Empire Lumber Co. v. Washington Water Power Co.

755 P.2d 1229 COMPANY,

EMPIRE LUMBER

Complainant,

v. WATER

WASHINGTON POWER

COMPANY, Respondent.

EMPIRE LUMBER

COMPANY, Appellant,

v. WATER COM-

WASHINGTON POWER

PANY and Idaho Public Utilities

Commission, Respondents.

No. 16634.

Supreme Court of Idaho.

July 1987. Rehearing May

On Jones, Gen., Atty. D.

Jim Scott Wood- Boise, Gen., bury, Deputy Atty. respon- for dent Idaho Public Utilities Comn. Peterson, Boise, appel- for Orndorff & argued. H. Orndorff lant. Owen Hamblen, Coffin, Miller, Paine, Brooke & d’Alene, Washington Coeur for Water Pow- Strong argued. er. R. Blair SHEPARD, Chief Justice. appeal an

This is from a decision of the Idaho Public Utilities Commission denying directing for an order Washington motion Company Water Power to enter into a con- Company tract with Lumber of electricity pursuant to the Utility Regulatory Public Policies Act. We affirm. Congress, part as a of the Na- Energy Act,

tional enacted the Public Utili- 192 ty Regulatory (PURPA), Policies Act P.L. See, Commission. I.C. 61-612. § 95-617, (1978). 92 Stat. 3117 Section 210 of Energy Inc. v. Idaho Power Compa- Afton requires

that Act pur- 925, electrical utilities to ny, (1986). 111 Idaho 729 P.2d 400 power by co-generators produced Thus, chase the it is clear that the Idaho Public Utili- power producers or small which obtain ties granted Commission is authority by qualifying status under the Act. Pursuant to, appropri- Idaho statutes and is the Act, co-generators 201 to section or co-genera- ate forum to resolve whether producers power small must meet three power producer tor or small has satisfied Qualified (QF). become criteria to Facilities “qualified facility” status, for criteria size, fuel, encompass Those criteria and regulated and to determine whether a utili- ownership. Upon satisfaction those cri- ty obligation has an PURPA pur- under teria, operator required the owner or power chase from applicant. an Energy Regu- furnish notice to the Federal case, In the Empire instant Lumber Com- (FERC). latory promul- Commission FERC pany has, PURPA, passage since the gated regulations implementing sections investigated co-gener- of a construction 201-210 of PURPA. plant produce power ation electrical for implementation The of PURPA as it re- Washington Empire sale to Power. co-generation power small pro- lates to and proposed has the construction of a ducers, regulations promulgated by and pro- products burn waste wood FERC, largely regula- been left to the power duction mills at of electrical at either tory individual authorities states. Kamiah, Maries, all Weippe, or of which St. PURPA, 210(f), provides part: section Washington are within service area of regulatory implement “Each state shall ... purchased In Empire Water Power. 1983 such rule ... for each electric utili- [FERC] Zellerbach equipment used from Crown and ty ratemaking for which it has authority.” consulting engineer for retained a advice as The regulation, FERC 18 C.F.R. development power to the PURPA 292.401(a) (1980), provides: further § project. During Empire at- 1984 and 1985 implementation Such may consist negotiate tempted agreement [state] an with regulations, of the issuance of an under- under Washington Water taking disputes quali- to resolve between Washington Water Power would fying facilities electric utilities under negoti- Empire. electric Those (arrangements subpart C between elec- largely unsuccessful. ations were June qualifying cogeneration tric utilities 1985, Washington presented Water Power power production facilities un- and small proposal, a contract however (PURPA)) any 210 of or other ac- der terms, objections made § to certain i.e.: reasonably implement designed tion Agreement —Terms of Section 4 subpart. such —Liquidated Damages Section 9 Public Commission is The Idaho Utilities Payments Section 12— directed to su- agency authorized and Indemnity Section Insurance and 15— utilities, regulate pervise and electrical Performance Bonds ratemaking authority over such utili- has Security Section 16— 61-129; 61-501, Grever v. ties. I.C. §§ 900, negotiating 94 The session between Em- Telephone Company, Idaho last Idaho (1972). Commission, Washington pire Water Power took 499 P.2d 15, duties, place Septem- On statutory September determines rea- part of its 23, 1985, Empire complaint ber filed a investigates and reviews sonable rates 61-502, Utilities re- -503. The Com- Idaho Public Commission contracts. I.C. §§ questing order Wash- jurisdiction has to hear com- mission also long- alleging ington Water Power to execute plaints against utilities violation of term, the avoided order or rule fixed-rate at any provision law of ty’s petition for increased rates. Where not until cost rates.1 It was October findings supported by competent are of a 9.9 filed its notice Kamiah, QF and substantial evidence this Court Idaho. MW obliged affirm its decision. Boise Wa- Empire’s com- Hearings were held on Corp. ter v. Idaho Public Utilities Com- argued plaint, Empire that Wash- wherein mission, 832, 838, 163, 555 97 Idaho P.2d pursuant ington required Power was Water (1976); Application 169 Tele- of Pacific to enter into a contract for the to PURPA Co., 476, 71 phone Telegraph Idaho & power Empire, from and Wash- purchase of (1951). 1024, P.2d 1026 233 argued Empire ington Water Power plant configuration Sugar Co. v. Inter specific had no sized or See also Utah-Idaho 368, 376, Co., 100 Idaho project required in mind for its which were mountain Gas 1058, 1066(1979) PURPA, willing stating, review ready, and thus P.2d by was not “[I]n a sign Washing- ing findings of fact we will sustain Com and able to a contract with appears unless it ton Water Power. Thereafter the Commis- mission’s determination dismissing Empire’s weight order that the clear of the evidence sion issued its against complaint, concluding that “at no time its conclusion or that the evidence Empire ready, willing sign strong persuasive that the commis and able sion abused its discretion.” In the instant Washington a contract with Water Power.” case, stated, order, held that the Commission stated: Commission “ready, willing Empire was at no time Implicit guideline require- in this is the Washington a contract with able (Empire) knowledge ment that aforestated, co-gener As Water Power.” facility’s design specifica- size and power producer comply must ator or small tions. While we do not look for virtual QF regulations to obtain a sta with FERC completion project prerequisite of a aas Empire The found that tus. Commission contract, ordering purchase power QF file its notice of a status under did not progress comple- substantial towards its 10, 1985, after Em PURPA until October tion should be evident. complaint filed its in the Idaho pire had Thereafter, Empire petition re- filed a against Commission Wash Public Utilities granted, consideration and a which was ington Power. The record before hearing May further held in supports findings by the Commission The then its further Commission issued output of Em the Commission order, dismissing complaint. again Empire’s unknown, facility pire’s proposed is still an rates While Commission discussed sizing facility and that the is not QF, which must be offered to a the Com- capacity configuration upon based or again concluded that mission any equipment. known The Commission a con- “perfected its entitlement” to “[AJpart filing from a No concluded tract. FERC, Empire tice with has taken no ac The Idaho Constitution authorizes acquire, design tion to or construct a 9.9 jurisdiction re only this Court limited facility.” MW The evidence before the view orders of the Public Utilities Commis feasibility Commission reveals that CONST, art. 5 61-629 sion. ID. 9.1.C. § § study by Empire in conducted 1984 was jurisdiction, further defines that limited required concerned the amount of fuel and this Court has held: Kamiah, plant for a 3.75 MW or a 5 MW finding, quasi- is a Idaho. The further reveals that Commission fact evidence investigate filing complaint legislative body prior authorized to to the before Commission, Em- presented and determine issues a utili- the Idaho Public Utilities utility generate purchase 1. "Avoided cost” means the incremental costs to itself or utility energy capacity 292.101(b)(6) (4-1- an electric of electric or another source. 18 CFR § which, or both but for the from the 86). facilities, qualifying qualifying or such (1984). plant 107 Idaho 693 P.2d 427 Idaho pire had not committed to build Hence, particular capacity. fought strenuously we size before Pub- clearly Commission, supports the hold that the evidence lic and then in this Utilities Idaho Utilities Com- decision of the Public adopted by for its views which were Court ready, was at no time mission Bakes, Justice and well stated him in his binding willing and able to enter into dissent, that the did not have Washington Water Power. jurisdiction to order Idaho purchase power from, Power to that the intent of Afton.1 We deem it clear jurisdic- He wrote that the “Commission’s utility require is not to an electric PURPA tion must stem from state law. The com- pur company enter into a contract to power, no inherent and its mission has power entity pow- from an chase electrical entirety jurisdiction ers derive their option an only in essence desires to obtain statutes, enabling ‘nothing pre- from is power some amount of electrical to to sell jurisdiction____’ Af- plant at of unknown sumed favor its generated some be capacity. entity Energy attempting an must first to enforce con- size or Such ton QF, any a and in the instant case rights granted by become federal law tractual ... relating proposed gen concrete facts to the statute or it is not true ... that the federal by eration were not known Wash grant a regulations jurisdiction can to state during negotiation ington Water Power agency administrative which has not been facts, defined, process, and such as were legisla- the Idaho given jurisdiction only following filing became known 790-91, 107 Idaho at 693 P.2d ture.” complaint with the Idaho Public Utili “vehemently” disagreed with 436-37. He sup clearly ties Commission. The evidence otherwise, opinion which held the Court’s ports the decision of the Idaho Public Utili rehearing and on continued to adhere during ties Commission that at no time Shepard on the re- those views. Justice willing negotiations Empire ready, was hearing he had earlier adhered stated that Washington a contract able views, to do to those same and continued Power. The decision of the Idaho hotly the issue was rather con- so. That affirmed; Utilities Commission is Public perhaps tested in this Court is an under- respondent. costs statement, by the fact that as witnessed unprece- Shepard openly made the

