20110713ReplyComments.pdf

WILLIAMS · BRADBURY
ATTORNEYS AT LAW
July 12,2011
Ms. Jean Jewell
Commission Secreta
Idaho Public Utilties Commission
472 W. Washington
Boise,ID 83702
Re: PAC-E-11-01 through PAC-E-11-05
Dear Ms. Jewell:
~'l ~
~ ~~ %~.. -'"-: \,j
~~
Enclosed please find an original and seventeen copies of the Reply Comments of
Cedar Creek Wind, LLC for filing in the above referenced dockets.
Please call should you have any questions.
RLW/jr
Enclosures
cc: Service List
Sincerely,
J.~J.lJ~
Ronald L. Wiliams
1015 W. Hays Street - Boise, ID 83702
Phone: [phone] - Fax: [phone] - ww.wiamshradbur.com
Ronald L. Wiliams ISB No. 3034
Wiliams Bradbur, Attorneys at Law
10 15 W. Hays Street
Boise,ID 83702
Phone: [phone]
Fax: [phone]
ron(fwilliamsbradbur .com
Lar F. Eisenstat
Michael R. Engleman
Dickstein Shapiro LLP
1825 Eye Street, NW
Washington, DC 20006-5403
Tel: [phone]
Fax: [phone]
eisenstatl(fdicksteinshapiro.com
engleman(fdicksteinshapiro.com
Counsel for Petitioner Cedar Creek Wind, LLC
RECEIVED
20/1 JU/. 12 PH 4: 31
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
PACIFICORP DBA ROCKY MOUNTAIN )
POWER FOR A DETERMINATION )
REGARDING A FIRM ENERGY SALES )
AGREEMENT BETWEEN ROCKY MOUNTAIN )
POWER AND CEDAR CREEK WIND, LLC )
(RTTLESNAK CANYON PROJECT) )
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IN THE MATTER OF THE APPLICATION OF
PACIFICORP DBA ROCKY MOUNTAIN
POWER FOR A DETERMINATION
REGARDING 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 FOR A DETERMINATION
REGARING A FIRM ENERGY SALES
AGREEMENT BETWEEN ROCKY MOUNTAIN
POWER AND CEDAR CREEK WIND, LLC
(NORTH POINT PROJECT)
CASE NO. PAC-E-ll -01
CASE NO. PAC-E-ll-02
CASE NO. PAC-E-ll-03
DSMDB-2953492
IN THE MATTER OF THE APPLICATION OF
PACIFICORP DBA ROCKY MOUNTAIN
POWER 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 FOR A DETERMINATION
REGARING A FIRM ENERGY SALES
AGREEMENT BETWEEN ROCKY MOUNTAIN
POWER AND CEDAR CREEK WIND, LLC
(FIVE PINE PROJECT)
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) CASE NO PAC-E-ll-04
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CASE NO. PAC-E-ll-05
REPLY COMMENTS OF CEDAR CREEK WIND, LLC
Cedar Creek Wind, LLC ("Cedar Creek") hereby submits these Reply Comments
("Reply") to the Answer of Rocky Mountain Power to Cedar Creek Wind, LLC's Petition for
Reconsiderationl (the "Answer") fied by PacifiCorp d//a Rocky Mountan Power ("Rocky
Mountain Power") in the above-captioned dockets? Although not permitted as a matter of right,
Cedar Creek respectfully submits that because Cedar Creek is, in effect, the applicant for
contract approval in this case, and in order to ensure that the Commission has the benefit of a full
and fair record as to the issues presented in the Petition, Cedar Creek should be permitted to
respond to Rocky Mountain Power's inappropriate effort to provide apost hoc rationalization for
Case No. PAC-E-l 1-01 et al. (July 6, 2011).
