20130607New Energy Notice of Appeal.pdf

‘C’’‘).I
fl!P $‘
C’-f
Angelo L.Rosa (153 No.7546)
1168E.1700 S.
Salt Lake City,Utah $4105
Telephone:($01)440-4400
Fax:[phone]
E-mail:arosaexergydeve1opment.com
Attorney for:
New Energy Two,LLC
New Energy Three,LLC
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
)CASE NO.IPC-E-12-25
IN THE MATTER OF THE )
COMPLAINT AND PETITION OF )CASE NO.IPC-E-12-26
IDAHO POWER COMPANY FOR A )
DECLARATORY ORDER )
REGARDING THE FIRM ENERGY )NOTICE OF APPEAL
SALES AGREEMENT AND )
GENERATOR INTERCONNECTION )
AGREEMENT WITH NEW ENERGY )
TWO,LLC.)
)
IN THE MATTER OF THE )
COMPLAINT AND PETITION OF )
IDAHO POWER COMPANY FOR A )
DECLARATORY ORDER )
REGARDING THE FIRM ENERGY )
SALES AGREEMENT AND )
GENERATOR INTERCONNECTION )
AGREEMENT WITH NEW ENERGY )
THREE,LLC.)
)
)
__________________________________________________________________________
)
NOTICE OF APPEAL -Page I
TO:The IDAHO POWER COMPANY and its counsel of record,and to the IDAHO
PUBLIC UTILITIES COMMISSION:
NOTICE IS HEREBY GIVEN THAT:
1.The titles of the actions are as stated above.
2.Appellants,New Energy Two,LLC and New Energy Three,LLC,by and through
their counsel,Angelo L.Rosa,hereby appeal Order No.32780 issued by Idaho Public Utilities
Commission,Respondent,to the Idaho Supreme Court (“Order No.32780”)entered in the
above-entitled consolidated actions on 4 April 2013.A copy of Order No.32780 is attached and
incorporated hereto as “Exhibit 1”.
3.Appellant has a right to appeal to the Idaho Supreme Court,and the order
described above is an appealable order under Idaho Appellate Rule (I.A.R.)11(e).
4.The issue on appeal which the appellant intends to assert in the appeal is whether
the Public Utilities Commission has jurisdiction to determine the applicability of a force majeure
clause in contracts between Appellants and the Idaho Power Company,and whether Order No.
32780 denying Appellant’s Motion to Reconsider the Commission’s Order No.32755 denying
Appellant’s Motion to Dismiss on those grounds (“Order No.32755”)should have been granted
as a matter of law.A copy of Order No.32755 is attached and incorporated hereto as “Exhibit
2”.
5.No order has been entered sealing the record.
6.Appellants request the preparation of the entire reporter’s transcript.
NOTICE OF APPEAL -Page 2
7.Appellants request the preparation of the entire clerk’s record as set forth in I.A.R.
2$.
8.A copy of this Notice of Appeal has been not been served on the reporter as there
were no live proceedings held in this matter.
9.The clerk of the P.U.C.has been paid the estimated fee for preparation of the
reporter’s transcript and the clerk’s record.
10.The applicable appellate filing fee has been paid.
11.Service has been made on all parties required to be served pursuant to I.A.R.20.
DATED:7 June 2013
ANGELO L.ROSA,ESQ.
A/i
Angelo L.Rosa
Attorney for New Energy Two,LLC and
New Energy Three,LLC
NOTICE OF APPEAL -Page 3
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on 7 June 2013,I caused a true and correct copy of the
NOTICE OF APPEAL to be served by the method indicated below,and addressed to the
following:
Jean Jewell
Secretary
Idaho Public Utilities Commission
472 W Washington Street
Boise,Idaho 83702
Peter Richardson
Richardson &O’Leary,PLLC
515 N.27th Street
Boise,Idaho 83702
Donovan Walker
Jason Williams
Idaho Power Company
1221 West Idaho Street
Boise,Idaho 83702
()U.S.Mail,Postage Prepaid
(X)Hand Delivered
()Overnight Mail
(X)Facsimile
(X)Electronic Mail
()U.S.Mail,Postage Prepaid
()Hand Delivered
()Overnight Mail
(X)Facsimile
(X)Electronic Mail
()U.S.Mail,Postage Prepaid
()Hand Delivered
()Overnight Mail
(X)facsimile
(X)Electronic Mail
Signed
Angelo L.Rosa
NOTICE OF APPEAL -Page 4
IIfflIHXEL
Office ofthe Secretary
Service Date
April 4,2013
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE COMPLAINT )
AND PETITION Of IDAHO POWER )CASE NO.IPC-E-12-25
COMPANY FOR A DECLARATORY )ORDER REGARDING THE FIRM ENERGY )SALES AGREEMENT AND GENERATOR )iNTERCONNECTION AGREEMENT WITH )NEW ENERGY TWO,LLC.)
____________________________________________________________________________________
)IN THE MATTER OF THE COMPLAINT )AND PETITION OF IDAHO POWER )CASE NO.IPC-E-12-26
COMPANY FOR A DECLARATORY )
ORDER REGARDING THE FIRM ENERGY )SALES AGREEMENT AND GENERATOR )ORDER NO.32780
INTERCONNECTION AGREEMENT WITH )NEW ENERGY THREES LLC.)
On November 9 and 21,2012,Idaho Power Company filed two separate “Complaints
and Petitions for-Declaratory Order”regarding two Power Purchase Agreements (‘PPAs”)
between itself and New Energy Two and New Energy Three,respectively.Idaho Power
generatly alleged the New Energy projects (collectively “New Energy”)breached their
respective PPM by failing to supply power to the utility.On December 4,2012,the
Commission consolidated the two cases into a single proceeding and directed New Energy to
answer the Complaints and Petitions by December 27,2012.Order No.32692.Rather than file
an answer,New Energy filed a “Motion to Dismiss for Lack of Subject Matter Jurisdiction.”
Idaho Power filed an answer to the Motion,and New Energy filed a reply to Idaho Power’s
answer.
On March 5,2013,the Commission issued Interlocuto;y Order No.32755 denying
New Energy’s “Motion to Dismiss.”The Commission found that it did have jurisdiction to
resolve the contract dispute becatise New Energy and Idaho Power had expressly agreed in their
PPAs to submit disputes arising under their respective PPAs to the Commission for resolution.
Order No.32755 at 10 citing Afton Energy v.Idaho Powet’Co.(“Afton fI’”),111 Idaho 925,
929,729 P.2d 400,404 (1986);PPA §19.1.The Commission also ordered New Energy to file
its answer (if any)to the Complaints and Petitions no later than March 19,2013.Id.at 12.
ORDER NO.32780 1
On March 18,2013,New Energy filed a Motion generally seeking the Commission’s
permission for leave to file a permissive appeal pursuant to Idaho Appellate Rule (I.A.R.)12
challenging the Commission’s decision that it did have jurisdiction to resolve the dispute.New
Energy did not request a hearing on its Motion and Idaho Power did not file an answer to the
Motion.As set out below,the Motion is granted in part and denied in part.
BACKGROUND
A.Interconnection ttnd the PPA Processes
The background for this consolidated case is taken primarily from the two complaints
and is set out in greater detail in Order No.32755,Briefly,New Energy proposed to build two
separate anaerobic digester’projects at Swager Farms (New Energy Two)and Double B Dairy
(New Energy Three)that would generate electricity for sale to Idaho Power pursuant to the
Public Utility Regulatory Policies Act (PURPA).PURPA generally requires electric utilities
such as Idaho Power to purchase the output from “qualifying facilities (Qfs)”at rates set by the
state regulatory commissions.PURPA §210(a),]6 U.S.C.§$24a-3(a).PURPA also requires
QFs (such as the anaerobic digestcrs in this casc)to py thc cost of constructing the necessary
interconnection facilities (or transmission upgrades)to “connect”the Qf project with the
purchasing utiLity’s system.Order No.32755 at 2 citing t$C.F.R.§292.308.Thus,the typical
PURPA transaction in Idaho contains two separate and independent parts.One part is the
parties’obligations to sell and purchase the electrical output from the Qf project —in this case
embodied in the PPAs.The other part is the interconnection process where the utility and the QF
negotiate and contract for the construction of the necessary interconnection facilities.Order No.
32755 at nn.2,3.The culmination of the interconnection process is the execution of a Generator
Interconnection Agreement (GIA)and the construction of the transmission facilities by the
utility.2
Returning to the facts of this case,New Energy initiated discussions with Idaho
Power in October 2009 about the interconnection process for the two digester projects.Order
Nos.32755 at 2;32692 at 2.following initial discussions,New Energy submitted a reqtiest to
Anaerobic digesters utilize animal waste to produce methane gas which is then combusted to provide motive foi’ce
for the prodnction of electricity.Order No.28945 at 2.