Justice DONALDSON, BAKES and voting majority with the dented move of HUNTLEY, JJ., concur. petition “solely to the end that should a for to, rehearing may filed I be able Justice,

BISTLINE, dissenting. will, meaningful assuredly cast a vote most grant rehearing.” 107 Idaho at 693 (A) us, and it is P.2d at 439. That all behind fifty if much court was doubted co-generation case Idaho The first Co., right judicially rejected the of Con- Power states Energy, Inc. v. Idaho Afton power. purchase corporation, not to In an effort Afton, newly Afton decided a formed 1. In PURPA, Inc., cogenera- a Energy, wanted to construct Power to contract under to force Idaho Afton, plant Wyoming. plant This Energy tion to the PUC which Afton took its case by products and would consume waste wood ultimately ordered Idaho Power to prelimi- power. After a produce 4.5 MKW of Afton. negotiations study, nary feasibility started Afton markedly encountered a dif- Lumber Valley Light, & a local Lower with first utility, response the PUC when it tried to ferent from copy A then later Idaho Power. way in a similar to Afton force WWP to contract Energy, Afton but before contract was sent to rejecting PUC in Em- and Idaho Power. The sign, requested letters Power would Idaho indicating status, QF pire's required a claim held it En- from the Federal self-certification showing plant, of ade- for the and a location Commission, Wyo- jurisdiction ergy waiver of required facility. quate fuel for the Also arrangements power delivery from ming, and design specifications "implicit” size and later Afton re- Several months local utilities. plant. requested and a documents turned with the financing plans. summary Idaho Power gress pass legislation. today’s such generator, The in a sawmill run opinion Shepard for the Court Justice mere- Co., Evergreen Forest Products uses ly legislation mentions the without com- bark, chips, castoff sawdust and shav- ment other than that “it is clear that the ings. They steam, are burned to make Idaho Public Utilities grant- Commission is turbines, which turns which creates elec- to, authority appropriate ed and is the fo- tricity megawatts than five of it a —more co-generator rum to resolve whether a or year, enough 1,000 electrically power producer small has satisfied the cri- heated homes. ‘qualified status, facility’ teria for and to power plant produces The even more regulated determine utility whether has juice hoped. than its founders had obligation an under PURPA to to, electricity goes brings money power applicant.” an At from, Idaho Power Co. P.2d at 1230. very, “That’s very good plant; been case, In the Idaho Power’s resist- Afton has,” really Barrell, part- said Dick co-generation ance to solely was based ner in Energy Partnership, Tamarack objection concept having to the Evergreen which assists with the deal with such concerns at all. If it raised production. any objection Energy’s qualifica- to Afton tions, them, I do help not remember The sales and believe stabilize the mill’s fi- that it can safely be said nances, that such was not generator he said. The also an issue before ap- the commission or on helps dispose waste, of wood he said. peal in this Court. It can safely also be always “That has problem.” been a co-generation said that by as envisioned the generators Small such as the one at Congress becoming is reality a in Idaho. Evergreen benefits, too, have broader Even while this case has been under con- plants Barrell said. “These small can sideration, the Idaho Statesman under date (start operating) much faster the than 15,1987, of June carried an article which large plants,” gener- he said. And informed its readers that there are now at ally use renewable resources. least 85 small producers Idaho-based However, generation power by such 56 contracts to Power, feed Idaho 17 with producers Evergreen, small the first Light, Utah Power and 11 Washington generator a contract with Idaho Power, Water and one with Pacific Power Power, problems has created some for Light. & What that means is that the major utilities. commission, as a result of leg- the PURPA many years, For utilities would not islation, since 1984 had to accommodate at buy power producers. from small But least 85 more probably cases and more. the Regulatory Public Utilities Policies is This a lot cases when added to the (PURPA), Act by Congress enacted primary already PUC’s burdensome task of 1978, required utilities supervising rate-making cases of the output big public producers. of small-scale utilities in the state. Terms purchases of those by are set vary —and article, least, The to this reader at tends widely among utility commissions in the — explain by the stance taken the commis- various states. sion in rather summarily dismissing the complaint lodged by Empire with it Lum- Knowing something about comparative ber, a company may greater which be no or net Energy, worth of Afton Evergreen Evergreen no smaller than Forest Prod- Products, Empire Co., Forest or Lumber ucts, featured in the Idaho Statesman. and the other 82 or power pro- more small