2 On June 29, 2011, Cedar Creek petitioned the Commission to reconsider its Order No. 32260,
issued June 8, 2011 (the "June 8 Order"), in which it disapproved five Fir Energy Sales Agreements
(the "Agreements") between Rocky Mountain Power and Cedar Creek (collectively, the "Paries") with
respect to Cedar Creek's Rattlesnake Canyon, Coyote Hil, North Point, Steep Ridge, and Five Pine
projects (collectively, the "Projects"). Cedar Creek Wind, LLC's Petition for Reconsideration of Order
No. 32260 and Request for Expedited Treatment, Case No. PAC-E-l 1-01 et al. (June 29, 2011)
("Petition").
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the Commission's rejection of the Agreements, as well as Rocky Mountain Power's
mischaracterization of pertinent Commission precedent, state and federal law, and Cedar Creek's
arguents supporting reconsideration of the June 80rder.3
I. REPLY COMMENTS
A. The Commission Should Disregard Rocky Mountain Power's Attempt to
Exclude the Proper Application of Grandfathering Criteria to Determine the
Date on Which a Legally Enforceable Obligation Arose
In an effort to separate the Commission's June 8 Order from the requirements of
PURP A, Rocky Mountain Power asserts that the "concept of grandfathering is distinct from the
concept of the establishment of a legally enforceable obligation.,,4 Both PURP A5 and Idaho law
directly refute this very argument. 6 Determination of the standards governng the date on which
a legally enforceable obligation is incured is largely left to state implementation.
Grandfathering criteria are the mechanism through which the effective date of the legally
enforceable obligation (and by extension, the "lock-in" date for avoided cost rates under
PURP A) is determined.
3 Cedar Creek further submits that this timely-filed reply wil not delay the Commission's
consideration of the Petition within the prescribed 28-day review period.
4 Answer at 6.
5
Section 292.304(d)(2) of the Federal Energy Regulatory Commission's ("FERC") regulations
establish as a matter of binding federal law that a QF is entitled to rates effective at the time the obligation
is incurred. 18 C.F.R. § 292.304(d)(2). Grandfathering criteria are used to determine that date.
6 Rosebud Enterprises, Inc. V. Idaho Pub. Util. Comm 'n, 128 Idaho 609, 624,917 P.2d 766, 781
(1996) ("Rosebud r) (concluding that "(c)onferment of grandfathered status on (a) qualifying facilty is
essentially an IPUC finding that a legally enforceable obligation to sell power existed by a given date");
see also In the Matter of the Petition of Idaho Power Company for an Order Temporarily Suspending
Idaho Power's PURP A Obligation to Enter into Contracts to Purchase Energy Generated by Wind-
Powered Small Power Production Facilties, Case No. IPC-E-05-22, Order No. 29872, at 9 (2005)
("Order No. 29872") (affiring that the Commission's adoption of a "legally enforceable obligation"
standard to determine published rate entitlement in complaint and grandfathering cases was reasonable).
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By viewing the grandfathering criteria through the prism of a contract, rather than a
legally enforceable obligation, Rocky Mountain Power confuses the effective date of the
Agreements with the date on which a legally enforceable obligation arose.7 The need to
determine the latter date as distinct from the former is precisely why the Commission has
adopted grandfathering criteria over the course of more than two decades: because under
PURPA, the two dates are not necessarly synonymous. To conclude otherwse is simply another
way of holding that only a fully-executed contract can establish a legally enforceable obligation,
a requirement expressly prohibited by PURP A. 8 The Commission's grandfathering criteria
recognize this fact, by providing that a legally enforceable obligation (and an accompanying
right to grandfathered rates effective as of the date of the legally enforceable obligation) can
exist prior to both the execution of a contract, and the Commission's approval of the contract,
even where a contract specifies that it will not be effective until approved by the Commission.9
Thus, even if a "lock-in of rates does not occur until the Commission approves a contract to
provide power,"lO PURPA mandates that the locked-in rates in the contract be set as of the date
7
Answer at 5.
8 Rocky Mountain Power's assertion that a legally enforceable obligation does not arse until a
commission approves a contract actually takes this argument one step further, by subjecting a QF not only
to the whims of its counterpar utilty, but to the review period of a commission as well. Answer at 4.
As a result, it potentially eliminates any certinty available to the QF regarding its avoided cost rates,
until the contract is actually approved.