2 Typically there are three steps to the interconnection process:(I)the Qf submits a generator interconnection
request and signs a Study Agreement with the utility;(2)the utility prepares and issues a Study Report;and (3)if the
study is acceptable,the parties sign the GIA and QF pays the utility to construct the interconnection facilities.
ORDER NO.32780
Idaho Power for the utility to prepare an Interconnection Study Report (including proposed
routing,estimated cost,and a construction schedule).Id.at n.2.Idaho Power submitted separate
Study Reports for each project to New Energy.Order No.32755 at 2.
In May 2010,Idaho Power and New Energy entered into a separate PPA for each
digester proj ect.Each project was contracted to supply 1.2 MW of power to Idaho Power over a
15-year term.The scheduled commercial operation date (COD)for Swager Farms was October
1,2012,and the COD for Double B was December 1,2012.Id,On July 1,2010,the
Commission approved the PPAs for Swager farms and the Double B Dairy in Order Nos.32026
and 32027,respectively.Id.
In January 2011,New Energy requested that the interconnection capacity for each
project be increased from 1.2 MW to 2.0 MW.id.at 2-3.New Energy and Idaho Power
subsequently executed new Study Agreements and Idaho Power prepared a new Facility
(Interconnection)Study Report for each project.In late April 2011,Idaho Power issued its final
Facility Study Reports estimating that the cost for the Swager Farms’2.0 MW interconnection
would cost approximately $1 .7.1 million,andDouble Bs 2.0 MW interconnectiotr capacity
would cost approximately $376,000.Id.at 3.The parties then engaged in protracted discussions
and communications leading up to Idaho Power’s preparation of draft “Generation
Interconnection Agreements”(GIAs)for each QF.
On March 22,2012,Idaho Power sent New Energy the draft GIA for Swager Farms.
In April 2012,New Energy asked Idaho Power to revise the interconnection facilities to the
original 0.$MW capacity.Swager Farms Complaint at 59•3 The parties executed a “Re
Study”Agreement and Idaho Power subsequently estimated that the interconnection cost for the
reduced Swager Farms capacity would be approximately $225,000.fri.at ¶60-61.
On September 14,2012,Idaho Power sent the final GIA to Swager Farms at the
lower 0.8 MW capacity.Idaho Power’s cover letter to the GIA advised Swager Farms that it
“must have the executed GIA and funding no [ater than October 1,2012.in order to complete
construction by this date.”Id.at ¶66 (emphasis original).[n a follow-up e-mail,Idaho Power
warned New Energy that if the executed GIA and the required funding are not received by
In May 2011,New Energy advised Idaho Power that Exergy Development would assist New Energy with its twoQfprojects.Order No.32753 at 3.
ORDER NO.32780
October 1,2012,“it will not be possible to complete the required interconnection work before
the end of the year 2012.”Id.atJ 68,
On May 9,2012,Idaho Power sent a draft GIA to New Energy for the Double B
project and advised it that failure to submit all of the required items and the executed GIA “will
cause the Generator interconnection request to have been deemed withdrawn,”Double B
Complaint at ¶49,On June 19,2012,Idaho Power sent DoubLe 3 a finaL GIA to be executed
and returned to Idaho Power no later than July 20,or “your [GIA]will be deemed withdrawn.”
Id.at ¶53.tdaho Power insisted in its Complaint that New Energy did not execute the GIA and
return it to the utility.Idaho Power subsequently issued a deficiency notice to New Energy that
the GIA had been deemed withdrawn and removed the project from Idaho Power’s
interconnection queue.On August 28,2012,Idaho Power asserted it refunded New Energy’s
interconnection deposit for the Double B project.Id at ¶54-5 5.
B.Notice of force Majeure
On September 28,2012,the two New Energy projects sent a joint “Notice of Force
Majeure”to Idaho-Power in accordance with Section-14 of their respective PPAs.The projects
explained they could not perform under the respective PPAs because of “the occurrence of a
force majeure event.”Swager at Tab 56;Double B at Tab 36.The projects alleged in their
notice that the Commission’s generic PURPA investigation (GNR-E-11-03)and other “pending
proceedings”caused lenders to be “unwilLing to lend in Idaho pending the outcome of these
proceedings.”!t Thus,with “no financing available,..it [is]impossible for [the QF]projects
to perform [their]obligation”under the PPAs.id,¶4;Order No.32755 at 4.
C New Energy’s liotiott to Dismiss
[n its Motion to Dismiss,New Energy maintained that the Commission does not
possess the necessary jurisdiction to interpret andlor enforce contracts.In particular,New
Energy asserted the Supreme Court has stated that the “general nile”is:
Generally,the construction and enforcement of contract rights is a mattel’that
lies in the jurisdiction of the courts and not the public utilities commission.
This is true notwithstanding that the parties are public utilities or that the
subject matter of the contract coincides generally with the expertise of the
‘[‘he Swager Farms PPA provided that the project’s commercial operation date for supplying power to the utility is
October 1,2012.
Under the terms ot’its PPA,Double B as to be in commercial operation supplying power to the utility no later
than December I,2012,
ORDER NO.32780 4
commission.If the matter is a contractual dispute,it should be heard by the
courts.
Motion at 6 quoting Lemhi Telephone Co.v.Moumain States Tel.&Tel.Co.,98 Idaho 692,696,
571 P.2d 753,757 (1977).New Energy did concede that the Court has recognized exceptions to
the general rule set out above.Id.at 9-10.More specifically,the Court in Afton Energy v.Idaho
Power Co.(“Afton IV’),reiterated the exception to the general rule is that the Commission may
resolve a contract dispute because “the parties agreed to let the PUC settle this dispute and
there is substantial evidence in the record to support the Commission’s decision.”111 Idaho
925,729 P,2d 400 (1986),citing Bunker Hilt v.Washington Water Power Co.,98 Idaho 249,
259,561 ?.2d 391,394 (1977).New Energy also observed the Afton IV Court found that the
PURPA contract “between Afton and Idaho Power does not fall within any of [the]exceptions
[to the general rule].Idaho Power and Afton have not agreed to allow the Commission to
interpret the contract.”Motion at 10 quoting Afton IV,111 Idaho at 929,729 P.2d at 404.Idaho
Power filed an answer opposing the Motion.See Order No.32755 at 7-8.
THE COMMISSION’S INTERLOCUTORY ORDER NO.32755
In Order No.32755,the Commission recognized that the general nile is “[g1eneijy
the construction and enforcement of contract rights is a matter which lies in the jurisdiction of
the courts and not in the public utilities commission.”Order No.32755 at 9 quoting Afton IV,
11 1 Idaho at 928,729 P.2d at 403 (emphasis added),However,the Commission found that this
case is controlled by one of the exceptions to the general rule where “the parties agreed to let the
PUC settle the]dispute....“Id.at 9-10;Afton JV,111 Idaho at 929,729 P.2d at 404 quoting
Bunker Hill,98 Idaho at 242,561 P.2d at 394,6 In particular,the Commission found
that the “consent”exception (where parties agree to let the Commission
settle a contractual dispute)is controlling in this instance.More
specifically,we find that the Qfs and Idaho Power have expressly agreed in
their PPAs to submit disputes arising under their respective PPAs to the
Commission for resolution.As pointed out by Idaho Power,each PPA
contains a provision granting the Commission jurisdiction over this matter.
Section 19.1 of each PPA provides:
b In McNeaI v.Idaho PUC,142 Idaho 685,689,132 P.3d 442,446 (2006),the Court recognized another exception
to the general rule regarding the Commission’s ability to interpret and enforce interconnection agreements between
telecornrntinication carriers.In explaining this exception,the Court stated it has been “carel’uI to use words such as
generaIIy’and ‘normally’[when stating the applicability of the general rule)and also,to provide for ççptions to
the norm”(Emphasis added.)The Commission resolving disputes about interconnection agreements is an
exception to the general rule (i.e.,norm).
ORDER NO.32780
Disputes —All disputes related to or arising under this Agreement,including,but not limited to,the interpretation of the terms andconditionsofthisAgreement,will be submitted to the Commission forresolution.
