. PAC-E-10-08
XRG-DP-7, XRG-DP-8, XRG-DP-9,
XRG-DP-10, LLCs' PETITION FOR
RECONSIDERATION OF
COMMISSION ORDER NO. 32553
INTRODUCTION
XRG-DP-7, XRG-DP-8, XRG-DP-9, XRG-DP-10, LLCs (referred to collectively as
"XRG" or "Exergy") hereby files this Petition for Reconsideration of the Commission's Order
No. 32553 (the "Order") pursuant to Rule 331 of the Idaho Public Utilities Commission's Rules
of Procedure ("IPUCRP"). See also I.C. § 61-626. The XRG projects are qualifying facilities
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("QFs") that filed a complaint against Rocky Mountain Power alleging Rocky Mountain Power
had refused to enter into power purchase agreements ("PPAs") pursuant to the Idaho Public
Utilities Commission's ("Commission" or "IPUC") implementation of the Public Utility
Regulatory Policies Act of 1978 ("PURPA"). Rocky Mountain Power moved for summary
judgment, which XRG opposed. The Order denied Rocky Mountain Power's Motion for
Summary Judgment because "there are genuine issues of material fact related to the underlying
complaint that do not permit determination of the case through use of summary judgment."
Order at 7. Yet the Order stated, "we find that the record provided through pleadings and at oral
argument presents ample evidence for the Commission to decide the underlying disputed matters
alleged in XRG's original complaint." Id. The Order dismissed XRG's complaint. For the
reasons described below, the Commission's dismissal of XRG's complaint should be
reconsidered because it is unreasonable, unlawful, erroneous or not in conformance with the law.
See IPUCRP 331.
XRG therefore respectfully requests that the Commission reconsider its previous Order,
and issue an order which:
. Denies Rocky Mountain Power's Motion for Summary Judgment;
. Reinstates XRG's original claim in its complaint for rates in Order No. 30744;
• Grants XRG's request for leave to amend its complaint to alternatively claim right to the
rates in Order No. 31025 (should the Commission construe the existing complaint not to
include such relief);
• Grants XRG's Motion to Complete Discovery by ordering Rocky Mountain Power to
respond to XRG's revised discovery requests; and
• Provides XRG an opportunity to file its own motion for summary judgment at the close
of discovery.
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FACTUAL AND PROCEDURAL BACKGROUND
1. XRG's Fruitless Attempts to Obtain Four PPAs Prior to Filing the Complaint
The complaint in this case arose from Rocky Mountain Power's conduct which stalled
XRG's development of 4 off-system wind generation facilities near Malta, Idaho, each of which
is a self-certified PURPA QF. XRG DP-7, XRG DP-8, and XRG-DP 9 will be nameplate 20
MW, and XRG DP-10 will be nameplate 10 MW. Complaint at ¶ 6. XRG has actively
developed these projects since 2006. See, e.g., XRG 's Answer to Rocky Mountain Power's
Motion for Summary Judgment Exhibit 1 (hereinafter "XRG Exhibit"), at pp. 1-48 (containing
2007 wind leases); Id., at p. 49 (describing XRG's efforts to collect and evaluate wind data and
to secure interconnection, both beginning in 2006).
On January 21, 2009, XRG formally requested that Rocky Mountain Power provide it
with 4 standard PURPA PPAs for the projects subject to the Complaint, as well as 2 larger QF
wind projects sized over 10 aMW for which XRG requested IRP Methodology rates. Rocky
Mountain Power's Motion for Summary Judgment Exhibit A (hereinafter "RMP SJExhibit"), pp.
12-95, 111. XRG proposed to deliver the output of the projects to Rocky Mountain Power's
system at the Brady substation with online dates of December 31, 2010. Id. at 44, 56, 78, 87.
Rocky Mountain Power, however, quickly rejected XRG's request. Beginning February
25, 2009, Rocky Mountain Power rejected the request for 4 standard PPAs, and never provided
IRP Methodology rates for the 2 larger projects. Id. at pp. 105, 117, 143, 209-10, 299-301.
Rocky Mountain Power stated it lacked transmission capacity for the cumulative output such that
Rocky Mountain Power Commercial and Trading ("Rocky Mountain Power C&T") could
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designate the projects as network resources and thereby obtain network transmission service
from Rocky Mountain Power Transmission, as required by PacifiCorp's Open Access
Transmission Tariff ("OATT"). Id. Rocky Mountain Power stated that it would need to deliver
the output to its Utah load, would only be able to do so for 23 MW delivered to the Brady or
Borah substation, and therefore required XRG to select only one of its projects for a PPA. Idd at
p. at 117.
Meanwhile, in March 2009, the Bonneville Power Administration ("BPA") required
completion of environmental studies costing $20,000 for each of the 4 standard project's
interconnection - a total of $80,000. XRG Exhibit 1, at p. 49. Because Rocky Mountain Power
had expressed its reluctance to executing PPAs for all 4 projects beginning February 25, 2009,
XRG had to bear the futility of its PPA efforts in mind when committing additional funds to the
interconnection process and ultimately lost its queue numbers for each project which it had
initiated in 2006. Id.