9 E.g., In the Matter of the Application of Idaho Power Company for Approval of a Firm Energy
Sales Agreement with Yellowstone Power, Inc. for the Sale and Purchase of Electric Energy, Case No.
IPC-E-1O-22, Order No. 32104, at 12 (2010) ("Yellowstone Order") (approving on November 1,2010 a
contract executed on July 28,2010, and grandfathering rates in effect prior to March 16,2010).
10 Answer at 4, n.6 (citing Earth Power Resources, Inc. v. The Washington Water Power Co., Case
No. WW-E-96-6, Order No. 27231 (1997) ("Earth Power")). Cedar Creek also is not arguing that the
Commission is prohibited from requiring that any legally enforceable obligation ultimately be reflected in
a signed contract; quite the contrary, as a project developer, Cedar Creek believes that the certinty
provided by a signed contract is beneficial to all paries, and Cedar Creek took every step possible to
obtain a fully executed contract before December 14,2010. However, Cedar Creek is contesting the
Commission's erroneous conclusion that a legally enforceable obligation cannot be established until a
contract is fully-executed.
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the legally enforceable obligation was incured, a determination that requires application of
grandfathering criteria.
1 1
B. Rocky Mountain Power's Misleading Recitation of the Commission's
Grandfathering "Requirements" is Incorrect and Ignores Commission
Precedent
Rocky Mountain Power wrongly asserts that "long-stading Idaho law" creates only "two
paths by which a QF may establish a legally enforceable obligation under PURPA," i.e., a fully
executed power purchase agreement approved by the Commission, or a timely-fied complait
alleging that the QF would have obtained such an agreement but for the utilty's refusal to
negotiate one (referred to herein as the '''contract or complaint' stadard"). This arguent is
tellng. As Rocky Mountain Power would have it, either the utilty alone has total control over a
QF's PURPA rights by virtue of the power of its signatue (or lack thereof), or the QF has to sue
(by virte of the "meritorious complaint process") to protect its PURPA rights. Accordingly,
Rocky Mountain Power asserts that because Cedar Creek did not complete either path prior to
December 14,2010, it failed to establish a "legally enforceable obligation" entitling it to
published avoided cost rates.12 Notwithstading the frightening policy implications of this
position, Rocky Mountain Power's arguent is fudamentally legally flawed. It ignores, or
sloughs off as mere "exceptions,,,13 years of recent Commission precedent in which the
Commission's grandfathering criteria required neither a fully-executed contract nor the filing of
11
18 C.F.R. § 292.304(d)(2). Rocky Mountain Power's citation to Public Service Company of New
Hampshire, 13 1 FERC ~ 61,027 (2010) for the proposition that FERC has recognized the "distinction
between grandfathering and the establishment of a legally enforceable obligation" is misleading. That
order addressed whether, and, if so, the circumstances under which, a QF's PURPA rights would surive
following the termination of its local utility's PURP A purchase obligation, not a situation, as here, where
a QF is simply seeking a determination by a state commission that it had established a legally enforceable
obligation to specific avoided cost rates pursuant to 18 C.F.R. § 292.304(d)(2).
12 Answer at 4, 7.
Answer at 16.13
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a complaint prior to the anounced effective date of a rate change, to establish a legally
enforceable obligation.
As an initial matter, much of the precedent cited by Rocky Mountain Power does little
more than recognize that the Commission has authority to establish standards for determining
when a "legally enforceable obligation" is incured.14 This is a red herring, for Cedar Creek has
not challenged this general authority; indeed, Cedar Creek's Petition supports it. Cedar Creek is
directly challenging, however, the legally flawed maner in which the Commission chose to
exercise its authority in this case by adopting a bright-line "fuly executed contract" requirement
for puroses of determining whether to grandfather the Agreements here.