Swager at Tab 1,Double B at Tab (emphasis added).Unlike the parties inAftonIV,we find that New Energy and Idaho Power have expresslyagreedthat“lajil disputes related to or arising under this AgreementwillbesubmittedtotheCommissionforresolution.”PPA at §19.1.NewEnergyTwoandNewEnergyThreesignedtheirrespectivePPAscontainingSection19.1 on May 21,2010.We further find this provision of the PPA tobeclearandunambiguous.“An unambiguous contract will be given its plainmeaning.”Shawver v.Huckleberry Estates,140 Idaho 345,361,93 P.3d 685,692 (2004).In this case,the dispute between the parties is “related to orarisingunderthisAgreement.”In addition,New Energy’s force majeure
notice specifically refers to Section 14 of the PPAs —clearly relating to thePPAs.$wager at Tab 56,Double B at Tab 36.Moreover,each PPA providesinSection20.1 that “This Agreement is subject to the jurisdiction of thosegovernmentalagencieshavingcontrolovereitherpartyofthisAgreement.”
Swager at Tab 1,Double B at Tab 1.
We further find that there is a statutory basis for our jurisdiction in thismatter,Just as in the case where QFs may bring complaints against utilitiesunderPURPA(Afton 1/111,107 Idaho at 781,693 P.2d at 427),theCommissionisauthorizedunderIdahoCode§61-621 to hear complaintsmadebyptiblicutilities.7 As the Idaho Supreme Court noted in Afton I/li!,Section 6 1-612 “gives the Commission jurisdiction to hear complaints againstpublicutilitiesallegingviolationsofrules,regulations or any provision of law;IC.§6 1-502 gives the Commission jurisdiction to determine reasonable rates,including rates collected under contracts;and IC.§61-503 gives theCommissionpowertoinvestigateasinglecontract....“107 Idaho at 784,693 P.2d at 430.The PPAs at issue in this case directly affect Idaho Power’sratesthroughtheannualPowerCostAdjustment(PCA).Idaho Code §61-502,Kootenai,99 Idaho at 880,591 P.2d at 127.8 The United States SupremeCourtalsonotedinFERCMississippi,PURPA ‘and the [FERCJimplementingregulationssimplyrequirethe[state regulatory]authorities toadjudicatedisputesarisingunder[PURPA].Dispute resolution of this kind istheverytypeofactivitcustomariLyengagedinbytheMississippi[PttblicUtilities]Commission....“456 U.S.742,760,102 S.Ct.2126,2138 (1982)
Idaho Code §61-621 states:“Any public utitity shall have a right to complain on any grounds upon whichcomplaintsareallowedtobefiledbyotherparties...
The Idaho Supreme Court in A/ion 1/Ill observed:“Contracts entered into by public utilities with [QFsj ordecisionsbyutilitiesnottocontractwith[QFs]have a very real effect on the rates paid by consumers both at presentandinthefuture.”107 Idaho at 789,693 P.2d at 435 (emphasis added).
ORDER NO.32780 6
(emphasis added);Afton I/Ill,107 Idaho at 789.693 P.2d at 435 (emphasis
original).
Order No.32755 at 10-1 1 (bolding added,underline original,footnote originaL).Having found
that it has jurisdiction to resolve the contract dispute,the Commission ordered New Energy to
file its answer by March 19,2013.
NEW ENERGY’S MOTION FOR PERMISSIVE APPEAL
New Energy’s Motion for leave to file a permissive appeal has four parts.first,it
requests that the Commission designate its two Interlocutory Orders (Nos.32692 and 32755)as
final Orders pursuant to Commission Rule 323.[03],IDAPA 31.01.01.323.03.Motion at 2,
Second,New Energy seeks a Commission Order approving New Energy’s Motion for a
Permissive Appeal under 1.A.R.12.Id.Third,New Energy seeks a stay of the current
proceeding pursuant to Rule “324 until the appeal to the $upreme Court is resolved.”Id.
Finally,and in the alternative,New Energy seeks reconsideration of Order Nos.32692 and
32755 pursuant to Commission Rule 331,IDAPA 3 1.01.01.331.Each component of New
Energy’s Motion is set Out 1d reviewed in greater detail below.
A.Designating tite commission ‘s Intertoctctoiy Orders as final Orders
New Energy first requests that the Commission designate its two interlocutory Orders
(Nos.32692 and 32755)as final Orders pursuant to Commission Rule 323.[03].’°Rule 323.03
provides in pertinent part that:“Whenever a party believes that an order not designated as a final
order according to the terms of these ntles should be a final order,the party may petition the
Commission to designate the order as finat.”IDAPA 3 1.01,01.323.03.In its Motion,New
Energy states that it “intends to appeal the [two]Orders in question and designation of those
Orders as final is appropriate.”Motion at 2.New Energy insists that these two Orders “embrace
a controlling isstie of law and are appealable pursuant to the appellate provisions of the IPUC
Rules of Procedure and the Idaho Code.”Id.
C’oinmission findings:Idaho Code §6 1-601 provides that all proceedings before the
Commission shall be governed by the Public Utilities Law and by the rules of practice and
procedure adopted by the Commission.Commission Rttle 321 defines and designates certain
New Energy actually cites to Rule 323,04 but quotes Rule 323.03.Motion at 2-3,
Supra,11.9.
ORDER NO.32780 7
Commission Orders as interlocutory orders.Rule 321.01 defines interlocutory orders as those
orders “that do not finally decide all previously undecided issues presented in a proceeding,
except the Commission may by order decide some of the issues presented in a proceeding and
provide in that order that its decision on those issues is final and subject to review by
reconsideration and appeal....“IDAPA 31.01.01.321.01.Rule 321.02 specifically designates
certain orders as “always interlocutory [including]ders initiating complaints or
investigations;orders joining,consolidating or separating issues,proceedings or parties
IDAPA 31.01.01.321.02 (emphasis added).
Returning to the first Order (32692),we find that it is clearly an interlocutory order as
defined by our Rule 321.Order No.32692 initiated the complaint and consolidated the two
complaints into a single proceeding.In addition,the Idaho Supreme Court has held that “[a]s a
general rule,final judgment is an order or judgment that ends the lawsuit,adjudicates the subject
matter of the controversy,and represents a final determination of the rights of the parties.”In i’e
Johnson,153 Idaho 246,251 n.5,280 P.3d 749,754 n.5 (Ct.App.2012)quoting Camp v.East
fork Ditch Co.,137 Idaho 850,867,55 P.3d 304,321 20fl2).OurfirstOrderneither ended the
case nor represented a final determination.It does not meet the definition of a final order under
our Procedural Rules or the guidelines issued by our appellate courts.
The Commission’s second Order No.32755 denying New Energy’s Motion to
Dismiss also was not designated as a final Order pursuant to Rule 323,IDAPA 31.01.01.323.01.
However,it is not the “title”or description of an order that is controlling but whether the order
represents a final decision of the whole controversy.Williams v.State Bd.of Real Estate
Appraisers,149 Idaho 675,677-78,239 P.3d 780,782-83 (2010).An order “which is
intennediate or incomplete and,while it settles some of the rights of the parties,leaves
something to be done in the adjudication of their substantive rights in the case ...is
interlocutory.”Id.quoting Evans State Bank v.Skeen,30 Idaho 703,705,167 P.1165,166
(1917).The Commission expressly noted that Order No.32755 did not address or resolve the
substantive issues in dispute.Order No.32755 at 12.Although this second Order decided that
the Commission had jurisdiction to resolve this contract dispute,it did not end the lawsuit,did
not hilly adjudicate the subject matter of the controversy,and did not represent a final
determination of the rights of the parties,Rule 321.01.
ORDERNO.32780 8
Our Supreme Court held in Williams that an “order simply denying a motion to
dismiss is not a final order.”149 Idaho at 678,239 P.3d at 783.The Court went on to say that
an order denying a motion to dismiss “would only be reviewable in connection with the petition
for judicial review of the final order ttltimately entered.”Id.Consequently,we conclude that the
Commission’s Order Nos.32692 and 32755 are not “final Orders”and we decline to designate
them as final Orders (thereby becoming subject to reconsideration).Idaho Code §61-626(1),
61-627;Key Transp.;‘.Trans Magic Airlines,96 Idaho 110,524 P.2d 1338 (1974).
IL Motion for Approval ofPermissive Appeal
New Energy next requests that the Commission approve the digesters’Motion for
permission to appeal from an interlocutory order pursuant to Appellate Rule 12.New Energy
asserts that a permissive appeal from the Commission’s interlocutory Orders is appropriate in
this circumstance “because the issues on appeal are threshold matters that will determine whether
these proceedings may be adjudicated before the Commission or in another forum.As such,
these are controlling issues of law reviewable by an appellate court preparatory to an
adjudication of the merits.”Mofionat2i.-
Appellate Rule 12(a)provides that the Supreme Court may grant permission to appeaL
from an interlocutory order issued by the Commission “which is not otherwise appealable under
these rules,but which involves a controlling question of law as to which there is substantial
grounds for difference of opinion and which an immediate appeal from the order or decree may
materially advance the orderly resolution of the litigation.”New Energy asserts that a
permissive appeal is warranted at this juncture in the case “given the disagreement between the
parties and the Commission as to which adjudicatory body has jurisdiction to hear [thisi
dispute.”Motion at 6.It further maintains that it would be “duplicitous and wasteful”for the
proceeding to continue until the question of jurisdiction has been resolved,Id.Consequently,
New Energy respectfully requests that the Commission grant permission for an interlocutory
appeal “to materially advance the orderly resolution of this dispute.”Id.at 7.