XRG nevertheless persisted in attempting to convince Rocky Mountain Power that
transmission from Brady to the Utah load center would not be a problem, and pointed out that
publicly available information regarding upgrades to the applicable transmission path refuted
Rocky Mountain Power's position. See RMP SJ Exhibit A, at p. 269. From a phone
conversation on November 10, 2009, XRG understood Rocky Mountain Power itself to state that
transmission would not be a problem if the projects came online in June 2011, and in light of this
information XRG requested to move the online date to June 2011. See id., at pp. 289, 296.
Yet Rocky Mountain Power consistently and unequivocally relied on the perceived
transmission problem to reject XRG's request for 4 PPAs. See, e.g, id, at p. 209. XRG again
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requested 4 PPAs in March 2010. See id., at pp. 289, 296. On March 12, 2010, the Commission
issued Order No. 31021, increasing Rocky Mountain Power's wind integration charge, and then
issued Order No. 31025 on March 16, 2010, which significantly decreased the published avoided
cost rates. On April 13, 2010, Rocky Mountain Power responded to XRG's March inquiries by
letter from Mr. Ken Kaufmann. He stated, "PacifiCorp has not offered to purchase net output
from any remaining Exergy project because PacifiCorp lacks the ability to accept more than
approximately 23 MW of new capacity at either its Borah or Brady substation and XRG has not
offered to pay for system upgrades necessary to accept more than 23 MW." Id., at p. 299.
Rocky Mountain Power disagreed with Exergy's reliance on the November 2010 phone call to
"conclude that PacifiCorp Transmission will be able to accommodate all Exergy projects after
completion by PacifiCorp Transmission of the upgrade in mid-2011." Id., at p. 300.
2. XRG's Complaint
Left with no other recourse, XRG filed the Complaint in this case on July 29, 2010.
XRG alleged that it attempted to negotiate 4 standard PPAs in good faith prior to March 12,
2010, but that Rocky Mountain Power refused to furnish them on account of its purported
transmission constraint. Complaint, at 118, 15-16. XRG alleged that, "By failing to provide
publicly available standard PPA terms and conditions, and delaying its responses to XRG's
binding offers to enter into four PURPA PPAs for its wind QFs near Malta, Idaho, PacifiCorp is
in violation of PURPA, FERCs implementing regulations, and the Commission's orders." Id. at
¶ 18. XRG requested that the Commission order Rocky Mountain Power to "execute standard
PURPA power purchase agreements for XRG's four QF projects at PacifiCorp's avoided cost
rates on file for QFs under 10 aMW prior to March 12, 2010[,]" or, "Grant[]any other relief that
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the Commission deems necessary." Id. at p. 6.
In its Answer, Rocky Mountain Power "admits it informed XRG in writing on March 23,
2009, May 11, 2009, and October 2, 2009, that available transmission capacity from the
proposed delivery point - Brady substation - was insufficient for accepting more than 23
megawatts of net output from XRG's proposed qualifying facilities." Answer, at ¶ 8. It also
asserted as an affirmative defense that it had not acted in bad faith or with undue delay. Id., at p.
:4!
3. Rocky Mountain Power's Admission that Network Transmission Was Available
The parties commenced discovery, and XRG's First Set of Production Requests
(Requests Nos. 1-15) inquired into the transmission capacity issue. See XRG Exhibit 2, at pp. 1-
24, 34, 36-37. Then, on September 21, 2010, Rocky Mountain Power sent XRG a letter
admitting that transmission was now available for all 4 QFs. XRG Exhibit 3, at pp. 1-10. Rocky
Mountain Power's September 21, 2010, letter did not even reference the complaint case. Id. As
though the litigation were not ongoing, and as though Rocky Mountain Power's perceived
transmission constraint were not a central issue in the litigation, the letter stated:
On July 15, 2010, PacifiCorp Transmission designated a new Point of
Delivery/Point of Receipt for Network Transmission Service under its Open
Access Transmission Tariff called "Path C". . . The new Point of Delivery/Point
of Receipt at Path C effectively increases available firm transmission across P ath
C and resolves PacifiCorp C&T's concerns at this time about the availability Q(
firm Network Resource Transmission Service 1QJ1 the Lour Q.Fprpjccts.. . . If you
decide to pursue all four projects, we would request an update on each project per
the attached matrices so that we can correctly and expediently prepare the draft
PPAs.
Id., at p. 2 (emphasis added).
The letter provided no explanation for why Rocky Mountain Power designated a new
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point of service on Path C, or why Rocky Mountain Power was unaware prior to this date that
transmission would be available by the time XRG had initially proposed the projects come online
- December 31, 2010. The letter contained, for the first time since XRG contacted Rocky
Mountain Power on January 21, 2009, a standard matrix of additional project information for
each of the 4 QFs that Rocky Mountain Power believed XRG needed to provide in order for
Rocky Mountain Power to prepare standard contracts and complete due diligence. Id., at pp. 3-
10.