In fact, nothng in the orders cited by Rocky Mountain Power codifies or mandates the
"contract or complaint" stadard in the maner suggested by Rocky Mountain Power. And
rightly so, as Rocky Mountain Power cited not a single case from even the last decade in which
the Commission applied that "long-stading precedent," let alone denied a QF's grandfathering
request because a QF failed to establish a legally enforceable obligation solely by one of those
two mechanisms. The authority cited by Rocky Mountain Power itself demonstrates that the
"fully-executed contract or timely-filed complaint" options are not the only routes available to
QFs seeking to establish a legally enforceable obligation and entitlement to grandfathered rates.
15
Indeed, the PUC has for many years, routinely approved grandfathered rates where (l) a
14 E.g., Rosebud I, 128 Idaho 609, 624, 917 P.2d 766, 781 (1996).
See supra n.l6.15
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QF fied its complaint after the effective date of the proposed rate change,16 or (2) no complaint
was fied at all.
17
Even if it were true that the only mechansm by which a QF could seek to protect its
PURP A rights was to execute a contract or file a complaint, Cedar Creek has, consistent with
Commission precedent, satisfied the "complaint" criterion by virtue of its conduct in these
proceedings. The Commission's 2010 orders allowing grandfathered rates are paricularly
instrctive, as in each case, while acknowledging the Commission's "contract or complaint"
precedent, Idaho Power Company ("Idaho Power") argued that simply by the utility "signing the
Agreement and voluntaily presenting it to the Commission," the QF had satisfied the purorted
requirement to "fie a complaint" with the Commssion.18 And in each order, both the
Commission and Staff agreed with that conclusion, with the Commission expressly affirming
that it found the utilty's "approach... regarding contract rates to be consistent (or in concert)
with the spirit of (the Commission's) prior grandfathering cases.,,19 The Commssion rightly
16 E.g., Earth Power at 6-7 (granting a complaint requesting grandfathered rates fied on July 3,
1996, in response to a rate change effective on July 1, 1996); Blind Canyon Aquaranch, Inc. v. Idaho
Power Co., Case No. IPC-E-94-1, Order No. 25802, at 5 (1994) (granting a complaint requesting
grandfathered rates fied on Februar 11, 1994, in response to a rate change effective on Januar 14,
1994).
17 E.g., In the Matter of the Application of Idaho Power Company for Approval of a Firm Energy
Sales Agreement for the Sale and Purchase of Electric Energy Between Idaho Power Company and New
Energy Three, LLC (Double B), Case No. IPC-E- 1 0- 18, Order No. 32027, at 2, 4 (2010) ("Double B
Order") (approving contract based on grandfathered rates in effect prior to March 16,2010, despite
contract being signed on May 24, 2010 and no complaint being fied, because grandfathering was "in
concert with the spirit" of the Commission's prior grandfathering cases); In the Matter of the Application
of Idaho Power Company for Approval of a Firm Energy Sales Agreement for the Sale and Purchase of
Electric Energy Between Idaho Power Company and Salmon Falls Wind Park LLC, Case No. IPC-E-05-
33, Order No. 29951 (2006) (approving, with rates grandfathered as of August 4,2005, a power purchase
agreement executed on October 14,2005).
18 E.g., In the Matter of the Application of Idaho Power Company for Approval of a Firm Energy
Sales Agreement with Grand View Solar PV I, LLC for the Sale and Purchase of Electric Energy, Case
No. IPC-E-I0-19, Order No. 32068, at 2,5 (2010) ("Grand View Solar PV I Order"); Idaho Power
Double B Order at 2, 4.
19 E.g., Yellowstone Order at 12; Double B Order at 4.
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recognized that it could conduct the same thorough review of a project's matuity (and
accompanying right to grandfathered rates) through these proceedings as through a complaint
proceeding.