Commission findings:Our Supreme Court has held that permission to appeal from
an interlocutory order should only be granted “iii the most exceptional cases.”Verska v.St.
Aiphonsus Reg.Med.Center,151 Idaho 889,892,256 P.3d 502,505 (201 1);A’Iontalbano v.St.
Aiphonsus Reg.Med.Center,151 Idaho 837 itl,264 P.3d 994 n.1 (201 1);see also Aurdema v.
ORDER NO.32780 9
US.Dairy Systems.147 Idaho 785,215 ?.2d 505 (2009).In VerIca,the Court laid out six
factors to be considered when evaluating a request for permissive appeal.
It was the intent of l.A.R.12 to provide an immediate appeal from an
interlocutory order if [there are:(1)1 substantial tegal issues of great public
interest[;(2)]legal questions of first impression[;(3)]the impact of an
immediate appeal upon the parties[;(4)]the effect of the delay on the
proceedings in the [agency]pending the appeal[;(5)]the likelihood or
possibility of a second appeal after judgment is finally entered by the
[agency;and (6)1 the case workload of the appellate courts.No single factor
is controlling in the Court’s decision of acceptance or rejection of an appeal
by certification,but the Court intends by Rule 12 to create an appeal in the
exceptional case and does not intend by the rule to broaden the appeals which
may be taken as a matter right under E,A.R.11.
151 Idaho at 892,265 P.3d at 505 quoting Budell v.Todd,105 Idaho 2,4,665 P.2d 701,703
(1983)(emphasis added).
Turning to the first two Verska factors set out above,we find that the question of
j itrisdiction in this case is neither a legal question of first impression nor an issue of great public
interest.As the COmmissiOn noted in its Order,this COurt has rOcognized an exception to the
general rule that allows the Cominission to resolve contract disputes when both parties consent to
the Commission’s jurisdiction.Order No.32755 at 9-Il;Afton IV,III Idaho at 929,729 P.2d at
404.Relying on §19.1 of the Agreements,the Comniission found that New Energy and Idaho
Power expressly agreed that “[aJll disputes related to or arising under this Agreement...will be
submitted to the Commission for resolution.”Order No.32755 at 10.The Commission also
noted that New Energy’s Notice of Force Majeure specifically references §14 of the PPA and
that §20.1 of the PPA provides that the Agreement “is subject to the jurisdiction of those
governmental agencies having control over either party of this Agreement.”Id.Section 19 also
states that the interpretation of terms contained in the Agreement —including what constitutes
force majeure under §14.1 —will be submitted to the Commission for resolution.Id.;PPA §
14.1 and 1 9.1.As far as this issue being “of great public interest,”it involves two Qf entities,a
utility,and the Commission.While this issue may be of great interest to the parties,it does not
rise to the level of “great public interest.”
Turning to the remaining factors,we tInd that granting a permissive appeal from the
interlocutory Order will certainly delay this proceeding and cause the parties to commit
additional time and resources.While a decision on the issue of the Commission’s jurisdiction
ORDER NO.32780 10
will be definitive,a ruling in favor of the Commission may not eliminate the possibility of a
second appeal on the merits.Motion at 2.Although there is a difference of opinion whether the
Commission has jurisdiction to resolve this dispute,New Energy has not demonstrated the
“substantial grounds”regarding the dispute over jurisdiction or why the Commission’s decision
is in error.I.A.R.12(a).There is substantial and competent evidence to support the
Commission’s findings as well as a statutory basis to hear the utility’s complaint.industrial
Customers ofIdaho Power v.Idaho PUC,134 Idaho 285,28$,I P3d 786,789 (2000);Order
No.32755 at 9-Il;Idaho Code §61-621.In summary,after weighing the factors set out above,
we find that these factors tip the scales in favor of disapproving New Energy’s request for
granting a permissive appeal.
C Reconsideration of Order No.32755
If the Commission is not inclined to either designate its Orders as final or approve a
request for a permissive appeal,then New Energy moves in the alternative for the Commission to
reconsider its Order denying the Motion to Dismiss.Relying on our Procedural Rule 33 1,New
Energy requests that the Commission “reconsider”its ruling on-jurisdiction-for the-reasons set
fbrth in New Energy’s Motion and its reply to Idaho Power’s answer,Motion at 8.The Motion
further states that “the fact that the New Energy parties agreed to boilerplate language offered by
Idaho Power as to [the]forum for dispute resolution is not outcome determinative because [sic],
as set forth in detail in the New Energy parties’Motion to Dismiss.”Id.
Commission fbutings:For the reasons set out below,we decline to “reconsider”
Order No.32755.Our Rule 331 provides that within 21 days of the “issuance of any fipl order,
any person interested in a final order ...may petition for reconsideration.”IDAPA
31.01.01.331.01 (emphasis added).First,tinder the Commission’s Rules of Procedure,
reconsideration under Rule 33 1 is only applicable to fil Orders of the Commission.As the
Commission found above,Order No.32755 is neither a “final”Order nor does it result in a final
determination of the rights of the parties.As our appellate courts have held,a final order is one
that resoLves all issues,or the last unresolved issue..Johnson,153 Idaho at 251,280 ?.3d at 754;
Williams,149 Idaho at 677-78,239 p.3d at 782-83;Camp v.East fork Ditch Co.,137 Idaho at
867,55 P.3d at 321.
Second,Rule 331.01 also requires that requests “for reconsideration must set forth
specifically the ground or grounds why the petitioner contends that the order or any issue
ORDER NO.32780 11
decided in the order is unreasonable,unlawful,erroneous,or hot in conlbrmity with the law,and
a statement of the nature and quantity of evidence or argument the petitioner will offer if
reconsideration is granted”IDAPA 31.01.01 .33 1 .01.New Energy does not specifically point to
any particular finding or analysis contained in the Commission’s Order that is in error.Order
No.32755 set forth several reasons supporting the Commission’s jurisdiction but New Energy
does not indicate which specific finding is in error.The Motion merely asks the Commission to
reconsider its Order based upon “the reasons set forth in the New Energy parties’motion to
dismiss and reply”to Idaho Power.Motion at 8.Despite New Energy’s concession that the
dispute resolution language contained in Section 19.1 allows the Commission to resolve contract
disputes,New Energy does not elaborate why this “is not outcome determinative.”
Third,and more importantly,New Energy’s request is more properly viewed as a
motion to “review”interlocutory Order No.32755 pursuant to Rule 322.The distinction here is
important because “reconsideration”is only avaIlable from final orders and is a statutory
prerequisite for parties seeking to appeal.Idaho Code §61-626;compare Rule 322 with Rule
331,IDAPA 3 1.01.01.322 and .331.As the Supreme.Court observed in Washington Waler
?ower Co.v.Kootenal Environmental Allicince,the purpose of “reconsideration”under Idaho
Code §6 1-626 is “to afford an opportunity for the parties to bring to the Commission’s attention
in an orderly manner any question [previotisly]determined in the [proceeding]and thereby
afford the Commission an opportunity to rectify any mistake made by it before”an appeal.99
Idaho 875,879,591 P2d 122,126 (1979).
In essence,reconsideration is an administrative remedy that must be exhausted before
seeking judicial review.Rule 331.01,IDAPA 31.01.01.331.01;Idaho Code §61-626,61-627;
Eagle Water Co.v.Idaho PUC,130 Idaho 314,316,940 P.2d 1133,1135 (1997).“final orders
of the Commission should ordinarily be challenged either by petition to the Commission for
[reconsideration]or by appeal to this Court as provided by I.C.§6 1-626 and -627;Idaho Const.
Art.V,§9.A different rule would lead to endless consideration of matters previously presented
to the Commission and conftision about the effectiveness of Commission orders.”Utah-Idaho
Sugar Co.v.Intermountain Gas Co..100 idaho 368,373-74,597 P.2d 1058,1063-64 (1979)
(emphasis added),Simply put,reconsideration is not available with the issuance of every
Commission Order.