Back in the litigation, in discovery, Rocky Mountain Power then provided internal
communications between Jim Partouw, a trader in Energy Marketing for PacifiCorp C & T, to
John Younie, a contract administrator for PacifiCorp C & T, regarding Rocky Mountain Power's
investigation into the transmission availability. XRG Exhibit 2, at pp. 1-22, 61. On January 29,
2009, Mr. Younie had described the projects, including the online date of December 31, 2010,
and that each would be a mandatory purchase PURPA project with an "Idaho Standard QF Off-
System MAG PPA." Id., at p. 4-7. He asked Mr. Partouw, "Are there any issues with this much
capacity being delivered to Brady?" Id., at p.. 3.
On January 29, 2009, Mr. Partouw responded, "Import to Utah system on a firm basis is
limited to 23 MW total for these transactions . . . . Another 250 MW exists but APS has first
rights to schedule on the path." Id. at pp. 16-19. Mr. Partouw further elaborated by stating:
Will need to request Network Resource status for this resource. Please notify
when you want request for Network Resource status submitted (will need to have
signed attestation of C&T commitment). Suggest ff4. be contingent upon
receivinz Network Resource status. Without Network Resource status for this
resource, we will need to use PacifiCorp PTP capacity and schedule the energy to
load on the PTP reservation.
Id. (emphasis added).
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XRG quickly filed its Second Set of Production Requests (Nos. 16-23), on September 29,
2009, to inquire further into the erroneous transmission finding, including information regarding
Rocky Mountain Power's internal procedures for investigating available transmission for off-
system PURPA projects.
4. XRG's Renewed Attempt to Secure Four PPAs Without Further Litigation
Despite the highly suspicious nature of the newly revealed facts, XRG entered into
settlement negotiations in good faith in hopes of foregoing further litigation and simply securing
PPAs for its projects. XRG accepted Rocky Mountain Power's request to stay discovery, and
settlement negotiations commenced in October 2010.
Then, on November 5, 2010, Rocky Mountain Power, along with Idaho Power Company
and Avista Corporation, filed a Joint Motion to Adjust Published Avoided Cost Rate Eligibility
Cap in GNR-E-10-04. The utilities requested that the Commission immediately reduce the
eligibility cap for standard rates contained in PURPA PPAs for QFs from a project size of under
10 aMW to a project size of under 100 kilowatts ("kw") nameplate capacity. See Case No.
GNR-E-10-04. On December 3, 2010, the Commission issued Order No. 32131, wherein it
declined to immediately reduce the eligibility cap, but stated that its final decision on the
eligibility cap issue would be retroactively effective on December 14, 2010.
XRG understood settlement negotiations to be ongoing despite the Joint Motion to reduce
the eligibility cap. The parties met on December 7, 2010. But XRG perceived that meeting to
have been a breakdown in the settlement negotiations. After that meeting XRG provided Rocky
Mountain Power with a letter containing updated information regarding the projects, which in
part, responded to the September 21, 2010 letter requesting refreshed information on the projects
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since the time in early 2009 when Rocky Mountain Power refused to negotiate. See XRG Exhibit
3, at pp. 11-15.' Although XRG's response to the September 21, 2010 letter was delayed by
litigation and settlement negotiations, XRG expressed interest in simply executing contracts. Id.,
at p. 13. In response, Rocky Mountain Power did not provide contracts containing the rates in
Order No. 30744 or 31025. Indeed, it never responded to XRG's letter at all. Rather, it re-
commenced litigation.
5. The Re-Commenced Litigation
Rocky Mountain Power responded to XRG's Second Set of Production Requests on
December 21, 2010, and Rocky Mountain Power filed its Second Set of Production Requests
(Nos. 26-51) on December 22, 2010. XRG filed its Third Set of Production Requests (Nos. 24-
63) on January 11, 2011, asking for detailed explanations for Rocky Mountain Power's failure to
earlier realize that transmission would not be a problem, and its reliance on that non-existent
problem to stall negotiations. For example, XRG has asked, "please explain why Rocky
Mountain Power did not offer the option to XRG to make the requested PPAs 'contingent upon
receiving Network Resource status," Rocky Mountain Power's Motion for Protective Order
Exhibit A (hereinafter "RMP P0 Exhibit"), at No. 31(b), which would have enabled Rocky
Mountain Power to make a formal request to its transmission experts to analyze availability of
transmission. Id, at Nos. 36-39; XRG Exhibit 2, at pp. 63-64. XRG also asked Rocky Mountain
Power to explain the legitimate use under its OATT for which it held 250 MW of PTP capacity,
and the reason it did not offer that capacity for XRG's projects. RMP P0 Exhibit A, at Nos. 32-
1 Because settlement negotiations are confidential for some purposes and Rocky Mountain Power has
objected to discovery requests regarding the settlement negotiations, XRG has provided only the redacted letter
which does not refer to settlement negotiations. As redacted, it is simply a response to Rocky Mountain Power's
September 21, 2010 letter, provided by Rocky Mountain Power outside the context of the litigation.
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33.