Accordingly, the Commission did not characterize these orders, as Rocky Mountain
Power now does, as "exceptions" to the Commission's precedent, but rather asfully consistent
with that precedent. In fact, in these orders the Commission cites not only to A. W Brown, a case
relied upon by Rocky Mountain Power to establish its claimed "long-stading" "contract or
complaint" standard, but to Order No. 29872, the 2005 order affrming the very rate eligibilty
grandfathering criteria that Cedar Creek maintains should be applied here as weii.2o The
Commission's citation to this precedent amply demonstrates that the Commission deemed both
the 2005 criteria, and its 2010 orders, as establishing the stadard for demonstrating a legally
enforceable obligation entitled to grandfathered rates?1
What occured in this case is, in all relevant respects,22 no different from what occured
in numerous 2005 and 2010 grandfathering cases when Idaho Power presented to the
20 E.g., Yellowstone Order at 12; Grand View Solar PV I Order at 5.
That the Commission deemed the 2010 cases as relevant precedent is particularly noteworthy
because, as in the December 3, 2010 order announcing the effective date of a potential change in the rate
eligibilty cap, the Commission specified no grandfathering criteria in its March 16, 2010 order changing
the published avoided cost rates. In the Matter of the Adjustment of Avoided Cost Ratesfor New PURPA
Contracts for Avista Corporation dba Avista Utilities, Idaho Power Company, and PacifCorp dba Rocky
Mountain Power, Case No. GNR-E-I0-0l, Order NO.3 1025 (2010); In the Matter of the Joint petition of
Idaho Power Company, Avista Corporation, and PacifCorp dba Rocky Mountain Power to Address
Avoided Cost Issues and to Adjust the Published Avoided Cost Rate Eligibilty Cap, Case No. GNR-E- 1 0-
04, Order No. 3213 1 (2010). Yet, the Commission nevertheless granted numerous requests for
grandfathered rates by evaluating whether a legally enforceable obligation existed, based on whether
(1) contract negotiations between the QF and utilty were substatially complete prior to March 16,2010,
and (2) but for pending completion of the utility's internal contract reviews, a contract would have been
signed prior to that date. E.g., Grand View Solar PV I at 5; Double B Order at 4.
22 One immaterial difference is that Idaho Power supported the grandfathering requests in those
cases, while Rocky Mountain Power opposes grandfathering in this instance. However, it is certinly
inconsistent with the spirit, if not the letter, of PURP A to allow a utility's support or opposition to sway
the determination of when a legally enforceable obligation existed.
21
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Commission contracts containing published avoided cost rates, and requested a Commission
determination as to the appropriateness of those rates. No complaints had been fied and the
contracts had not been fully executed before the effective date of the rate change. And what
Cedar Creek did in the instat matter is consistent with those cases: it promptly intervened and
advocated in support of its right to grandfathered rates. Thus, it is not asking for any deviation
from Commission precedent, but rather only its fair implementation.
What Rocky Mountain Power's reading of Commission precedent would ultimately
require is that a QF pursuing grandfathered rates fie a complaint alleging bad faith negotiations
by the utilty once it becomes clear that its contract would not be fully-executed and approved by
the Commission prior to an anounced effective date for a rate or eligibilty cap change. Ths is
both wildly impractical, in that it would sabotage the prospect of productive negotiations once
the complaint was filed, and directly contrar to Rocky Mountain Power's purorted interest in
"administratively efficient" resolution of grandfathering claims,23 as the Commission would be
deluged with complaints requiring the same case-by-case determinations that Rocky Mountan
Power so abhors. And, in this case, the Commission avoided this deluge only by witholding
notice of its possible rejection of established grandfathering criteria in favor of a bright line
"signed contract" stadard, thereby depriving affected QFs of any indication whatsoever that a
complaint might be needed to protect their rights.