ORDER NO.32780 12
finally,we find that New Energy’s reliance on the A/ton cases is misplaced because
the Agreement and facts in the Afton cases are distinguishable from the Agreements and facts in
this case.In Aflon 1/111,Afion filed a complaint with the Commission requesting that the
Commission order Idaho Power to enter into a PURPA contract with Afton.Idaho Power
objected to the Conrntission’s jurisdiction (authority)to compel the utility to enter into a PURPA
contract with Afton.A/ton Energy v.idaho Power C’o.,107 idaho 781,782,693 P.2d 427,42$
(1984)(Afton 1/Im)’In Afton IV,Idaho Power petitioned the Commission to interpret the
underlying contract but the Commission decLined finding that the proper forum was district
court.111 Idaho at 928,729 P.2d at 403.The Court stated in Afton IV that “Idaho Power and
Afton have not agreed to allow the Commission to interpret the contract.”Id.at 929,729 P.2d at
404.
The PURPA Agreement in A/Ion 1/111 is markedly different than the Agreements in
this proceeding.The A/ton Agreement Article XIII (Legal Dispute)states that there is “a bona
fide legal dispute...between [AfionJ and Idaho [Power]as to the authority of the Idaho Public
Utilities Commission to order Idaho [Power].to enter into contracts containing rates,terms and
conditions with which Idaho [Power]does not concur.”A/ton PPA,Art.XIII dated Aug.11,
1982.That language stands in stark contrast to the dispute resolution language in the current
PPAs which provides that “alL disputes related to or arising under this Agreement,including,but
not timited to,interpretation of the terms and conditions of this Agreement will be submitted to
the Commission for resolution.”Order No.32755 at 10 citing PPA §19.1.Thus,the parties in
the present Agreements have expressly agreed to the Commission’s jurisdiction,while each party
in the Afton cases and Agreement did not consent to submitting the dispute to the Commission’s
jurisdiction.
Having reviewed our interlocutory Order No.32755,we deny New Energy’s
alternative request for reconsideration for the reasons set out above.
The lineage of the Afton cases is sometimes confusing.Afton I was issued in January 1984,Idaho Power
subsequently petitioned the Court for rehearing and the case was re-argued.In July 1984,the Court issued a
subsequent opinion tAfton If)at which time Afton petitioned tbr rehearing.Finally,in December 1984,the Court
withdrew its Afton I!opinion and issued a third opinion (A/ion III)that modified the Court’s Afton I opinion.
Consequently,the first opinion is often cited as “Afton J/IJI.”Order No.32755 at n.6 citing Afton IV,lit Idaho 927
n.1,729 P.2d 402 n.j.
ORDERNO.32780 13
D.Requestfor Stay
As part of its Motion,New Energy requests that the Commission stay the proceedings
while the digesters pursue an interlocutoiy appeal under 1.A.R.12,Motion at 3,7.New Energy
maintains that a stay is appropriate so that “the threshold issue ofjurisdiction is resolved”and a
stay will preserve resources.Id.at 7.Rule 324 provides that the Commission may “stay any
order,whether interlocutory or final.”IDAPA 31.01.01.324.
Commission findings:While the Commission does not approve New Energy’s
request to seek a permissive appeal,we find there is merit in granting a stay.Appellate Rule
12(c)(l)provides that any party may appeal an agency’s “order approving or disapproving a
motion for permission to appeal”within 14 days of the agency’s order.The Commission finds
that it is reasonable to stay our proceeding for 15 days to see whether New Energy files a motion
for a permissive appeal with the Court.If New Energy tiles a Rule 32 motion with the Court
requesting acceptance of an appeal by permission,then the Commission will continue its stay of
this proceeding until such time as the Court has ruled on the Rule 12 motion.
ORDER
IT IS HEREBY ORDERED that New Energy’s Motion for Permissive Appeal is
granted in part and denied in part.More specifically,New Energy’s request that the Commission
designate its two interlocutory Order Nos.32692 and 32755 as final Orders is denied.
IT IS FURTI-IER ORDERED that New Energy’s motion that the Commission
approve a permissive appeal from the two interlocutoiy Orders is denied.
IT IS FURTHER ORDERED that New Energy’s request that the Commission
reconsider its Order No.32755 regarding the Commission’s finding that it has jurisdiction to
resolve the contract dispute is denied,
IT IS FURTI-IER ORDERED that New Energy’s request for a stay of this proceeding
is initially granted for 15 days from the date of this Order.If New Energy does not file an
Appellate Rule 12 motion with the Supreme Court within 14 days from the service date of this
Order,the stay will be lifted and New Energy is directed to file an answer to Idaho Power’s
complaints within 28 days from the service date of this Order.If New Energy does file a timely
Rule 12 motion with the Supreme Court seetdng a permissive appeal from interlocutory Order
No.32755,the stay shall be continued until such time as the Court rules on New Energy’s
motion.
ORDER NO.32780 14
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this ‘7’
day of April 2013.
f /11 ,1
a2 t€_
PALL KJELLANER,PRESIDENT
MACK A.REDFORD,OMMISSIONER
MARSHA H.SMITI-I,COMMISS tONER
ATTEST:
1L
]jiD,Jewell UCommissionSecretary
0:I PC-E-I 2-25_IPC-E-1 2-26_dh4
ORDERNO.32780 15
ZJ19111X3
Office of the Secretary
Service Date
March 5,2O3
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSiON
IN THE MATTER OF THE COMPLAINT )
AND PETITION OF IDAHO POWER )CASE NO.IPC-E-12-25
COMPANY FOR A DECLARATORY )
ORDER REGARDING THE FIRM ENERGY )
SALES AGREEMENT AND GENERATOR )
INTERCONNECTION AGREEMENT WITH )
NEW ENERGY TWO,LLC.)
_____________________________________________________________________________________
)
IN THE MATTER OF THE COMPLAINT )
AND PETITION Of IDAHO POWER )CASE NO.IPC-E-12-26
COMPANY FOR A DECLARATORY )
ORDER REGARDING THE FIRM ENERGY )
SALES AGREEMENT AND GENERATOR )ORDER NO.32755
INTERCONNECTION AGREEMENT WITH )
NEW ENERGY THREE,LLC.)
On November 9 and 21,2012,Idaho Power Company filed two separate “Complaints
and Petitions for Declaratory Order”regarding two Power Purchase Agreements (PPAs)between
itself and New Energy Two and New Energy Three,respectively.In the 12-25 case.Idaho
Power alleged that New Energy Two’s proposed anaerobic digester at Swager Farms failed to
meet its scheduled commercial operation date of October 1,2012.In the 12-26 case,Idaho
Power alleged that New Energy Three’s proposed anaerobic digester at the Double B Dairy did
not meet its scheduled operation date of December 1,2012.Idaho Power asserted in both
complaints that the qualifying facilities (QFs)have “failed to take the necessary steps required to
bring the facilit[ies]online and operational by the dates required in [their power purchase
agreements (PPAs)j incLuding,...failing to take steps required to secure the interconnection of
[their]proposed facilit[iesJ to Idaho Power’s system.”Complaints at 3.
On December 4,2012,the Commission issued a Notice of the Complaints and
Petitions and ordered that the two cases be consolidated into a single proceeding.Order No.
32692.The Commission directed the Commission Secretary to serve copies of the complaints
on the respondents.On December 27,2012,New Energy Two and New Energy Three
(collectively “New Energy”)filed a “Motion to Dismiss for Lack of Subject Matter Jurisdiction.”
Idaho Power filed an answer to the Motion,and New Energy filed a reply to the answer.Rules
56-57.As outlined below,the Commission denies the Motion to Dismiss.
ORDER NO.32755
BACKGROUND
A.Interconnection aitd the PPAs
The background for these cases is taken primarily from the two complaints and is
summarized below.In October 2009,New Energy initiated discussions with Idaho Power to
begin the interconnection process for two anaerobic digester projects to be located at Swager
farms and Double B Dairy.’Under the federal Public Utility Regulatory Policies Act (PURPA),
Qfs are obligated to pay the costs of constructing the necessary interconnection facilities (or
transmission upgrades)between the QF project and the purchasing utility’s system.18 C.F.R.§
292.308.2
following initial discussions,New Energy submitted a small generator
interconnection request to Idaho Power for each project.Both QF projects executed
interconnection Facility Study Agreements with Idaho Power in late October 2009.Order No.
32692 at 2.Idaho Power subsequently prepared and submitted separate Study Reports for each
project to New Energy.
In May 2010,Idaho Power and New Energy entered into two separate PPAs for each
of the biogas projects.3 Initially each biogas project was projected to sell 1 .2 MW of power to
the utility.The PPAs contained avoided cost rates which were in effect prior to the issuance of
Order No.31025 (March 16,2010),and contained 15-year operating terms.The scheduled
commercial operation date (COD)for Swager Farms was October 1,2012,and the COD for
Double B was December 1,2012.On July 1,2010,the Commission approved the Swager Farms
and the Double B Dairy PPAs in Order Nos.32026 and 32027,respectively.