XRG also requested an explanation for Rocky Mountain Power's failure to recognize the
publicly available information regarding Rocky Mountain Power's plans to upgrade Path C such
that it would have up to 1600 MW of transfer capacity by the end of 2010, and would require no
upgrades for deliveries at Brady. See, e.g., id., at Nos. 42, 44. XRG further inquired into Rocky
Mountain Power's commitment to the Idaho Commission during the Mid-American holdings
acquisition in 2005 to upgrade this path, and into its successful request for preferential
transmission ratemaking treatment for the upgrades at FERC in 2008 where it stated that
southwestern Idaho would be "hub" from which its "power will be collected and delivered in
different directions." Id., at Nos. 48, 52. XRG requested explanation for Rocky Mountain
Power's request to rate base the upgrades in its 2010 rate case before the Idaho Commission. Id.,
at Nos. 47, 49, 50. XRG asked whether anyone at Rocky Mountain Power C & T that processed
XRG's PPA requests knew of the proposed upgrades. See, e.g., id, at No. 44(d).
XRG then timely responded to Rocky Mountain Power's Production Request Nos. 26-50
on January 12, 2011, without requesting a delay, despite the intervening holiday season. On
January 20, 2011, XRG agreed to allow Rocky Mountain Power an additional 14 days to respond
to XRG's Requests Nos. 24-63. See XRG Exhibit 4, at pp. 1. At that time, Rocky Mountain
Power did not indicate that it planned to file a motion for a protective order or for summary
judgment.
Then, on February 2, 2011, Rocky Mountain Power requested that XRG agree to stay the
response to all of Request Nos. 24-63 pending resolution of a Motion for Summary Judgment
Rocky Mountain Power now planned to file. Id., at p. 3. XRG rejected this request. On
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February 7, 2011, Rocky Mountain Power then filed its Motion for Protective Order to Stay
Discovery on XRG's Production Requests Nos. 24-52, and Motion for Summary Judgment. On
the same day, the Commission issued Order No. 32176, in Case No. GNR-E-10-04, reducing the
published avoided cost rate eligibility cap to 100 kw for wind QFs effective December 14, 2010.
One can therefore infer from Rocky Mountain Power's motions that it believes XRG could not
even entitle itself to the published avoided cost rates in Order No. 31025. On February 15, 2011,
Rocky Mountain Power responded to XRG's pending requests that do not regard the erroneous
transmission constraint finding (Nos. 52-63), but did not respond to transmission questions (Nos.
24-52).
XRG filed an extensive Answer to Rocky Mountain Power's Motions, wherein it
opposed the motions (hereinafter "XRG 's SJ Answer"). XRG also moved pursuant to I.R.C.P.
56(f) to complete discovery, and requested leave to amend its Complaint to expressly include a
request for alternative relief of entitlement to the avoided cost rates in Order No. 31025, which
had become unavailable during the pendency of litigation and XRG's fruitless settlement
attempts. Rocky Mountain Power then filed a Reply to XRG's Answer.
Over two months after briefing on Rocky Mountain Power's motions was complete, the
Commission issued a scheduling order on May 18, 2011, setting the matter for oral argument to
be held on June 9, 2011. See Order No. 32246. The Commission's scheduling order stated,
"Specifically, the Commission seeks argument on whether there is a genuine issue as to any
material fact regarding XRG's complaint. See I.R.C.P. 56(c)." Id. at 2 (emphasis added). At oral
argument, Rocky Mountain Power maintained that XRG had not committed itself to the four
requested PPAs prior to the rate change in Order No. 30744 in March 2010. See Order No.
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32553 at 5-6.
In response to the Commission request to address any disputed material facts, XRG
presented oral argument regarding several material, disputed facts that existed and compelled
rejection of Rocky Mountain Power's Motion for Summary Judgment. Tr. at 27-38. XRG
argued Rocky Mountain Power either knowingly, or through negligence or ineptitude, "acted so
as to prevent the QF from obtaining a contract." Order No. 32553 at 6. XRG stated, "XRG's
theory of this case is that Rocky Mountain Power abused its role as a PURPA negotiator and
network transmission service provider to stall PURPA negotiations from March 2009 until
September 2010 by failing to acknowledge the availability of the Populus to Terminal upgrades
for XRG' s projects." Id. (citing Tr. at 31-32). XRG also withdrew several of its pending
discovery requests so that the outstanding requests at issue were reduced from 30 questions to 14
questions. Tr. at 3-4.
6. The Commission's Order No. 32553 Dismissing XRG's Complaint
On May 18, 2012 - almost an entire year after oral argument on summary judgment was
held on June 9, 2011 - the Commission issued its Final Order No. 32553, dismissing XRG's
Complaint. The Order denied Rocky Mountain Power's Motion for Summary Judgment because
"there are genuine issues of material fact related to the underlying complaint that do not permit
determination of the case through use of summary judgment." Order at 7. Yet the Order stated,
"we find that the record provided through pleadings and at oral argument presents ample
evidence for the Commission to decide the underlying disputed matters alleged in XRG's
original complaint." Id.