24
23 Answer at 10.
24 Rocky Mountain Power even asserts that Cedar Creek has not alleged that it ''wongly delayed
signing the Agreements." Answer at 7, n.12. This is misleading at best, as Cedar Creek received and
relied upon verbal and written assurances from Rocky Mountain Power prior to December 14, 2010 that
Rocky Mountain Power anticipated being able to execute the Agreements before that date. Only in the
days immediately preceding December 14, 2010 did it become clear that Rocky Mountain Power would
not execute the Agreements before then. Had Cedar Creek been given notice that the Commission was
backtacking from established precedent and that a signed contract or complaint was necessar, Cedar
Creek would have fied what it believes would have been a "meritorious" complaint. As recounted at
great length in the affdavit submitted by Dana Zentz in this proceeding, Cedar Creek was subjected to
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Furhermore, Rocky Mountain Power's assertion that the "Commission has not
established a regular practice of granting grandfathering for changes to the eligibilty cap" is
belied by the facts?5 In each of the last two changes in the rate eligibilty cap - first, in 2005,
and again in 2010 - the Commission has in fact established grandfathering criteria to determine
the date on which affected QFs established a legally enforceable obligation. Of course, the key
difference between 2005 and 2010 is that in 2005, the Commission established criteria which a
QF could actually satisfy, and did not inform QFs of those criteria six months late. In 2010, by
comparison, the Commission created a "bright line" rule, months afer the anounced change in
the eligibilty cap, by which time it knew that none of the affected QFs could satisfy its new
standard.
Finally, Rocky Mountain Power's reliance on Power Resource Group, Inc. v. Public
Utilties Commission ofTexai6 is wholly irrelevant to Cedar Creek's Petition. Cedar Creek
petitions ths Commission to adhere to its own precedent, Idaho law, and PURPA and reverse its
determination in the June 8 Order that a fully-executed contract is the sole basis to establish the
date when a legally enforceable obligation is incured. Thus, the fact that a cour upheld a
different standard - one that the cour recognzed was not expressly addressed by PURP A 27 -
does not bear on whether the bright line test adopted by the Commission - which is expressly
addressed and prohibited by PURP A - is consistent with federal and state law. Nor does it
repeated delays over nearly a year in its effort to negotiate contracts with Rocky Mountain Power. Had
Rocky Mountain Power acted with comparable dilgence earlier in the negotiations, it is likely that this
entire proceeding would have been moot, and the Agreements executed well in advance of the
December 14,2010 cutoff.
25 Answer at 15.
422 F.3d 231 (5th Cir. 2005) ("Power Resource Group").
Id at 239.
26
27
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address the notice issues raised even if Power Resource Group did provide support for the newly
adopted bright line test.
C. The Commission Should Reject Rocky Mountain Power's Argument that the
Notice Provided to Cedar Creek Was Suffcient Under Idaho Law
Rocky Mountain argues that the Commission had no obligation to provide any notice to
Cedar Creek and other QFs of its adoption ofthe new "bright line" rue because the changed
eligibility cap did not constitute a "rate" change subject to the 30-day notice requirement in
Idaho Code § 61-307.18 Yet, on the very next page it asserts that the notice requirements of
Idaho's Administrative Procedure Act similarly did not apply because the Commission was
engaged in its "legislative fuction" ofrate-makng.29 By classifying the Commission's action as
neither "heads nor tails," Rocky Mountain Power has conveniently created a regulatory black
hole in which the Commission can freely act without providing any notice of its actions to
affected paries. Regardless, even if the revised eligibilty cap does not constitute a rate change,
Idaho Code § 61-307 requires 30 days notice for any change to a classifcation, as well as in any
rules relating to a classifcation.3o Here, there can be no doubt that revising the eligibility cap,
and re-classifying wind and solar QFs between 100 kW and 10 aMW as ineligible for published
costs, constitutes such a change in classification subject, at minimum, to the 30-day notice
requirement.
28 Answer at 12.
29 Answer at 13, n.28.
IDAHO CODE ANN. § 61-307 (providing that "no change shall be made by any public utilty in any
rate, fare, toll, rental, charge or classifcation, or in any rule, regulation, or contract relating to or affecting
any rate, fare, toll, rental, charge, classifcation or service... except after thirt (30) days' notice to the
commission and to the public as herein provided" (emphasis added)).
30
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As if the justification for violating the Notice requirement makes a difference under the
law,31 Rocky Mountain Power explains that, in this instace, lack of notice was justified because
had the Commission provided adequate notice affected QFs might have been able to actually
execute their PURP A contracts prior to the date change.32 This is a shocking and troubling
admission by the utility, because it makes clear that only by depriving affected QFs of notice,
could the Commission and the utilties achieve the desired result, restriction of PURP A rights.
