922 F.3d 929
9th Cir.2019Background
- PURPA (1978) requires utilities to buy from qualifying facilities (QFs) at "avoided cost" and allows FERC to set implementing rules; states calculate avoided cost consistent with FERC guidance.
- California (CPUC) administers several programs for small generators: the 2010 QF Settlement standard contracts (including a ≤20 MW contract using SRAC for energy and a fixed capacity payment), the Re-MAT/FiT program (≤3 MW), the CHP program (AB 1613, <20 MW, priced to MPR), and Net Energy Metering (NEM, ≤1 MW, paid at DLAP).
- CARE (Californians for Renewable Energy) and two small solar members sued CPUC alleging: (1) avoided cost calculations improperly aggregate multiple energy sources (should be "multi-tiered"), (2) CPUC excludes capacity (capital) costs from avoided cost, and (3) NEM violates PURPA interconnection/mandatory purchase rules; CARE also sought equitable damages and attorney fees.
- District court denied CARE leave to add damages/fees and granted summary judgment to CPUC on CARE’s PURPA claims; CARE appealed.
- Ninth Circuit affirmed in part and reversed in part: it held the district court erred in not requiring consideration of California’s RPS when determining which alternative sources are relevant to avoided-cost calculations, remanding that question; it affirmed dismissal on capacity for NEM, interconnection, RECs, and denied damages/fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether avoided cost must be calculated by reference only to like energy sources (multi-tiered pricing) when QF energy is used to meet an RPS | CARE: avoided cost must reflect the specific resource type (e.g., solar) or otherwise renewable sources when QFs are used to meet RPS | CPUC: states have discretion; FERC permits but does not require multi-tiered pricing; avoided cost may aggregate sources | Court: Where a state RPS means the QF’s energy is used to meet RPS obligations, avoided cost must be based on sources that could satisfy the RPS; remanded to determine compliance |
| Whether avoided cost must include capacity (capital) costs across programs | CARE: CPUC programs improperly exclude capacity/capital costs from avoided cost payments | CPUC: capacity included where appropriate; regs require capacity only "to the extent practicable" and only when QF displaces utility capacity needs | Court: Capacity costs are required only if QF energy (with enforceable deliverability) lets utility avoid new capacity; affirmed that NEM customers typically do not provide such enforceable capacity, so no capacity payment required there |
| Whether NEM violates PURPA interconnection/mandatory-purchase rules | CARE: NEM unilaterally imposes terms and may evade PURPA’s interconnection/mandatory purchase protections | CPUC: NEM customers are interconnected and PURPA allows states/utilities to assess connection costs to QFs; NEM credits/payments fall outside PURPA in many forms | Court: NEM does not violate PURPA interconnection rules; participants are connected and utilities may charge interconnection costs; affirmed |
| Availability of equitable (retroactive) damages and attorney fees under PURPA | CARE: equitable damages and fees should be available to vindicate PURPA rights | CPUC: Eleventh Amendment bars retroactive relief against state agencies; PURPA lacks fee-shifting; sovereign immunity limits relief | Court: Eleventh Amendment bars equitable retroactive relief against CPUC (only prospective injunctive relief under Ex parte Young); no statutory attorney-fee remedy and private-attorney-general/common-benefit doctrines cannot supply fees; affirmed denial of leave to amend for damages/fees |
Key Cases Cited
- Indep. Energy Producers Ass'n, Inc. v. Cal. Pub. Utils. Comm'n, 36 F.3d 848 (9th Cir. 1994) (states have primary role and broad discretion in calculating avoided costs under PURPA)
- American Paper Institute, Inc. v. American Electric Power Service Corp., 461 U.S. 402 (U.S. 1983) (interconnection is prerequisite to purchase/sale under PURPA)
- Edelman v. Jordan, 415 U.S. 651 (U.S. 1974) (Eleventh Amendment bars retroactive monetary relief against states in federal court)
- Will v. Michigan Dep't of State Police, 491 U.S. 58 (U.S. 1989) (states and state agencies are immune from certain suits under Section 1983 and implicate state sovereign immunity)
- Sonner v. Schwabe North America, Inc., 911 F.3d 989 (9th Cir. 2018) (summary judgment review and standards for equitable relief in the Ninth Circuit)