Despite concluding summary judgment was not warranted, the Order's dismissal of
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XRG's complaint relied upon the record for several factual determinations. The Commission
found "no evidence in the record that Rocky Mountain Power was refusing to negotiate in March
2009." Id. at 7. The Order states, "Rocky Mountain Power reasonably held its position that
transmission in the area of XRG's requested interconnection was constrained." Id. at 9. The
Order appears to have concluded that Rocky Mountain Power acted in good faith and reasonably
even though Rocky Mountain Power completely ignored the publicly available evidence that the
Populus to Terminal upgrade would resolve the perceived transmission problem over the critical
network transmission path. Id. at 9-10. The Order concludes, "Based on these facts, we cannot
find that Rocky Mountain Power was attempting to impede negotiations with XRG by failing to
acknowledge the Populus to Terminal transmission upgrades." Id. at 10.
The Order did not rule on XRG's Motion to Complete Discovery pursuant to I.R.C.P.
56(f). The Order did not rule on XRG's entitlement to the rates contained in Order No. 31025,
which XRG argued precluded dismissal. See XRG 's SJ Answer at 18 & n.9, 28-29. Nor did it
rule on XRG' s request for leave to amend its complaint to expressly include entitlement to the
avoided cost rates from Order No. 31025 in effect on the date XRG filed its complaint, to the
extent the Commission might find such amendment necessary.
LEGAL STANDARD
IPUCRP 331.01 provides, "Petitions for reconsideration must 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, and a statement of the
nature and quantity of evidence or argument the petition will offer if reconsideration is granted."
See also I.C. § 61-626.
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GROUNDS FOR RECONSIDERATION
1. The Commission Should Grant Reconsideration Because Order No. 32553 Relied on
an Unreasonable and Arbitrary Legal Standard That Is Not in Conformity With the
Commission's Own Rules, or Other Applicable Rules and Laws.
Order No. 32553 is erroneous because it failed to address the matters presented, and
instead relied upon some unspecified and therefore completely arbitrary legal standard. As noted
above, Rocky Mountain Power moved for summary judgment, and XRG filed a response
applying the summary judgment rule. The Commission issued a scheduling order requesting oral
argument on the summary judgment rule. The parties then presented extensive oral argument
based upon the summary judgment rule.
"Summary judgment under I.R.C.P. 56(c) is proper only when there is no genuine issue
of material fact and the moving party is entitled to judgment as a matter of law." Ackerman v.
Bonneville County, 140 Idaho 307, 310, 92 P.3d 557, 560 (Ct. App. 2004). "When ruling on a
motion for summary judgment, the trial court must determine whether the evidence, when
construed in the light most favorable to the nonmoving party, presents a genuine issue of
material fact or shows that the moving party is not entitled to judgment as a matter of law."
Chandler v. Hayden, 147 Idaho 765, 769, 215 P.3d 485, 489 (2009). "The moving party bears
the burden of proving the absence of material facts." Id. "If the evidence is conflicting on
material issues or supports conflicting inferences, or if reasonable minds could reach differing
conclusions, summary judgment must be denied." Doe v. Sisters of Holy Cross, 126 Idaho 1036,
1039, 895 P.2d 1229, 1232 (Ct. App. 1995). "Should it appear from the affidavits of the party
opposing the motion that the party cannot for reasons stated present by affidavit facts essential to
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justify the party's opposition, the court may refuse the application for judgment or may order a
continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had
or may make such other order as is just." I.R.C.P. 56(f).
XRG' s argument that Rocky Mountain Power failed to meet the summary judgment
standard was apparently convincing. The Commission denied Rocky Mountain Power's Motion
for Summary Judgment because "there are genuine issues of material fact related to the
underlying complaint that do not permit determination of the case through use of summary
judgment." Order at 7. Nevertheless, the Order somehow concluded, "we find that the record
provided through pleadings and at oral argument presents ample evidence for the Commission to
decide the underlying disputed matters alleged in XRG's original complaint." Id (citing IPUCRP
327). Despite purporting not to grant summary judgment, the Order reached several factual
determinations by citing extensively to the record. Id. at 7-10. This is a completely arbitrary
application of some hybrid form of summary judgment where only one party is provided with the
opportunity to obtain and present evidence necessary for summary judgment.
Parties to Commission proceedings are entitled to know what standards will apply to their
case. In this case, no such standard supporting the Commission's Order No. 32553 was provided
before the parties presented their case. It is still unclear what legal standard the Commission
applied to conclude there were material issues of fact that would preclude summary judgment,
yet the extensive record nevertheless supported dismissal. Order No. 32553 does not state the
obvious alternative to summary judgment - a motion for judgment on the pleadings pursuant to
I.R.C.P. 12(c) or a motion to dismiss pursuant to I.R.C.P 12(b)(6). The Order cannot rely on
those rules because the Order relied on evidence submitted by Rocky Mountain Power. "If on a
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motion for judgment on the pleadings, matters outside the pleadings are presented to and not
excluded by the court, the motion shall be treated as one for summary judgment and disposed of
as provided in Rule 56, and all parties shall be given reasonable opportunity to present all
material made pertinent to such a motion by Rule 56." I.R.C.P. 12(b)(6), accord I.R.C.P. 12(c);
see also Taylor v. McNichols, 149 Idaho 826, 833, 243 P.3d 642, 649 (2010).