Whle Rocky Mountain Power presents the Commission with a rationalization for the lack of
notice, nothing in the Commission's June 8 Order in any way indicates that it was the intent of
the Commission to sandbag the affected QFs in the maner Rocky Mountain Power now posits.33
And this outcome is at odds with the Commission's holding when it last lowered the eligibility
cap in 2005, at which time it held:
The Commission is obliged, however, to enforce PURPA and
FERC rules and reguations that require utilty purchases of QF
capacity and energy. 18 C.F.R. § 292.303(a). Mandatory PURPA
resources offered under the Commission approved avoided cost
methodology canot be declined by Idaho Power because the
Company would prefer to acquire similar resources through a
competitive non-PURP A IRP related RFP process.34
31 Even Rocky Mountain Power recognizes that the Commission has failed to adequately explain its
reasoning, and effectively attempts to "coach" the Commission on how to remedy that failure. E.g.,
Answer at 7, n.12 (arguing that, notwithstanding the fact that the Commission made no reference in the
June 8 Order to the second "complaint" path discussed in RMP's Answer, ''te Commission might note
that Cedar Creek has not fied a complaint" in its order on reconsideration); Answer at 18 (arguing that,
notwithstanding Rocky Mountain Power's allegation that the Commission had no obligation to provide
notice of its change of the eligibility cap, ''the Commission had good cause to act as it did, and may wish
to fuer document such for the record").
32 Answer at 12-13.
33 Furthermore, even if it wanted to, the Commission may not create post hoc rationalizations for its
findings in the June 8 Order. See, e.g., Nw. Envtl. De! Ctr. v. BPA, 477 F.3d 668, 686 (9th Cir. 2007)
(explaining that "an administrative order canot be upheld unless the grounds upon which the agency
acted in exercising its powers were those upon which its action can be sustained" (citing SEC v. Chenery
Corp., 318 U.S. 80, 95 (1943)); Safe Air for Everyone v. EPA, 488 F.3d 1088, 1091 (9th Cir. 2007)
(concluding that review is limited to the reasoning the agency relied upon in making its decision).
34 Order No. 29872 at 9.
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The Commission understood then that it had an obligation to enforce PUR A even over the
objection of the utilties. That obligation has not changed. The Commission also recognzed in
2005 that it was appropriate for it to "consider the reasonable expectations of wind QFs in the
negotiating queue for published rate contracts and to establish grandfathering criteria for those
eligible projects actively engaged in contract negotiation with a utility and able to demonstrate
project maturty and entitlement.,,35 Cedar Creek asks only for application of that same
standard.
36
Rocky Mountain Power also wrongly dismisses Cedar Creek's due process rights to
appropriate notice of the Commission's adoption of a "bright line" rule, by claiming that a QF
has no due process rights to a paricular avoided cost rate "until the developer has established a
legally enforceable obligation to sell its output to a utilty at the rate in question.'.3 But, Rocky
Mountain Power is putting the proverbial car before the horse, as the Petition's central question
is whether, in fact, Cedar Creek did have a legally enforceable obligation prior to December 14,
2010, which would establish its due process right to the published avoided cost rates. This
determination has no bearng on whether, as a separate matter of due process, Cedar Creek was
35 Order No. 29872 at 10. Cedar Creek also notes that the Commission ultimately revised the
effective date of its rate eligibility change from July 1,2005, the date on which it provided notice ofIdaho
Power's request to change that cap, to August 4, 2005, the date on which it lowered the cap on an interim
basis. Order No. 29872 at 11. The Commission emphasized that the utility "had a continuing obligation
(through August 4, 2005) under PUR A, FERC rules, and the Orders of this Commission to offer to
purchase QF power at the published rate and to engage in contract negotiations with eligible QFs." Order
No. 29872 at 11.
36 Applying the criteria adopted in 2005 would allow the Commission to determine, on a project-by-
project basis, whether individual QF projects were suffciently mature to qualify for grandfathered rates,
and would not, therefore, necessarily result in approval of all of the rejected QF contracts.
