293 F. Supp. 3d 980
N.D. Cal.2017Background
- Winding Creek Solar LLC (Winding Creek) seeks to build a 1 MW solar facility in Lodi, CA and to secure a long-term PURPA contract to sell energy to PG&E.
- CPUC adopted the Re-MAT feed-in tariff (for ≤3 MW renewable generators) with a statewide 750 MW cap and per-utility, per-period caps (PG&E share ~218.8 MW; ~49.949 MW for peaking as-available). Re-MAT sets fixed long-term prices adjustable every two months via a reverse-auction-like mechanism.
- CPUC also adopted a separate uncapped Standard Contract (product of the QF Settlement) for QFs ≤20 MW; its energy price is a formula with three market-driven monthly inputs (burner-tip gas price, market heat rate, locational adjustment) unknown at contract signing.
- PURPA (and FERC regulations) requires utilities to "must-take" energy from qualifying facilities and gives QFs a choice of pricing: avoided costs calculated at time of delivery or at the time the obligation is incurred (18 C.F.R. § 292.304(d)(2)).
- Winding Creek sued CPUC Commissioners under the Supremacy Clause, alleging Re-MAT (i) unlawfully caps QF purchases contrary to the must-take obligation, and (ii) sets prices that are not based on utilities’ avoided costs; CPUC defended by asserting the Standard Contract satisfies PURPA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Re‑MAT’s statewide and per‑period caps violate PURPA’s must‑take obligation? | Re‑MAT caps limit utility purchases and thus conflict with PURPA’s mandatory purchase requirement. | Standard Contract availability cures any shortfall; caps are permissible because an alternative (uncapped) PURPA program exists. | Held for plaintiff: Re‑MAT caps violate the must‑take obligation; caps cannot stand where QF lacks access to required options. |
| Do Re‑MAT prices satisfy PURPA’s "avoided cost" requirement? | Re‑MAT’s reverse‑auction and arbitrary $4/MWh adjustments do not reflect a utility’s incremental but‑for costs and therefore are not "avoided costs." | Re‑MAT pricing is market‑based and reasonable; Standard Contract supplies PURPA‑compliant pricing. | Held for plaintiff: Re‑MAT pricing does not meet the FERC definition of "avoided costs." |
| Does the Standard Contract (alone or combined with Re‑MAT) provide the two pricing options required by 18 C.F.R. § 292.304(d)(2)? | Winding Creek contends it lacks access to a contract that offers the statutorily required choice (time‑of‑delivery or time‑of‑obligation avoided‑cost basis). | CPUC/defendants contend the Standard Contract is a PURPA avoided‑cost contract and that it (and Re‑MAT) satisfy the regulations; reliance on agency discretion and FERC orders. | Held for plaintiff: The Standard Contract does not, in practice, offer both § 292.304(d)(2) options; defendants failed to identify any program that provides the required choice. |
| Remedy: Is Winding Creek entitled to a specific contract at a specific price (e.g., $89.23/MWh)? | Requests a declaration and an order awarding a Re‑MAT contract at the initial $89.23/MWh offering. | Opposes ordering a specific as‑applied remedy; stresses procedural posture. | Court granted declaratory and injunctive relief finding Re‑MAT preempted/inconsistent with PURPA but declined to order a specific contract or price (treated specific contract request as an as‑applied remedy reserved to state forum). |
Key Cases Cited
- Independent Energy Producers Ass'n, Inc. v. Cal. Pub. Util. Comm'n, 36 F.3d 848 (9th Cir. 1994) (state PURPA implementation preempted where inconsistent with FERC regulations)
- Allco Renewable Energy Ltd. v. Mass. Elec. Co., 208 F. Supp. 3d 390 (D. Mass. 2016) (state rule invalid where it eliminated QF’s regulatory option to fix avoided‑cost at time obligation is incurred)
- FERC v. Mississippi, 456 U.S. 742 (1982) (states may implement FERC’s PURPA rules by various means but must give effect to those rules)
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (summary judgment burden‑shifting standard)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (definition of genuine dispute of material fact for summary judgment)