The only rule cited in the Commission's Order (other than the summary judgment rule)
was IPUCRP 327. Order No. 32553 at 7. That rule provides:
Unless prohibited by statute, the substance of orders and the relief provided by
orders may differ from the relief requested or proposed by any party. The
Commission's order may provide for any result supported by the record before the
Commission without regard to whether each component of the order or any
component of the order was specifically recommended by a party to the
proceeding.
IPUCRP 327.
This rule does not contain any legal standard the Commission could apply. It merely stands for
the unremarkable proposition that the Commission may rely upon a legal basis not advocated by
any party, or grant relief not specifically requested by a party. For example, if the Commission
were to determine in this case that summary judgment was inappropriate, IPUCRP 327 allows
the Commission to apply an alternative legal standard such as that for judgment on the pleadings
set forth in I.R.C.P. 12(c). IPUCRP 327 merely puts parties on notice that the Commission may
rely on an alternative basis, or grant some form of relief not specifically requested. However, the
rule cannot supplant all other applicable legal standards and allow the Commission to apply a
completely arbitrary and unspecified legal standard. To do so reads new words into the plain
terms of IPUCRP 327.
The error is particularly acute in this case where the Commission itself asked the parties
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to specifically address the summary judgment standard. See Order No. 32246 at 2. The
Commission asked the parties to address the summary judgment standard in response to Rocky
Mountain Power's Motion for Summary Judgment. XRG did just that. And the Commission
agreed with XRG that Rocky Mountain Power had not satisfied the legal standard Rocky
Mountain Power advocated for and the Commission asked the parties to argue. Nevertheless,
tLci nearly a yfar of inaction by the Commission, the Commission deemed the summary
judgment record sufficient to dismiss XRG's complaint. The Commission erred by applying an
arbitrary and unreasonable legal standard.
2. The Commission Should Grant Reconsideration Because Order No. 32553 Failed to
Rule on XRG's Motion to Complete Discovery Pursuant to LR.C.P 56(f).
The Commission's Order No. 32553 failed to address XRG's Motion to Complete
Discovery pursuant to I.R.C.P. 56(f). The revised discovery requests still outstanding pertain to
the crucial issue in this case - Rocky Mountain Power's bad faith investigation into available
transmission capacity. XRG's Motion to Complete Discovery under Rule 56(f) should be
granted on that basis alone. Doe, 126 Idaho at 1044, 895 P.2d at 1237 (finding error in denial of
Rule 56(f) motion seeking an opportunity to conduct discovery on relevant points before
disposition of a summary judgment motion).
Rocky Mountain Power's unreasonable conclusion that it lacked available transmission
capacity until months after XRG filed its complaint is the critical issue in this case. Rocky
Mountain Power refused to negotiate four PPAs with XRG on that basis alone. See RMP 's SJ
Motion at 5; RIvIP Sf Exhibit A at 209; see also Tr. 38-41. The Commission cannot dismiss
XRG's complaint without allowing XRG to fully explore that issue in discovery, unless Rocky
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Mountain Power's conduct is completely irrelevant to the legal conclusions reached in Order No.
32553.
But Rocky Mountain Power's conduct is obviously not irrelevant. Indeed, Order No.
32553 itself made extensive findings on the issue.
The Order stated:
We further find that, prior to the time the published rates changed in March
2010, Rocky Mountain Power reasonably held its Dosition . traiisinissioii in
the area ofXRG's reauested interconnection iwasconstrained. In early 2009,
when XRG initially proposed its projects, Rocky Mountain Power reviewed the
publicly available information regarding its available transmission (OASIS). The
report showed that there was then between 20 and 25 MW of unsubscribed capacity
available at the location requested by XRG. Tr. at 49. This information was relayed to
XRG. Rocky Mountain Power suggested proceeding with a single PPA and
investigating alternatives for the remainder of the projects. XRG was provided a draft
PPA but did not follow up. Based on these facts. • cannot Find that Rocky
Mountain Power was attenwtingLo imDede negotiations XRGJiJfailing to
acknowledge the Fopulus to Terminal transmission upgrades. The parties had not
yet begun active negotiations on the projects.
Order No. 32553 at 9-10 (emphasis added).
This passage highlights the flaw in Order No. 32553. The Commission analyzed all of Rocky
Mountain Power's evidence, and reached a conclusion that Rocky Mountain Power acted reasonably
to restrict XRG to 20 to 25 MW total for all of its requested PPAs. Yet the Commission allowed
only one party to develop and present evidence on that issue, and the Commission's Order therefore
violates I.R.C.P. 56(f). XRG provided extensive argument regarding why the outstanding discovery
requests are highly likely to uncover evidence that undercuts the conclusion that Rocky Mountain
Power acted reasonably in its transmission investigation. See Tr. at 57-60.