About the time Idaho Power submitted the PPAs for approval,Idaho Power and New
Energy continued their discussions regarding interconnection.In January 2011,New Energy
requested that the interconnection capacity for each of its projects be increased from 1.2 MW to
Doub]e B subsequently authorized New Energy Three to act on its behalf in negotiating with Idaho Power.
2 Typically the interconnection process has three primary steps.first,a QE submits a small generator
interconnection (GI)request to the utility and the parties execute an Interconnection facilities Study Agreement.
Second,once the Study Agreement is executed,the utility prepares a Gt “Study Report”outlining the necessary
construction for interconnection.finally,if the interconnection Study Report (including proposed routing,estimated
costs,and a construction schedule)is acceptable to the QF,then the parties execute a “Generator Interconnection
Agreement”(GIA)and the Qf pays the utility so the utility can begin construction ofthe interconnection facilities.
The interconnection process and the GIA are separate and distinct from the PPA obligations to sell and purchase
QF power.In other words,the QF transaction requires the construction of both the interconnection facilities and the
QF’s generating plant.
ORDER NO.32755 2
2.0 MW.The parties subsequently executed new Facility Study Agreements and Idaho Power
then prepared a new Facility Study Report for each project.Drafts of the two Study Reports
were provided to New Energy.In late April 2011,Idaho Power issued its final Facility Study
Reports estimating that constructing the transmission interconnection for Swager farms’2 MW
interconnection would cost approximately $1.71 million.4 Idaho Power’s final Facility Study
Report for Double B’s 2.0 MW capacity estimated that interconnection would cost
approximately $376,000.In May 2011,New Energy advised Idaho Power that Exergy
Development would be assisting New Energy with its two Qf projects.Order No.32692 at 3.
The parties then had protracted discussions and communications leading up to Idaho Power
preparing the draft “Generation Interconnection Agreements”(GIAs)for each Qf.
On May 9,2012,Idaho Power sent a draft GIA to New Energy/Exergy for the Double
B project and advised it that failure to submit all of the requested items and the executed GIA
“will cause the Generator Interconnection request to have been deemed withdrawn.”Double B
Complaint at ¶49.On June 19,2012,Idaho Power sent Double 3 a final GIA to be executed
and returned to Idaho Power no later than July 20,or “your Generation Interconnection
Application will be deemed withdrawn.”Id.at ¶53.Idaho Power insisted that the GIA was not
returned and that Idaho Power subsequently issued a deficiency notice that the GIA has been
deemed withdrawn and that the project has been removed from Idaho Power’s interconnection
queue.On August 28,2012,Idaho Power refunded Exergy’s interconnection deposit for the
Double B project.Id.at ¶54-55.
On March 22,2012,Idaho Power sent the draft GtA to Swager Farms.Swager Farms
at ¶58.In April 2012,Exergy asked that Idaho Power “revisit”the interconnection at a lower
capacity of 0.8 MW.Id.at ¶59.The parties executed a “Re-Study”feasibility Study
Agreement which estimated an interconnection cost for the reduced capacity of $225,000.Id.at
¶61.On September 14,2012,Idaho Power sent the final GIA to Swager farms at the lower 0.8
MW interconnection.Id.at ¶66.The cover letter for the Swager Farms GIA stated that Idaho
Power “must have the executed GIA and funding no later than October 1,2012,in order to
complete construction by this date.”Id.(emphasis original).In an e-mail dated September 20,
2012,Idaho Power warned Exergy that if’the GIA and the required funding is not received by
The final Study Report also noted that interconnection costs for the smaller 1.2 MW interconnection would cost
approximately $575,000.
ORDER NO.32755 3
October 1,2012,“it will not be possible to complete the required interconnection work before
the end of the year 2012.”Id.at ¶68.Idaho Power alleged that Swager Farms did not execute
the GIA and did not pay for the interconnection.
B.force Majeure
On September 28,2012,Swager Farms and Double B provided a joint “Notice of
force Majeure”to Idaho Power.In accordance with Section 14 of their respective PPAs,the Qf
projects notified the utility that they could not perform under their respective Agreements
because of “the occurrence of a force Majeure event.’”Swager Complaint at Tab 56;Double B
Complaint at Tab 36.More specifically,the Qfs alleged that the Commission’s generic PURPA
investigation (GNR-E-1 1-03)and other “pending proceedings”caused the force majeure event.
They insisted that the Commission’s investigation regarding the ownership of renewable energy
credits (RECs)and the issue of “curtailment”caused lenders to be “unwilling to lend in Idaho
pending the outcome of these proceedings.”Id.Thus,with “no financing available,...it [isj
impossible for [the Qfs]to perform [their]obligation”under the PPAs.Id.at ¶4.
THE COMPLAINTS AND PETITIONS
In its Complaints and Petitions,Idaho Power alleged that Swager farms and Double
B failed to meet their obligations under their PPAs of providing power to Idaho Power by
October 1,2012,and December 1,2012,respectively.Swager Complaint at ¶2,Double B
Complaint at ¶2.Idaho Power maintained that the Commission has the authority to issue
declaratory orders pursuant to the Uniform Declaratory Judgments Act,citing Idaho Code §10-
1203.Swager at ¶76,Double B at ¶63 citing Utah Power &Light Co.v.Idaho PUC,112 Idaho
10,12,730 P.2d 930,932 (1987).
Idaho Power maintained that the Commission has jurisdiction over this matter
because:(1)the parties have agreed to submit disputes under the PPA to the Commission;(2)the
dispute requires an interpretation of the PPAs approved by the Commission;(3)the Idaho
Supreme Court allows the Commission to interpret contracts where parties agree to allow the
PUC to settle a dispute;(4)the Commission has authority over the generator interconnection
process;and (5)the allegations of force majeure pertain to Commission proceedings.Swager at
¶J 76,89,Double B at ¶j 63,75.Idaho Power asserted that it and New Energy “agreed to the
Commission’s jurisdiction regarding any and all disputes under the [PPA].”Swager at ¶79,
ORDER NO.32755 4
Double B atJ 65.Idaho Power relies on Section 19.1 of the PPAs executed by both Idaho Power
and the Qfs which provides:
Disputes —All disputes relating to or arising under this Agreement,including,
but not limited to,the interpretation of the terms and conditions of this
Agreement,will be submitted to the Commission for resolution.
Id.(Swager &Double B Tab 1 at p.24)(emphasis added).Idaho Power asserted that the parties’
agreement in Section 19.1 above —to submit all disputes involving contract interpretation to the
Commission —falls within an exception to the “general rule”that generally the interpretation of
contracts is a matter for the courts.Swager at ¶77,Double B at ¶63,citing Afton Energy v.
Idaho Power Co.(“Afton IV”),111 Idaho 925,929,729 P.2d 400,404 (1986);Bunker Hill Co.
v.Washington Water Power Co.(“Bunker Hill I”),98 Idaho 249,252,561 P.2d 391,394
(I977).
Given that the Qf projects have failed to meet their scheduled operation dates,Idaho
Power claimed that they are in material breach of their respective PPAs.Idaho Power also points
to Section 5.4 of the respective PPAs that upon a material breach by New Energy,Idaho Power
may terminate the PPAs at any time.Swager at ¶$6,Double B at ¶72.Consequently,Idaho
Power requested that the Commission issue an Order declaring that Idaho Power may terminate
the PPAs due to the breach and recover delay damages.Id.
In summary,the utility requested that the Commission find and declare:
1.That the Commission has jurisdiction “over the interpretation and
enforcement of the [PPAs]and the GIA[s]”;
2.That New Energy/Exergy’s “claim of force majeure does not ...excuse
[the QFs]failure to meet the amended Scheduled Operation Date for the
[PPAsJ”;
3.That New Energy/Exergy have failed to place Swager Farms and Double
B in service by their respective scheduled commercial operation dates of
October 1,2012.and December 1,2012;
4.That Idaho Power may terminate the PPAs if Swager Farms and Double B
failed to cure their defaults under their respective PPAs by December 30,
2012,and March 1,2013;
5.That under the terms of the PPAs Idaho Power is entitled to an award of
liquidated damages;and
Idaho Power also noted that New Energy’s force majeure notice specifically refers to Section 19.1 of the PPAs.
ORDER NO.32755 5
6.Award any further relief to which Idaho Power is entitled.
Swager Farms Complaint at 37;Double B Complaint at 27-28.