By RANDY STAPILUS helpful. ducers Although there The Idaho Statesman order, are intimations in the commission’s Court, picked up by on members

Snuggled deep in of this country the forest County generator only seeking “option” Adams that it is an key is a to have right power electric revolution. Washington to sell its 196 horse, farm, Power, aught house, or tries to sell accordingly is but

Water option, Washington Water he is unable to exercise the or speculator, a neither when up money. point come with the Power nor commission can’t Washington adduced evidence mill issue of The location a Empire or the commission pretext, herring. Maybe a red not to the get the substance to into the busi- without reader, anyone who uninformed becoming producer of elec- ness small Idaho, north it would matter little knows appears It rather that the word tricity. plant put operation whether at taken context “option” was out of Kamiah, Weippe, Any- at St. Maries. or commission, and for certain is region is an abundance where there opinion. 755 P.2d page Court’s At bark, chips, “cast-off sawdust shav- majority 1230 the writes “[i]n says are ings” such as the uti- Statesman purchased equipment from used Evergreen by Forest Products in lized Zellerback____” purchased itWhat Crown venture, and, County, I would Adams megawatt By law generator. a 3.7 Moreover, the commis- greater abundance. pro- operating generator cannot exceed impasse reached at recites the sion’s brief ducing megawatts. ten It did not over 16, 1985, negotiating September ses- building to foreclose itself from want sion, on there four items where up megawatts, possibly to 9.9 6 or plant agenda, one of which was “an offer page 3.7. commission’s brief preference Power’s consider Water justices of us informs all Kamiah).” Maries, (St. Ne- Weippe, or site including ex- progress, made substantial Bryan “Mr. gotiations broke down when $200,000 penses of over included the posi- adamant took the Water Power] [for megawatt plant Zeller- 3.75 form Crown contract at he would the tion that not (again Empire quite clear back. made it rates____ negoti- cannot You approved the Em- and not from the commission’s brief position on is adamant there an ate when shopping for a pire’s) that it had not been side.” party’s one plant, megawatt, or megawatt or a 5 Afton, in the situation Unlike plants, simply megawatt because two 5 an attack on not available Power does have got and “we’ve “negotiations broke down” jurisdiction. That issue commission’s the go we out and have a before to Instead, bring- settled.2 without has been equip- money time and to locate spend the Empire to show that any in evidence brief, At p. 10. the ment.” Commission’s though quali- it had qualified, not even was Empire’s response to a commis- page, same FERC, noted Order fied No. with I infer question asking, “Can ... that sion 4, 1986, also March which conceded up put plant to 10 might any size supply of a fuel Empire was assured that you lo- depending upon what megawatts waste. from wood cate”?, was, depending the answer “[Yes] action, order, philo- dismissing the That figures out.” Which how the come on sophized: me, that all to and confirms makes sense publicized well Water Power’s We note Empire saying that was was that development in to economic size. It commitment options open as to is keeping their indicates territories. This that its service suggest to basically unfair have a common utility and seeking on rate simply a commitment was cogeneration bringing this obtained, peddled— interest could be once so that boost line its attendant project on with buys option an a as one much same challenged, force of law when having and will have the infra, Legislature surfaces the Idaho 2. As legislation, major Library. All of the passed implementing State a PURPA in the Law not filed Oregon, Idaho Public Idaho doing such as occurred took utilities business electrical a promulgated com- Commission has Utilities plete proceeding. part in that rules, implementing are which not set of arbitrary: stages employment general stimu- that is there are and economic encourage parties jur- reached lation. We both must before we can take be negotiate complaint make a concerted effort to over The isdiction resolution. specific comprise by contract terms with the is Commission frustrated number objective bringing project to the complainant really indications grid. by Until such options action is undertaken to the utili- offering siting was parties, both this Commission will not unproductive capital ty, and that thus-far complaints argu- further consider expenditures have made been toward addressing specific ments contract terms. installing co-generating goal of a viable Voicing objections raising concerns importance some to the econo- equate negotiation. does not to active A area my of the Kamiah and consonant brought not Complaint should be objectives including uti- PURPA every Public utilities Commission until Our lization renewable resources. actively negotiate effort made to steps necessary frustration that the conclude a contract. negotiation, full as outlined constitute above, only by can be taken the com- rehearing granted, A followed plainant and not us. Order No. essentially Order No. 20693 which p. negotia- to both mandate resume parties good faith, cautioning tions in above, I truly word key found so ' approve “This Commission a con- will believe, A is “frustration.” frustrated giving project option tract owner the may expected to act out of commission be capacity size for anything up to 9.9. MW.” Only co-generation frustration. in these While the order not clarify did appear cases that frustration with does precision why the commission insisted parties and their attitudes surfaces. there capacity plant be fixed at the out- time, judges District face it much of the set, explain it does serve to the context in penalized parties for their failure using it understood itself to negotiate obviously when settlements “option” entirely word inconsistent with But, is in settlement order. is frustration meaning my perception which to has parties, apparently both them in the of been ascribed to it at this level. case, this a sufficient reason to close the sufficient, Perhaps ques- file? it All that is is but understand that federal law capacity, beyond validity, especially the and tion and in my restricts it is its this case understanding why very the in purpose commission its where the of PURPA is frus- plant trated, final order insists that the size the Weippe—St. of the and Ma- Kamiah— specified, suppose, be and one so would ries be area continues to denied the eco- purchased prerequisite showing as a of nomic stimulation which would flow from good faith. getting project this on line. sum, helpful be to know if frustration, My simply is view and producers operation

the 85 small now in justified very likely long-stifled and frus- similarly required a have definite tration is not reason for sufficient dismiss- plant, commitment to a certain size and ing complaint. the A dismissal is without why. pas- The commission closes with this question victory a for Water Power. Has sage, explaining I do see as which not No, prevailed on the merits? it has positive requirement plant of a size: prevailed by thwarting the of Em- efforts pire join co-generators. 85 other Idaho