XRG was developing more than one project and Rocky Mountain Power's unreasonable
network transmission conclusion precluded XRG's ability to proceed through Rocky Mountain
Power's QF due diligence evaluation on any of the projects or even so much as obtain a draft
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contract for any more than one of the projects. That Rocky Mountain Power suggests it proposed
negotiating only one PPA is unavailing to Rocky Mountain Power's Motion because XRG intended
to exercise its right to develop Lour projects. Rocky Mountain Power's erroneous network
transmission investigation precluded Rocky Mountain Power from even providing its standard due
diligence inquiry on even one project until September 11, 2010. See XRG LI Exhibit No. 3 at pp. 1-
10. The erroneous network transmission investigation completely stalled negotiations starting
February 25, 2009, until September 11, 2010. XRG is entitled to further discovery on the matter
prior to the Commission reaching factual conclusions on the issue and dismissing XRG's complaint.
3. The Commission Should Grant Reconsideration Because Order No. 32553 Failed to
Rule on XRG's Entitlement to the Rates Contained in Order No. 31025, or
Alternatively to Rule on XRG's Request to Amend Its Complaint to Expressly
Request Such Relief.2
As noted above, the avoided cost rates available when XRG filed its complaint were the
rates contained in Order No. 31025. XRG's Complaint alleges that Rocky Mountain Power
raised transmission constraint issues with which XRG disagreed, caused undue delay in
negotiations, and thereby deprived XRG of its right to 4 standard PPAs containing the pre-
existing rates in Order No. 30744, or any other relief the Commission deems necessary. XRG
argued that its complaint's request for any other relief the Commission deems necessary should
be read to include an alternative request for an order entitling it to 4 PPAs containing the rates in
Order No. 31025. XRG Sf Answer at 18 & n.9. XRG also requested leave to amend its
complaint, to the extent the Commission might disagree that XRG's Complaint includes a
request for such alternative relief. Id. Under I.R.C.P. 15(a), "in the interest of justice, district
2 XRG makes this argument in the alternative to its claim to the rates in Order No. 30744, and maintains it is
entitled to the rates in Order No. 30744.
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courts should favor liberal grants of leave to amend a complaint." Hines v. Hines, 129 Idaho
847, 853, 934 P.2d 20, 26 (1997).
The Commission's Order No. 32553 did not address or even mention this issue. Because
the availability of published rates changed after filing the complaint and Rocky Mountain Power
has admitted network transmission is available since the filing of the complaint, XRG should be
allowed to amend the complaint to include an alternative claim to entitlement to the intervening
rates in effect when it filed its complaint if the complaint cannot be read to request such
alternative relief.
Even under Rocky Mountain Power's formulation of the legally enforceable obligation
rule, XRG clearly entitled itself to the rates in effect at the time it filed its highly meritorious
complaint regarding Rocky Mountain Power's erroneous network transmission determination.
See Rocky Mountain Power's SJ Motion at 18 ("In considering QF requests for grandfather rate
treatment, the Commission requires that a QF either: (a) enter into a power purchase contract
with a utility prior to a rate change, or (b) file a meritorious complaint for grandfather rates
before a rate change."). To the extent Rocky Mountain Power may argue XRG did not make
adequate efforts to secure contracts prior to the drop in the eligibility cap on December 14, 2010,
the Commission could investigate settlement negotiations initiated by XRG after Rocky
Mountain Power first agreed to negotiate four PPAs in September 2010. See XRG 's SJ Answer
at 21 &n.11.
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4. The Commission Should Grant Reconsideration Because Order No. 32553 Fails to
Implement 18 C.F.R. § 292.304(d)(2)(ii) and the Commission's Own Prior Precedent
Applying that Federal Regulation.
XRG' s claim to entitlement of the rates contained in Order No. 30744, or alternatively
the rates contained in Order No. 31025, arises from the Federal Energy Regulatory
Commission's ("FERC") rules which the Commission must implement. See Complaint at IT 16-
18 (citing 18 C.F.R. 292.304(d)(ii) and Blind Canyon Aquaranch v. Idaho Power Company, Case
No. IPC-E-94-1, Order No. 25802 (1994)). FERC's rules allow a QF to create a "legally
enforceable obligation" even if a utility is resistant to entering into executed contracts. Cedar
Creek Wind, LLC, 137 FERC ¶ 61,006, ¶ 36 (2011) (explaining "that the phrase legally
enforceable obligation is broader than simply a contract between an electric utility and a QF and
that the phrase is used to prevent an electric utility from avoiding its PURPA obligations by
refusing to sign a contract, or as here, from delayin.- the si2nin Q(a contrcici, so that a later and
lower avoided cost is applicable." (emphasis added)). Pursuant to the Commission's precedent
implementing this rule, the QF is entitled to grandfathered rates if it can "demonstrate that 'but
for' the actions of [the utility, the QF] was otherwise entitled to a power purchase contract."
Earth Power Resources, Inc. v. Washington Water Power Company, Case No. WWP-E-96-6,
Order No. 27231 (1997).
XRG' s claim to entitlement to the rates in Order No. 30744 in effect prior to March 16,
2010 relies upon XRG's allegation that Rocky Mountain Power unreasonably refused to process
its request for four PPAs. The critical issue is the reasonableness of Rocky Mountain Power's
conclusion, from February 25, 2009 through the date of the rate change in March 2010, that
Rocky Mountain Power lacked network transmission capacity for more than one project to
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deliver at Brady substation. By depriving XRG of the right to even complete discovery on that
matter, Order No. 32553 improperly implements 18 C.F.R. § 292.304(d)(2)(ii) and the
Commission's precedent.