NEW ENERGY’S MOTION TO DISMISS
On December 27,2012,New Energy filed a timely “Motion to Dismiss for Lack of
Subject Matter Jurisdiction.”New Energy advanced two primary arguments,first,New Energy
maintained that the Commission does not possess the necessary jurisdiction to interpret and/or
enforce contracts.In particular,New Energy noted the Idaho Supreme Court has stated the
“general rule”is that the
construction and enforcement of contract rights is a matter that lies in the
jurisdiction of the courts and not the public utilities commission.This is true
notwithstanding that the parties are public utilities or that the subject matter of
the contract coincides generally with the expertise of the commission.If the
matter is a contractual dispute,it should be heard by the courts.
Lernhi Telephone Co.v.Mountain States Tel.&Tel.Co.,98 Idaho 692,696,571 P.2d 753,757
(1977);Bunker Hit!Co.v.Washington Water Power Co.(Bunker Hill II”,),101 idaho 493,494,
616 P.2d 272,273 (1980).
Although New Energy acknowledged that the Idaho Supreme Court has held
“PURPA was intended to confer upon state regulatory commissions responsibilities not
conferred under state law,”it argued that “PURPA provides no independent basis of authority to
interpret executed QF contracts.”Motion at 7-8 quoting Afton Energy v.Idaho Power Co.
(“Afton I/Ill”),107 Idaho 781,785,693 P.2d 427,431 (1984).Consequently,New Energy
asserted that the interpretation of the PPAs is a matter governed by state contract law “and each
particular state’s laws govern the proper forum for such contract disputes.In Idaho,the
Commission simply does not have ongoing jurisdiction over any contract disputes.”Id.at 8.
New Energy also conceded that the Supreme Court recognizes exceptions to its
general rule that the Commission does not have jurisdiction over contract disputes.Motion at 9-
10.In Afton IV,the Court reiterated the exception to the general rule is that the Commission may
“interpret an imprecise contract because ‘the parties agreed to let the PUC settle this dispute and
there is substantial evidence in the record to support the Commission’s decision.”111 Idaho
at 929,729 P.2d at 404,citing Bunker Hill 1,98 Idaho at 249,561 P.2d at 391 ,6 However,New
6 The lineage of the Afton cases is sometimes confusing.Afton 1 was issued in January 1984.Idaho Power
subsequently petitioned for rehearing and the case was ic-argued.In July 1984,the Court issued a subsequent
ORDER NO.32755 6
Energy noted the Afton IV Court found that the Qf contract “between Afton and Idaho Power
does not fall within any of the exceptions [to the general rule].Idaho Power and Aflon have not
agreed to allow the Commission to interpret the contract.”hi
Second,New Energy asserted it has not consented to the Commission’s jurisdiction to
interpret and enforce the two PPAs.In particular,New Energy insisted the dispute resolution
provision in each PPA does not confer jurisdiction upon the Commission.Although Section
l9.l of each PPA requires that all disputes be submitted to the Commission,New Energy
argued that the Commission “has consistently disavowed the ability of the parties to unilaterally
confer jurisdiction”on the Commission.Motion at 10.More specifically,New Energy relies on
two prior Commission Orders cautioning PURPA parties “that jurisdiction may not be conferred
upon the Commission by contractual stipulation.”Motion at 10-il,citing Order Nos.21359 at
1;24674 at 4.Consequently,New Energy urged the Commission to decline jurisdiction and
grant its Motion to Dismiss Idaho Power’s Complaints and Petitions for Declaratory Order.
Motion at 12.
IDAHO POWER RESPONSE
On January 10,2013,Idaho Power filed a response to the Motion to Dismiss.
Although Idaho Power conceded that the “general rule”normally requires that the interpretation
and enforcement of a contract is a matter for the courts,it asserted that the Court has recognized
exceptions to the general rule.More specifically,Idaho Power maintained that the Supreme
Court in Afton IV allowed the Commission to interpret a contract because “the parties have
agreed to submit a dispute involving contract interpretation to the Commission.”Response at 5
citing Ill Idaho at 929,729 P.2d at 404;Bunker Hill 1,98 Idaho at 252,561 P.2d at 394.
Idaho Power also pointed out that the Court created another exception to the general
rule in McNeal v.Idaho FUC,142 Idaho 685,132 P.3d 442 (2006).In McNeal,the Idaho
Supreme Court found that the Commission had authority to interpret an interconnection
agreement between two telecommunications carriers.After citing the general rule that contract
interpretation and enforcement are normally matters for the courts,the Idaho Supreme Court held
that the Commission does have authority to interpret and enforce interconnection agreements
opinion (Afton 1 at which time Afton petitioned for rehearing.Finally,in December 1984,the Court withdrew
A/ion II and issued a third opinion (Afton ill)that modified the Court’s .4/ton I opinion.Consequently,the opinion
is often cited as “Afton i/IlL”See Afion IV,Ill Idaho 927 n.I,729 P.2d 402 nI.
Supru,p.5.
ORDER NO.32755 7
between telecommunications carriers.Response at 4 citing McNeal,142 Idaho at 689,132 P.3d
at 446.Like the Commission’s authority under the federal Telecommunications Act to interpret
interconnection agreements,Idaho Power insisted that PURPA grants the Commission “the
jurisdiction and authority to interpret the force majeure clause in the [PPAs].”Response at 5.
Idaho Power also asserted New Energy had agreed in the PPAs to submit all contract
disputes to the Commission.In particular,the utility reiterated that Section 19.1 of the PPAs
provides that “all disputes relating to or arising under this Agreement,including,but not limited
to,the interpretation of the terms and conditions of this Agreement,will be submitted to the
Commission for resolution.”id.Idaho Power also insisted that Section 7.7 of each PPA
provides that the Commission will have continuing jurisdiction over the Agreement.Id.
Idaho Power next argued that there is a statutory basis for the Commission’s
jurisdiction over this dispute.In particular,Idaho Power insisted that Idaho Code §61-501
provides the Commission with the authority to supervise utilities and to do “all things necessary
to carry out the spirit and intent”of the Public Utilities Law.In addition,Idaho Code §6 1-502
and 6 1-503 provides the Commission with jurisdiction over contracts affecting rates and the
power to investigate a single contract,respectively.“The [PPAsJ at issue are utility contracts
which affect rates as defined under §61-502 and which the Commission has specific authority to
investigate under §6 1-503.”Response at 6-7.
Finally,Idaho Power asserted “PURPA itself grants the Commission jurisdiction.
.“Id.at 7.Idaho Power declared that our Supreme Court has stated that “it is clear that PURPA
was intended to confer upon state regulatory commissions responsibilities not conferred under
state law.”Id.quoting Afton 1/111,107 Idaho at 784-85,693 P.2d at 430-3 1.Consequently,
Idaho Power insisted that “the present dispute between a utility and [New EnergyJ over a
PURPA matter is seemingly precisely what FERC envisioned when it promulgated 1 $C.F.R.§
292.401(a).”Id.Combining the federal authority with the specific state statutory authority
“creates an explicit grant of authority to the Commission to interpret a PURPA contract.”Id.at
8.
NEW ENERGY REPLY
On January 16,2013,New Energy filed a reply to Idaho Power’s response.New
Energy takes issue with Idaho Power’s reliance on the exceptions to the general rule set out in
the McNeal case.More specifically,New Energy distinguishes the McNeal case which is
ORDER NO.32755 8
premised upon the federal Telecommunications Act.In A’fcNeal,the Supreme Court cited
Southwestern Bell Telephone Co.v.PUC of Texas,20$f.3d 475 (5th Cir.2000),for the
proposition that the Telecommunications Act grants state commissions the authority to interpret
and enforce the provisions of interconnection agreements that state commissions have approved.
New Energy Reply at 2.However,New Energy asserts that Idaho Power does not cite to any
FERC or PURPA case law allowing state commissions to decide and enforce disputes under
PURPA.New Energy argues that Idaho Power has not cited to any PURPA case “because there
are none.”Reply at 3.
While it recognizes that the PPAs contain language “to the effect that disputes would
be submitted to the Commission for resolution,”New Energy reiterates that the Commission’s
prior Orders have declined to exert jurisdiction.Id.at 6.Consequently,New Energy urges the
Commission to grant its Motion to Dismiss and “defer the common breach of contract claims to
the proper forum for resolution.”Id.at 7.
COMMISSION FINDINGS AND DISCUSSION
In its Motion,New Energy asked us to dismiss Idaho Power’s Complaints and
Petitions for Declaratory Order arguing that the Commission does not have the jurisdiction to
resolve disputes regarding PPAs.It is well settled that the Commission exercises limited
jurisdiction and nothing is presumed in favor of its jurisdiction.Utah Power &Light Co.v.