Dealing dispositively with the unusual A of an testimony dismissal action out of sheer frus- and exhibits in case ren- tration, court, by or whether district a necessarily, ders the tone of this Order— maybe regulatory body, more so with arbitrary, our reluctant conclusion— latter, repetitive reality delays, didactic. But the but does not solve. On that it is the under we work other been law occasions commission has power generation approached more forceful and and the has the electric —have right utility to be so. In that alone can these cases National serve a market Congress electricity, response for of Legislature and the Idaho frequently encouraging. has regulating left to the been commission. That necessarily outright giving includes di- Following which it observed the interven- parties rectives to the under its who come Congress. tion of jurisdiction. situation, Faced with this the U.S. Con-

gress II enacted Title of PURPA order competition genera- to foster electric II phase produc- longer tion. No is this Moreover, accept it is difficult to public tion to the exclusive domain of parties commission’s view that must monopoly utilities. Their natural has contract, present first it with an executed always will continue to be the been and good example problems and this is a Henceforth, electricity. distribution of system regarding. inherent so however, generation is to be a electric commission, by its No. in case Order enterprise regulation competitive P-300-12, promulgate numbered set out necessary intervening only to the extent applicable a set of rules to be to the devel- (Emphasis a free market. to simulate opment co-generation power and small added.) facilities, production engaged in a itself this, The commission also stated relative extensive, highly productive, rather en- paying co-generator or the utilities terprise. It first observed: equiva- are the producer small rates which qualify Facilities that under the Act are lent of avoided costs: exempt regulation to be from federal un- policy This Commissionendorses Utility Holding Company der the Public having utility pay its full avoided each regulation as a Act 1935 and from cogen- purchasing cost when “public utility” law as well. under state power producers. erators and small are re- regulatory State commissions equilib- price bring about the Such will by specify- quired implement the Act typical competitive of a rium solution utili- ing data to be submitted electric marginal where the cost of all market to set ties. Commissions are authorized product equal. producing firms a like utility purchases power from rates for Anything bring fail to less will about power producers cogenerators and small free, competitive market condition of utility back-up supple- sales of utility, buyer, as sole will leave power to these same facilities. mental position price to dictate as it sees fit. required are also The commissions rates for facilities publish standardized comple- The notion of avoided costs is proce- and to establish under 100KW “simultaneous mented the notion of a wheeling dures for- interconnection Simply put, purchase and sale.” arrangements. utility purchase must means that a question: itself the It also asked cogenerator or small output entire of a cogeneration of If the benefits utility’s own power producer at great— production are so power small and, time, costs at the same avoided utilities and to the to the individual both cogenerator or small supply must why has their devel- a nation as whole— producer its entire electric re- languished? opment non-discriminatory quirement under rate short, utility buy must few lines later: And answered it a schedules. margin at retail. at the and sell cogenerators or small potential When utility refuse that a cannot competitors It follows power producers potential — contract rates to to offer its standard the field of electric seeking entry into time; qualifying hap- company facilities equity people; that do not also ate and trav- pen taking power “customers” be Empire preparation el. has done in What company. from the power facility, small-sized feasibility locating study carried out a of The commission also commented on the Kamiah, plant procured engi- of at this size Qualified (QFs) treatment which Facilities neering regarding availability, studies fuel public receive from the utilities: employed power producer a small consul- “procedures obtaining quali- As to contract, negotiate tant to and insured statutes,” fying regulations state attorney fees ex- the usual and travel simply power production that “a small penses. pure Measured on a dollar-to-dol- facility cogeneration facility or scale, Empire lar exceeded Afton ex- meets the criteria is a [outlined above] $225,000 penditures pursuing its con- qualifying facility.” is sim- ply Em- to furnish FERC with certain infor- tract. The real distinctions between specified mation in section pire 292.297 of the and Afton would seem to be what? procedure required. rules. No further Empire planning stages in its initial Thus, question awaiting there is no not settled the choice of one exclusive facil- “an award” qualifying status as a location; and, ity site and as the commis- facility, especially most noted, supra, attempting oblige from sion since jurisdic- we have no Water Power’s concerns in site selection. tion over this area at all. Alternative- gives A of the record in review no Afton ly, power producer cogenera- a small requirements indication that these nor the option filing tor has with FERC an complete financing more packages, were application for certification that the facil- cogenerator receiving crucial to a a rate ity qualifying facility. is a If no order contract. days filing, appli- issues within 90 Empire and What share is a will- Afton granted. cation is to be deemed It thus ingness utility to contract with an electric appears “qualify- the criteria for company provide power from a small- ing facility” interpret- status are to be cogeneration facility. Empire sized While liberally. ed This Commission intends capacity carried out studies with smaller interpreted be so and we ex- facility, what desired to contract pect (Em- our utilities to do so as well. added.) megawatt phasis facility. for with WWP was a 9.9 Empire’s previous indecision should im- Such were the well-considered and well- It, Energy, material. like Afton decided August stated views commission in incur, obligations namely what it would But, year of 1980. this is the almost delivery specified power. of a amount of years, cogenera- seven and over 85 or more Empire’s state of readiness was not what power producers tion small cases later.

prevented being formed. progress” The lack of on the “substantial (B) part judged in terms should be Empire’s compared efforts should be negotiations of the contract as well as with Energy. those of Afton Af- The state of project majority notes that readiness. The preparations in “out-of-pocket ton’s ex- during negotiations objections to several $200,000. penses” approached This includ- proposal certain terms in the contract exist- studies; following: engineering fea- ed the numbers, objec- these ed. While true studies; rough per- sibility proposals; the importance. The tions are not so true application process building mit for a co- major points the of con- record shows that generation plant; the interim cost of devel- tention first WWP’s refusal to con- oping packages, including locating financial originally proposed; tract at a rate which identifying appropriate and and lenders second, 4(c) the con- identifying negotiating appropri- and with what was known as clause, subjected negotiations Empire a and tract clause which the the between commissions;3 Testimony Empire’s negoti- contract to actions future WWP. from third, question Empire hearing party’s the of whether ator at the illustrates be, be, required post to could should perspective of situation. performance con- security for of the Q Empire Lumber you Do believe that tract.4 every ef- Company exhausted reasonable matters, to obtain a from Water more fort contract These and in even limited two, the first terms caused a breakdown Power? 4(c), 4(c) Tyrer, Q what under this Section