Under the reasoning of the Order, the possibility of utility bad faith or delay is irrelevant.
That is incorrect reasoning. Cedar Creek Wind, LLC, 137 FERC ¶ 61,006 at ¶ 36. XRG's theory
of the case is that Rocky Mountain Power abused its dual role as network transmission operator
and PURPA negotiator in order to delay negotiations of PPAs for XRG's four projects. "In order
to grant their motion, you need to assume that they committed a violation of their standards of
conduct and their [OATT] and discriminated against this PURPA developer by sticking their
heads in the sand and ignoring they were upgrading this line and that the path was going to be
available." See Tr. at 60. To not even permit further discovery and simply dismiss the complaint
is a failure to implement 18 C.F.R. § 292.304(d)(2)(ii) and a failure to apply the Commission's
own prior precedent in a consistent manner.
Further, XRG' s right to entitlement to the rates contained in Order No. 31025 is
undeniable under the FERC rules and the Commission's precedent. Rocky Mountain Power
itself argued that QFs must file a complaint prior to the date of a rate change in order to lock in a
right to the pre-existing rates. See RMP 's SJMotion at 18; see also A. W Brown Co., Inc. v.
Idaho Power Co., 121 Idaho 812, 814, 816, 828 P.2d 841, 843, 845 (1992). That is the most
onerous grandfather test applied by the Commission that has been affirmed by the Idaho
Supreme Court or FERC.3 XRG meets that test for the rates contained in Order No. 31025.
Those were the rates in effect at the time XRG filed its complaint regarding Rocky Mountain
Although the test applied in Cedar Creek Wind LLC required a fully executed contract and was therefore
more onerous than filing a complaint, FERC determined that test to be inconsistent with 18 C.F.R. §
292.304(d)(2)(ii). 137 FERC 161,006.
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Power's unreasonable conclusions regarding network transmission. XRG presented argument
regarding its entitlement to these rates. See XRG 's SJMotion at 18 & n.9, 28-29; Tr. 24-25. The
Commission's Order failed to even address this issue or to grant XRG' s request to amend its
complaint to the extent the Commission views that as necessary. This is a failure to implement
18 C.F.R. § 292.304(d)(2)(ii) and a failure to apply the Commission's own prior precedent in a
consistent manner.
The Commission should grant reconsideration because Order No. 32553 establishes a rule
whereby no matter how bad faith the conduct of the utility during negotiations, the QF cannot create
a legally enforceable obligation by any means - even the filing of a meritorious complaint regarding
that bad faith and unreasonable delay.
CONCLUSION
For the reasons set forth above, XRG respectfully requests that the Commission
reconsider its Order No. 32553, and issue an order which: Denies Rocky Mountain Power's
Motion for Summary Judgment; Reinstates XRG's original claim in its complaint for rates in
Order No. 30744; Grants XRG's request for leave to amend its complaint to alternatively claim
right to the rates in Order No. 31025 (should the Commission construe the existing complaint not
to include such relief); Grants XRG Motion to Complete Discovery by ordering Rocky Mountain
Power to respond to XRG's revised discovery requests; and Provides XRG an opportunity to file
its own Motion for Summary Judgment at the close of discovery.
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Respectfully submitted this 8th day of June, 2012.
RACHARDSON AND O'LEARY, PLLC
A~ L
Pe r J. Richardson (ISB No: 3195)
Gregory M. Adams (ISB No. 7454)
Attorneys for the XRG LLCs
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PAGE 24
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 8th day of June, 2012, a true and correct copy of the
within and foregoing XRG LLCs' PETITION FOR RECONSIDERATION was served in the
manner shown to:
X Hand Delivery
U.S. Mail, postage pre-paid
Facsimile
X Electronic Mail
Jean Jewell
Commission Secretary
Idaho Public Utilities Commission
472 W. Washington
Boise, ID 83702
[e-mail]
Mark C. Moench
Rocky Mountain Power
201 South Main Street, Suite 2300
Salt Lake City, UT 84111
Mark.moench@pacificori,.com
Daniel E. Solander
Rocky Mountain Power
201 South Main Street, Suite 2300
Salt Lake City, UT 84111
Daniel.solander@pacificori,.com
Jeffrey S. Lovinger
Kenneth E. Kaufmann
Lovinger Kaufmann LLP
825 NE Multnomah, Suite 925
Portland, OR 97232
lovingerLKLaw.com
[e-mail]
By: ad--, Z
y M. Adams
RICHARDSON & O'LEARY PLLC
Attorneys for Complainant
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PAGE 25
- Hand Delivery
X U.S. Mail, postage pre-paid
Facsimile
X Electronic Mail
- Hand Delivery
•. U.S. Mail, postage pre-paid
Facsimile
• Electronic Mail
- Hand Delivery
....X. U.S. Mail, postage pre-paid
Facsimile
• Electronic Mail