37 Answer at 13, n.29 (citing Rosebud Enterprises, Inc. v. Idaho Pub. Util. Comm 'n, 13 1 Idaho 1, 12
(1997)).
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properly entitled to notice of the Commission's adoption and imposition of its "bright line"
rule.38
Finally, Rocky Mountain Power also claims that QFs should have assumed that, because
Order No. 32131 failed to provide any grandfathering criteria, no such criteria would be
forthcoming.39 Rocky Mountain Power's argument is misplaced. The Commission's clear
precedent in 2005 and 2010, including Commission orders issued as recently as four days prior
to the utilities' November 5, 2010 petition to revise the eligibility cap,40 provide established
grandfathering criteria so there was, in fact, no reason to assume that the Commission would
anounce, six months later, criteria which conveniently not a single QF could retroactively
satisfy. Rocky Mountain Power cites not a single prior instance of the Commission issuing
patently-unattinable stadards for determining the date by which a QF had established a legally
enforceable obligation, so there is simply no precedent for what the Commission has done here,
and certainly no precedent, i.e., notice, that would have suggested to Cedar Creek that the
Commission would deviate wildly from its past criteria as it has here.
38 Although, the Commission's failure to provide notice despite haing not yet determined whether
Cedar Creek had a legally enforceable obligation demonstrtes what a results-driven process this and
other related proceedings was, and raises its own due process concerns.
39 Answer at 15. Of course, criteria were fortcoming, just too late for Cedar Creek or any other QF
to act quickly enough to enforce their PUR A rights.
40 Yellowstone Order (issued on November 1,2010).
14
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II. CONCLUSION
F or the reasons described herein, Cedar Creek respectfully requests that the Commission
consider this Reply, expeditiously grant its Petition, and provide the relief requested therein.
DATED ths 12th day of July, 2011.
;'0- J. iJ~
By:
Ronald L. Wiliams
Wiliams Bradbur, Attorneys at Law
1015 W. Hays Street
Boise, ID 83702
Telephone: [phone]
Larr F. Eisenstat
Michael R. Engleman
Dickstein Shapiro LLP
1825 Eye Street, NW
Washington, DC 20006-5403
Telephone: [phone]
Counsel for Petitioner Cedar Creek Wind, LLC
15
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 12th day of July, 2011, I caused to be served a tre and
correct copy of the foregoing document upon the following individuals in the manner indicated
below:
Ted Weston
Rocky Mountain Power
201 South Main, Suite 2300
Salt Lake City, UT 84111
E-Mail: ted.weston~pacificorp.com
Daniel E. Solander
Rocky Mountain Power
201 South Main, Suite 2300
Salt Lake City, UT 84111
E-Mail: daniei.solander~pacificorp.com
Data Request Response Center
PacifiCorp
825 NE Multnomah, Suite 2000
Portland, OR 97232
E-Mail: datarequest~pacificorp.com
Kristine Sasser
Idaho Public Utilties Commission
472 W. Washington (zip: 83702)
PO Box 83720
Boise,ID83720-0074
E-Mail: kris.sasser~puc.daho.gov
Kenneth E. Kaufmann
Lovinger Kaufman LLP
825 NE Multnomah, Suite 925
Portland, OR 97232-2150
E-Mail: kaufmann~lklaw.com
D Hand Delivery
D US Mail (postage prepaid)
D Facsimile Transmission
D Federal Express
i: Electronic Transmission
D Hand Delivery
D US Mail (postage prepaid)
D Facsimile Transmission
D Federal Express
i: Electronic Transmission
D Hand Delivery
D US Mail (postage prepaid)
D Facsimile Transmission
D Federal Express
i: Electronic Transmission
D Hand Delivery
D US Mail (postage prepaid)
D Facsimile Transmission
D Federal Express
i: Electronic Transmission
D Hand Delivery
D US Mail (postage prepaid)
D Facsimile Transmission
D Federal Express
i: Electronic Transmission
Î.o- J lJ~
Ronald L. Wiliams
l6
DSMDB-2953492