3. The contract clause states: Washing- you happen if the (c) having jur- do believe would any regulatory If commission disap- to Water Power Commission were isdiction issues which does not ton a final order recovery by years prove allow for Water Power of all of the contract five into the term expenses purchases associated with its under the rates that were in this contract? Agreement rates for Well, this in Water Power’s sale they disapproved raised A if them and jointly power, Water and Seller shall of substantially, very we would be them I think appropriate actions be- take and reasonable they changed pleased. But if the rates below maintain the rates fore such commission to economically operate a rate which we could set forth in A. In the event such Exhibit for, hung dry. facility we out to maintaining not actions do result in rates By "hung dry,” you Q out mean— A, have forth in Seller shall set right Exhibit facility nothing We would have but a A Agreement, by written to terminate this obligations and no use for it. ninety Power within notification Water Tr., pp. actions, (90) days of such without further party, obligation performance by of either security provision Empire provided 4. The for damages. payment liquidated without of security buyer give to WWP. of a The scenario Agreement does not this as If Seller terminate security demanding a seller is a rather of section, provided in this Seller shall continue Empire unique questioned case. whether condi- the terms and to make deliveries under operate profit requirement. at a could with this Agreement this in accordance with tions of security pre- view of that of a WWP’s was for set final commission the rates forth in such payment. period the time of effect order. security runs as a loan in the same form time final order to the of of such commission actions, any joint and to cover the amounts. result of such Water loan payments Q in excess of of Power shall make does that to the How relate order. qualifying facility such final output of a under a p. 119. Tr. avoided cost? levelized 4(c) expressed by Empire’s view of cost, § prepay we A Under a levelized avoided negotiator: power power. prepay We that is deliv- for for continuing wrong Q What is com- ... agreement. part 35-year the latter a ered in of action, you refer to it? mission expect get of we the return So that —and agreement seeking power sales A We’re part of that that effective loan in the latter long period rely can of which we on for a that, request 35-year agreement. we So large justify sums of of time the investment security. form of some facility portion money of to build this you you put way: Q me When Can —let money And will have to be borrowed. Washing- comparing company like are there, belief, my it’s with that condition in Company, or some other ton Water Power inter- attempts have lenders and backed company publicly-traded company like with a contracts, language, type with that of ested you think of Company, can Lumber a con- have You have don’t a contract. types logical of any differences in terms commission, either one until the tract first required security they ought to be it, therefore, changes you don’t have them provide in transactions? any strength. a contract duration Oh, yes. financial as- We know the A don’t Lumber, strength pects of financial problem with that A Yes. I a serious Washing- deficits. The difficulties problem a lot we’ve related and that’s through well known are ton just con- isn’t a discussion to. It’s—it isn’t—it So published financial statements. their talking they’re future ac- because about tract equity significant Our those are differences. relief con- tions. Our is a termination people so that on a national market is traded tract, $12 million and what do do with equity. of our the market value can measure megawatts pow- generating Potlatch, fact, market value we used the you’re selling purchaser not to the er if security. equity as a of their measure certainly you can’t sell contracted to sell. We Tr., p. 155. Clear it to Water.

201 A I believe we did. Bryan position creating Lester said before additional liabili- they absolutely sign would not a ties. approved rates, contract at the and in progress The was not a matter of the year’s time, over a Washington Water proposal’s being but, completed terms in- gave ground 4(c) little on the stead, negotiations. testimony Further rate, long-term fixed language. contract Empire’s negotiator brings this to issue. Q Tyrer, Mr. I’m going you to show Q Tyrer, your opinion Mr. is it original, you and believe have a xerox prior September to the meeting copy original, 104; what is Marked empire had made substantial is that correct? progress completion toward A That is correct. project?

Q you is, Can tell me what that A They certainly exhibit had. please. Q you compare Would progress A myself Empire It’s a letter from Company to Steven Lumber made towards Anderson. project progress with the Plummer

made? A Empire had everything done Q of, Is it still the expressed attitude preparation Plummer for a con- letter, in the that there is no reason to tract. negotiate agree when we don’t on the Q appropriate Tyrer, Mr. do rates? believe that Wash- ington Water Empire Power and Lumber A I think there were two issues which I Company have a common interest in eco- and, one, have addressed the adamant development nomic in Northern Idaho? sign refusal to approved contract at the A I and, sure do. two, 4(c) rates language. Q Page 4th, On 4 of the March issues,

The rest of the Strong, Mr. opinion, Tyrer, resolved; Commission re- quickly could be ... quires that the CSPP must make every Washington If Water Power takes out negotiate effort to a contract. 4(c) language and if Is there other agree effort sign could contract at the rates have taken to approved obtain a Commission, contract which we could complied with prior Septem- PURPA have a contract before this afternoon is 23rd, ber Tr., 1985? finished. pp. 268-9 A I know of no other effort. I have roadblocks to the “substantial negotia- been involved in a number of progress” proposal and the eventual tions with the utilities from Wisconsin to Empire’s lie not in project develop- California, Washington, Wyoming, Mon- ment but in the contract negotia- terms and tana, Idaho, negotiations and these tions themselves. As stated numerous stopped by refusal, refusal, their stated record, times in the Empire did not feel a sign approved a contract at the rates. need expend money prepa- additional Tr., p. 263. ration time on project without a rate verify project’s viability. The finding of the PUC that it was This is especially true in the case of financ- ready, willing Lumber that or able project. case, In Afton’s the tenta- a contract up does not hold under financing tive packages up Afton set re- an examination of the record. WWP’s quired a near immediate contract in order original withdrawal of its rate or avoided preserve fragile their financing arrange- cost precipitating was instead the factor contract, ments—without the financing no negotiations. a breakdown of WWP sus- project. and no pended knew of these dif- applicable cogenera- its rates to all merely ficulties and wanted to secure its tor contracts in an effort as it described to mate, big this estimating we create a current estimate of the avoided are now change. cost, and one which was the estimate not year ago. for a and a half This unilateral puts me us be- Someone told that that questioned suspension by was the PUC. spot, knowing hard a rock and a tween file are have rates on that now we these question Q my bottom line of ... So the any more. Do we not our avoided costs you I it and the reason wanted ask requirement have to offer those still the is, you were cross-examined before they aren’t our avoided rates because knowing you price the know about what costs? surplus power, knowing the about region, knowing Q obligation what know Don't the of- have ques- pro- those there is a due regulatory lag I have a fer rates until about —and your change given this, I’ll cess those rates goes beyond get on but tion monopoly purchaser? as at you really it—do believe that Company’s own it can set the discretion here trying A I think we’re define until Commis- process aside and wait this certainly obligation our is and that what filing? Does that Tr., sion acts on new obligations. pp. our can be one of Congress satisfy you, act of or either the 162-3. FERC, by finally, the rulemaking WWP The PUC went on to hold that jurisdiction Idaho? rules improperly its rate. withdrew setting pro- I look it as A don’t negotiat- ‘given’ are the first in the Rates completely. look at it as cess aside process. They are the one factor ing with what we know is we’re faced can- beyond negotiation. Water Power condition, practical change of and as a anymore it withdraw them than can matter, waiting look also have to at will Bridge. Brooklyn It doesn’t sell really months effect the devel- three four right. As we indicated Coile if we know ex- opment of PURPA don't No. Company, Idaho Power Case v. during are actly what the rates U=1006-206, No. 17796: Order period. I view that three or four-month honor the utility that refuses to A probably happen, that the wouldn’t and on file at approved rates that are they’re and if PURPA sites are there as even the basis the Commission rates, they the new will economic under cogen- commencing negotiations with developed. producers acts erators or small never to offer con- We have refused ratemaking Orders. of final in defiance change pric- tract. What we did was utility though the has This is even true terms, it from a a term and believes old filed for new rates which we have fixed tariff to one known confisca- inadequate or even rates are said, pay we’ll whatever the Commission unilaterally change rates that tory. To currently, cost says is our avoided or that are charged for sales rates are currently is our avoided cost is whatever wage a collat- purchases is to paid for cost was a what our avoided rather than Orders on final Commission eral attack ago know at in which we year and-a-half prohibited Idaho in the manner avoided point represent our doesn’t Code 61-625. § are, someone any more. we as costs So said— to continue assert For Water Power 1985, on the that as of Q You know avoid- infer that it not bound case; ’86, you don’t that is the cusp of schedule, in its tariff published ed costs