Idaho PUC,107 Idaho 47,52,685 P.2d 276,281 (1984).The Commission may determine
whether it possesses jurisdiction over a particular matter.Id.However,once jurisdiction is
clear,the Commission is allowed all powers necessary to enable it to carry out its
responsibilities.Washington Water Power Co.v Kootenai Environmental Alliance,99 Idaho
$75,$79,591 P.2d 122,126 (1979).
Both parties recognize and we agree that the general rule is that “[glenerally,the
construction and enforcement of contract rights is a matter which lies in the jurisdiction of the
courts and not in the public utilities commission....If the matter is a contractual dispute,it
should be heard by the courts.”Afton IV,111 Idaho at 92$,729 P.2d at 403 (emphasis added);
Lemhi Telephone,9$Idaho 692,696,571 P.2d 753.757 (1977);McNeal,142 idaho 685,132
P.3d 442 (2006).However,the Supreme “Court has recognized exceptions to this [general]
rule.”Aflon IV,111 Idaho at 924,729 P.2d at 404.In McNeal,the Court explained that it has
“been careful to use words such as ‘generally’and ‘normally’[when stating the general rule]and
ORDER NO.32755 9
also,to provide for exceptions to the norm.”142 Idaho at 689,132 P.3d at 446 (emphasis
added).More specifically,the Court held that one exception to the general rule is where “the
parties agreed to let the PUC settle th[eJ dispute....“Afton IV,111 Idaho at 929,729 P.2d at
404 quoting Bunker Hill 1,98 Idaho at 242,561 P.2d at 394.New Energy declared that it has not
consented to allowing the Commission to resolve this contract dispute,while Idaho Power
believes that the exception to the general rule is applicable in this instance.
Based upon our review of the pleadings,the underlying record,and the case law,we
find that the “consent”exception (where parties agree to let the Commission settle a contractual
dispute)is controlling in this instance.More specifically,we find that the Qfs and Idaho Power
have expressly agreed in their PPAs to submit disputes arising under their respective PPAs to the
Commission for resolution.As pointed out by Idaho Power,each PPA contains a provision
granting the Commission jurisdiction over this matter.Section 19.1 of each PPA provides:
Disputes —All disputes related to or arising under this Agreement,including,
but not limited to,the interpretation of the terms and conditions of this
Agreement,will be submitted to the Commission for resolution.
Swager at Tab 1,Double B at Tab 1 (emphasis added).Unlike the parties in Afton IV,we find
that New Energy and Idaho Power have expressly agreed that “[a]ll disputes related to or arising
under this Agreement ...will be submitted to the Commission for resolution.”PPA at §19.1.
New Energy Two and New Energy Three signed their respective PPAs containing Section 19.1
on May 21,2010.We further find this provision of the PPA to be clear and unambiguous.“An
unambiguous contract will be given its plain meaning.”Shawver v.Huckleberiy Estates,140
Idaho 345.361,93 P.3d 685,692 (2004).In this case,the dispute between the parties is “related
to or arising under this Agreement.”In addition,New Energy’s force majeure notice specifically
refers to Section 14 of the PPAs —clearly relating to the PPAs.Swager at Tab 56,Double B at
Tab 36.Moreover,each PPA provides in Section 20.1 that “This Agreement is subject to the
jurisdiction of those governmental agencies having control over either party of this Agreement.”
Swager at Tab 1,Double B at Tab 1.
We further find that there is a statutory basis for our jurisdiction in this matter.Just
as in the case where Qfs may bring complaints against utilities under PURPA (Afton I/Ill,107
Idaho at 781,693 P.2d at 427),the Commission is authorized under Idaho Code §61-621 to hear
ORDERNO.32755 10
complaints made by public utilities.8 As the Idaho Supreme Court noted in Afton 1/111.Section
61-612 ‘gives the Commission jurisdiction to hear complaints against public utilities alleging
violations of rules,regulations or any provision of laws:I.C.§6 1-502 gives the Commission
jurisdiction to determine reasonable rates,including rates collected under contracts:and I.C.§
61-503 gives the Commission power to investigate a single contract 107 Idaho at 784,693
P.2d at 430.The PPAs at issue in this case directly affect Idaho Power’s rates through the annual
Power Cost Adjustment (PCA).Idaho Code §61-502.Kootenai,99 Idaho at 880,591 P.2d at
127.The United States Supreme Court aLso noted in fERC v.Mississippi,PURPA “and the
[FERC]implementing regulations simply require the [state regulatory]authorities to adjudicate
disputes arising under [PURPA].Dispute resolution of this kind is the very type of activity
customarily engaged in by the Mississippi [Public Utilities]Commission 456 U.S.742,
760,102 S.Ct.2126.2138 (1922)(emphasis added):Afton I/Ill,107 Idaho at 789,693 P.2d at
435 (emphasis original).
New Energy also relies on two prior Orders of this Commission to support its
argument that the Commission does not have jurisdiction in this matter.In its reply,New Energy
concedes that “While the instant parties do have language in their Agreements to the effect that
disputes would be submitted to the Commission for resolution,the Commission has already
disavowed the ability of the parties to unilaterally confer jurisdiction on [the Commission].”
Reply at 6.In particular,New Energy refers to a 1993 Order where the Commission cautioned
contracting parties regarding the Commission’s jurisdiction.Order No.24674 in Case No.IPC
E-92-32.In that case,the parties (Idaho Power and Glenns ferry Cogeneration)had executed a
PPA that contained identical language to the dispute resolution provision at issue in this case.In
reviewing the language in the Glenns ferry PPA,the Commission
reminds the parties that jurisdiction may not be conferred on the Commission
by contractual stipulation.The authority and jurisdiction of the Commission
is restricted to that expressly and by necessary implication conferred upon it
by enabling statutes.The nature and extent of the Commission jurisdiction to
resolve actual disputes will be determined by the Commission on an
$Idaho Code §61-621 states:“Any public utility shall have a right to complain on any grounds upon whichcomplaintsareallowedtobefiledbyotherparties....”
‘The Idaho Supreme Court in Ajion I/Ill observed.“Contracts entered into by public utilities with [QFs]ordecisionsbyutilitiesnottocontractwith[QFsJ have a very real effect on the rates paid by consumers both at presentandinthefuture.”107 Idaho at 789.693 P.2d at 435 (emphasis added).
ORDER NO.32755 11
individual case-by-case basis notwithstanding [the dispute resolution
provision]of the Agreement.
Order No.24674 at 4 (emphasis added).Despite expressing concern about the language,the
Commission approved the Glenns ferry contract including the dispute resolution provision.Id.
We find New Energy’s reliance on this prior case is misplaced.As noted above,the
Commission stated that the nature and extent of our jurisdiction “will be determined ...on an
individual case-by-case basis.”In the Glenns Ferry case,the Commission did not foreclose
exercising jurisdiction;it stated that the scope of its jurisdiction “to resolve actual disputes will
be determined ...on an individual case-by-case basis.”For the reasons outlined above,the
Commission finds in this particular case that it has jurisdiction to resolve this contract dispute
pursuant to the consent exception to the “general rule.”
In addition and without addressing the merits of the case,the Commission also notes
that New Energy alleges that the occurrence of the force majeure event concerned this
Commission’s generic PURPA investigation and possibly other PURPA proceedings.Because
New Energy’s force majeure allegation arises from Commission proceedings,we find that the
Commission is well-suited to review these allegations.Finally,we note that because “regulatory
bodies perform legislative as well as judicial functions in their proceedings,they are not so
rigorously hound 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.”McNeal v.Idaho PUC’,142 Idaho at
690,132 P.3d at 447;Washington Water Power Co.v.idaho PUC,101 Idaho 567,579,617 P.2d
1242,1254 (1980).
In summary,the Commission finds in this particular case that it has jurisdiction to
resolve the contract dispute under the consent exception to the general rule.Having found
jurisdiction in this matter,New Energy Two and New Energy Three should file their
consolidated answer (if any)to the Complaints and Petitions within 14 days of the service date of
this Order.
ORDER
IT IS HEREBY ORDERED that New Energy Two and New Energy Three’s Motion
to Dismiss for Lack of Subject Matter Jurisdiction is denied.
IT IS FURTHER ORDERED that New Energy Two and New Energy Three file their
answer (if any)to the Complaints and Petitions within 14 days of the service date of this Order.
ORDERNO.32755 12
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of March 2013.
ATTEST:
PAUL KJE LA R,PRESIDENT
‘\
.1
MACK A.REDFORD,CMMISSIONER
Ji &L
MARSHA H.SMITH,COMMISSIONER
,./J pD.Jewej
Commission Secretary
0:IPC-E-I 2-251PC-E-I 2-26_dh3
ORDER NO.32755 13