know that for 1990. rehearing, in its brief it did will no course, Oh, no, avoided This Commission and of indefensible. A utility position longer like 1984 run countenance just is an estimate cost informing Empire that asserts But our best esti- an estimate. has to extent lost the an WWP. The PUC some would not contract on basis of frame- op- sight avoided cost as of the intent of the PURPA obsolete albeit filed cogen- posed pre-eminent to its self-determined but unfiled work. The feature of a doing little agreement actual avoided costs was eration the rate or avoided obligations discharging than its and No. P-300- more cost element. IPUC Case See rights exercising pursuant its to the Pub- of this the benefit 8/8/1980. Without Utility Regulatory development lic Policies Act element, continued Empire’s Tr., (PURPA). pp. 277-8. Em- the near futile. project of becomes do one with pire’s negotiations not leave found, however, Empire The PUC impression viable co- the there was not a perfected had not its entitlement to the planning. does generation facility What rates, during negotiations that it had the had as impression exist is that WWP the signed unyielding an insistence on a con- concern, form the of a primary clauses project tract before commitment to size contract. location____ point and At some the dis- must cussion become other than theo- II or philosophical. retical It must tran- generalities. scend It must Oregon Appeals just assume a The of Court proposed facility definite form. The very year or similar of circumstanc- had a set project it, must mature the before CSPP es and as read that Court’s before Tr., a pp. expressed entitled to contract. 278. opinion, could be said that and dec- therein those 1980 statements are The PUC held and certain terms elements embodied the Idaho Commis- larations prior of the contract must resolved to Procedures, of sion’s statement Rules and reached, any agreement being these includ- excerpted from which the above been have previously engi- ed the site mentioned and supra, applicability. of their because neering specifications as well as insurance operation, terms provisions, of terms of Pine Company Snow Mountain filed a delivery, security. Oregon compel complaint the PUC distributor, power an electric CP National state, The PUC went on to Corporation purchase power Snow support cannot its contention pur- Mountain. The PUC ordered CP Water Power knew the size of the power approved chase a contract. On by alleging occurring project facts con- Oregon review the PUC’s of order temporaneous subsequent or analyzed Appeals Court of the PURPA filing, alleged in Complaint its brief on Oregon regulations. Oregon rules The i.e., rehearing, that on 9/23/85 Legislature regulations closely par- enacted complaint clearly showing filed its a 9.9 alleling federal This statutes. included facility; MW and that on 10/10/85 Em- goal encouraging policy qualify- of QF duly showing filed pire a notice ing facilities. sup- project size 9.9 MW. facts finding output

port Key enforcing policies these facility providing is still unknown. The proposed utility’s requirement pur- as a sizing facility upon price is not based chase the avoided cost. The contro- capacity configuration any versy surrounding the Snow Mountain com- equipment. The plaint known cost and the was over avoided agrees with 9.9 obligation” Water Power issue of when an “enforceable figure put by Empire MW forward existed. merely regulatory chosen because provide If qualifying facility elects to Tr., p.

constraints. power pursuant “legally to a enforceable obligation,” may choose to regulatory due constraints or “Chosen” price not, on the Empire wishes to enter into contract based utility’s costs” obligate itself to deliver “avoided calculated delivery, time of or the “avoided costs” date on which the “avoided costs” are projected apply to over the life of the determined.

obligation, as calculated “at the time the obligation is incurred.” Snow Mountain permit utility delay To a to the date to Maudlin, Pine Company v. Util- Pacific be used purchase price to calculate the Commissioner, ity and CP National simply by refusing purchase energy to Corporation, 84 Or.App. 734 P.2d expose qualifying facilities to risks (1987). 1369 Congress that we Oregon believe and the negotiations When through fell over the Legislature prevent. intended to The rate, avoided cost Snow Mountain went to commentary FERC to 18 CFR the PUC. The PUC held that CP had an 292.304(d)(2) suggests utility that a § obligation purchase power to when Snow “merely by cannot refusing to enter into Mountain tendered a argued contract. CP contract,” deprive a qualifying facility a obligation that an only is incurred when a right power of its to commit to sell in the written contract is executed between the prices future at which are determined at parties, obligation that an is not incurred qualifying facility the time the makes its qualifying a facility’s presen- unilateral provide power: decision to contract, tation of a the terms of which 292.304(d)(2)] permits CFR a ‘[18 § agreed upon. have not been qualifying facility to enter into a con- Oregon

The Appeals Court disagreed legally tract or other enforceable obli- holding that obligation gov- gation “CP’s is provide energy capacity to or erned by common concepts law specified con- over a term. Use of the term law; statutes, tract it is created regula- “legally obligation” in- enforceable rules____18 tions and administrative CFR prevent utility tended to a from cir- 292303(a) provides ... that an cumventing electric utili- requirement ty purchase” “shall any energy capaci- proves capacity eligible credit for an ty “which is made available qualify- qualifying from a facility merely by refusing Thus, ing facility.” obligation pur- to to enter quali- into contract with the power imposed by utility; fying chase law on a facility.’ Fed.Reg. 45 12224 voluntarily (1980). is not Mountain, assumed.” Snow supra, Snow Mountain, supra, 734 P.2d at 1373. P.2d controversy

In the over which obligation choice the The then is concerned with qualified becoming makes qualifying facility. As with costs, price calculation with Empire, avoided the Idaho PUC WWP are in- commented on the choice court based at the stead concentrating signed on the lack of a obligation obligation, or, time “the is incurred.” PUC, in the words of the an “entitlement” to the avoided costs. Em- “obligation” pur- The referred to for this pire’s portrayed situation is that in the pose qualifying facility’s is the obli- commentary. FERC WWP is attempting gation provide energy. That conclu- to hold over the lack of a contract supported by sion is the fact that OAR part due in nego- to its own refusals in the 860-29-010 defines the “time the obli- tiations. What needs is what Snow gation is incurred” as the date on which lacked, purchase price Mountain a set binding obligation first exists to deliv- Oregon avoided cost The rate. Court of Thus, energy. regulations er Appeals through attempts saw CP’s contemplate administrative rules that a PURPA; thwart qualifying facility’s self-imposed obli- gation delivery energy triggers utili- qualifying facility We conclude that a ty’s obligation purchase energy. has the determine the date for qualifying facility on which the date ob- costs” are to be calculat- “avoided ligates energy by tendering agreement itself to deliver fixes ed an that ob- should not responsibility which it provide power. Moun- It is a ligates it to Snow readily. away too on turn obligated provide power itself tain 6,1983, and that became July is when CP obligated purchase power. Snow REHEARING ON Mountain, supra, 734 at 1371. P.2d matter rehearing in this petition A PUC, however, criti- although it

The Idaho reargued. The and the cause granted efforts, through did not see cized WWP’s and con- has reviewed the record Court Empire or When chose to ob- past them. by coun- arguments presented sidered the provide power, should ligate itself to there sel, adhere to majority continues to and a question Empire’s obli- not have been of opinion. original the rather, gation, question should the been, purchase price what is the have JOHNSON, BAKES, HUNTLEY and from power? go of the avoided cost —and JJ., concur. there. conclusion, it for this makes no sense Justice, BISTLINE, rehearing, uphold the dismissal Court to commission’s continuing in dissent. of There is which arose out frustration. for distinguish any reason I cannot valid lying still in the the woods and around Empire treatment the discrete unfavorable along mills in the area Riv- the Clearwater the Public of Lumber received the hands products er of an abundance forest waste to Afton compared Utilities Commission put pro- which can and should to work be Energy’s success. ducing electricity. The has let commission admirably through came The commission displeasure it be known its at the attitudes Energy’s There the commis- in Afton case. Empire, Power and no harm it, did not- correctly duty, saw its sion But, awarding a done. dismissal to Water withstanding it hear Idaho that would later purpose except Power serves no to reward attor- argument through its at oral Power Empire punish cannot be —which it had charge blatant ney make the a result worthy said to be of an excellent contracting Afton into with been coerced commission, one of the in the west. best power Afton’s Energy for the day this the The Court should vacate (James Jim Bruce E. by the threat dismissal, remand to the commission Power) Bruce, president Idaho then bring parties directions the back jail put in until a contract be would bargaining table moni- and thereafter This should be water under entered into. regard for the negotiations with a tor the myth than bridge, other the Jim Bruce PURPA, Congress enacting of the intent throughout building, and this still echoes impose regard for its own with a influencing when we de- may an factor attorney fees such as costs and sanctions ongo- appeal most recent liberate party’s and all either recalcitrance against affray. v. Power Energy Idaho Afton keeping perspective the excel- the time Energy in its almost failed bid Afton rules, of its own 1980 lent tenor electricity producer entitled to an become Oregon by the guidance of the decision Idaho product to Idaho Power when sell its in Snow Mountain. Court to this moved the battlefield Court. newly a word learned borrow To five-member one less vote out of a With order, may seem to the commission’s court, Energy put have been Afton side, the didactic but it is well-intend- be on Whether out of business. [because sway Doubting involved, i.e., will right ed. these views question federal into the get members of the Court who Congress the three to direct states Supreme for the Shepard opinion issued the United States Justice PURPA act] open granted certiorari Court, have commission is reminded Court would opinion. re-open. anyone’s power on has the its own also observation, although composition only of this included As a second three Court one upheld justice city members of this Court the commis- from north of the Boise limits. But, credit, sion, to his when Lumber’s Energy since the first round of Afton Power, petition rehearing to this Court for v. Idaho there has been no indica- filed, justice that sole from south of the dissenting tion from the two then members vote, necessary city Boise limits cast the intervening years of the Court that again, and the case was briefed and rear- changed expressed by the views Jus- gued. perfunctory Nor was it a exercise I, rehearing tice Bakes and on Afton part parties, Washington on the Wa- firmly adopted by Shepard. Justice That Power, Lumber, and the ter Public succinctly view was set forth the final Utilities Commission. We have been paragraph of Justice Bakes’ dissent: presented by help- them with three sets of Thus, portion I dissent from ful briefs. majority opinion uses federal law grant to the Idaho Public Utilities Com- nothing has come of it is but fur- What jurisdiction mission to order Idaho Power Empire disappointment ther for Lumber— Company than, to enter into the fixed term if guilty of no fault other which is approves today. contract which it fault, out-niggled by being be a better Afton Co., Energy, Inc. v. Power 107 Energy Idaho Washington than was Afton Power 781, 793, (1984). Idaho 693 P.2d opin- by Idaho Power. The Chief Justice’s rehearing weighty in this matter is ion on say It is fair to that had the views of do I my not much to satisfaction. Nor Shepard prevailed Justices and Bakes bring expect that it will much credit I, only Energy would Afton been Afton readily join those so it. who kept electricity production, out of so but co-genera- almost would one hundred other very might The least that have done been states, fifty of tors! Out Idaho would by adhering majority to the would be back step. (at 194, out of Think also of the loss of language been the 755 P.2d at from off electricity produced by co-genera- 1232) the Empire which inferred that had no of 1988. Idaho Power tors this summer furnishing Washington interest Water already given notice that it will be has electricity, only but desired to up powered genera- fire obliged to coal option. opinions an In the 1987 obtain hydro (at 195, in order to off-set the loss of tors in effect 755 P.2d 1233) wrote at passed electricity at a cost to be powered there were some members of this thought ratepayers. PURPA was utilizing on to the who were the commission’s Court good program. context, The Idaho to be a national option language, taken out of to agree- was in Empire Public Utilities Commission ascribe to Lumber the motives of ment, fought opposition fierce argu- and over naught speculator. At the oral a successful conclusion. rehearing counsel adverse to ment on the us, my in- Empire responding to assured something All has to do with of which quiry, that the connotation which was Turned plight of Lumber. option of taken from the commission’s use PUC, away by the it had no alternative but power plant. only as to size of the this Its chances of suc- to come to Court. comprise the ma- Nevertheless those who great too since cess could not be considered busy to correct jority apparently are too of argue its case to members it would two respect opinion in that the 1987 —even yet to their Court who have disavow opinion an though is unfair to leave stand And quoted above. views Afton in so infer- admittedly is erroneous slimmer chance of success would become Empire. ring improper motivation one of the two by luck of the draw to when members of the Court who fall the honor Nor do those I dissenters would Afton deign say-nothing opinion join To the 1988 drafting opinion for the Court. party in appearance of a new which, might that the mention the fractionally, be added position formerly just action. Em- at Water Power’s filed rates. This What of federal and state pire’s against Washington case is untenable view Pow- regulated pur- rehearing requiring law utilities to er at the the benefit of now energy qualified chase facilities from all City supporting of Kamiah’s Em- brief existing, avoid- capacity at lawful and pire’s a commitment from effort obtain ed such California costs. Other states Washington Water Power. Oregon require purchase utilities been, Although there should not have qualified facili- capacity energy there seemed some doubt in the minds of at ties. mills in such states will be Lumber commissioners, again and then in the competitive advantage threaten- a distinct minds of some members of this Court as to industry if mills lumber Idaho Idaho’s put where its small develop markets elec- reliable cannot problem producing plant. That did not ac- tricity generated from wood wastes exist, tually longer and doubt should no qualified facilities. linger about in the of the brief filed face City’s only brief will address city of Kamiah. That is neutral in brief regulated util- question limited electric tenor, law, grounds, and well reflects the ity’s legal obligation offer to reasoning which should influence this qualified capacity energy from a facili- in turning punitive over Court action ty. issue will determine Resolution upon Empire dismissal inflicted Wash- and its benefits future PURPA ington request. Water Power’s That brief including Idaho the economic via- Northern goes ignored by wholly those members of bility City Kamiah. of majority. the Court It who constitute is, might as well have been written. It however, of worthy consideration and com- ISSUE STATEMENT Doubting my ment. ability improve presented The in this are: issues case

upon by a paraphrasing content reduc- 1. and the Idaho Whether Water Power tion, adopt incorporate part and it as Public Utilities Commissioncan eliminate also, mind, opinion. It my well ig- in Idaho benefits PURPA presents denigration of the federal in- legal regulated noring obligation terest which has been effectuated from a utility purchase to offer commission and this The Court. reader facility. qualified readily will see that its weighty none of filing Empire’s 2. to FERC of Whether authority-fortified have been un- comments 10, effectively 1985 established October derstood or undertaken in either the 1987 Empire’s quali- and location of size opinions 1988 for the Court: a con- fied and entitled Water Power’s filed avoided tract at

STATEMENT OF THE CASE costs. City Kamiah, (City) appearing The preempts 3. law Whether federal Curiae, generally Amicus with Em- concurs regulating qualified from facilities state pire’s City Statement of the Case. determining regulated facili- when a would note that both Water Power’s and ty purchase power from a must offer Commission’s Statements Case qualified facility. Empire’s filing completely ignore of a no- qualified facility tice of a at the Federal AND POINTS AUTHORITIES (FERC) Energy Regulatory Commission 10, Congress October 1985. Water Power and the A. PURPA to ad- enacted eventually argue finding that Em- traditional utilities dress its indeed, increasing pire’s filing, even the fact and de- experiencing costs qualified facility, efficiency by relying on fuel creasing was a was insufficient to fossil Energy Regula- energy entitle to a contract from Water Power sources. Federal 208 Congress (FERC) foreign oil. found that Mississippi, fuels and v.

tory Commission 2126, 2130, 742, 745, electricity largest 102 72 use generating S.Ct. was the 456 U.S. (1982), Energy, Inc. v. fuels, L.Ed.2d 532 consuming more than a of these Afton 781, Company, 107 Idaho Idaho Power energy quarter of all resources. 1978 U.S. 427, (1984). 783, 693 P.2d 430 Cong. & Admin.News 7659. Con- Code gress additionally found that the electric Congress problems imped- B. found two increasing experiencing costs utilities were independent power development this re- decreasing efficiencies due to 1) normally production: utilities would not Cong. independent gas. power from liance on oil and 1978 U.S.Code purchase electric 2) 7659, power producers; Reg- state and federal Energy Federal & Admin.News regulation imposed financial burdens (FERC) Mississip- v. ulatory Commission discouraged development. FERC v. Mis- 2130, 742, 745, 2126, pi, 102 S.Ct. 456 U.S. 742, 750-51, 102 S.Ct. sissippi, 456 U.S. (1982), Energy, Inc. 72 L.Ed.2d 532 Afton (1982). 2126, 2132-33, 72 L.Ed.2d 532 781, Company, 107 Idaho Af- v. Idaho Power Compa- Energy, Inc. v. Idaho Power ton 783, 427, (1984). 430 Because this 693 P.2d 781, 784, 693 P.2d 430 ny, 107 Idaho adversely affected consumers situation (1984). economy, Congress considered the national alternatives to the traditional prescribe Congress directed FERC to

C. numerous production facilities and chose to to offer electrical require rules that electric utilities power pro- energy qualifying promote cogeneration and small electric (CSPP). facilities exempt qualifying Mississippi, v. facilities and duction FERC governing elec- from state and federal laws 102 S.Ct. at U.S. 824a-3(a) (e). tric utilities. U.S.C. § power producers Cogenerators and small pow- importantly, it small D. Most [the hydroelectric facilities mainly of consist self producer’s notice of er certification] as an using or waste and facilities biomass FPL utilities—in this case required electric instance, nearly every energy source. energy qualifying purchase from

—to economy, either effects a double the CSPP facility power production at favorable small twice, once to using produced the heat 3(b). 824a-3(a)(2), Flor- rates. 16 U.S.C. § generate elec- facility and twice to heat a Energy Federal Light Power Co. v. ida & useless or by using an otherwise tricity; or 219, Commission, 711 F.2d Regulatory electricity and produce costly waste to (D.C.Cir.1983). 221 efficient and facility make the more Congress that the federal espe- E. intended cheaper. The latter products other facilities attained agency determine which and Kami- in Northern Idaho cially the case facility status under PURPA. qualified ah. Cong. & Admin.News 1978 U.S.Code 2,000 City approximately Kamiah is a preempted are F. State Commissions nearly the entire people. The livelihood utilities to offer requiring from electric City economy of the and the population qualify power from facilities purchase timber and depends directly on the region Edi- only under state law. Consolidated years, In recent products industry. timber Commis- Company v. Public Service son economy, industry and Kamiah’s the timber 153, 424, sion, 472 63 N.Y.2d 483 N.Y.S.2d competition from Ca- suffered due (1984) 470 appeal dismissed N.E.2d 981 A high fuel costs. lumber mills nadian 132 85 L.Ed.2d 105 S.Ct. U.S. mills, Idaho lumber of Northern number (1985). sought to build a Empire, as when such that burn facility, added facilities qualified ARGUMENT electricity. chips produce wood waste A BENE- HAS DOUBLE A. PURPA high offsets the income stream This added FIT IDAHO FOR timber American fuel and makes costs of clearly a bene- competitive, products more pointed out shortage of 1978 energy surrounding communities. fossil fit to dependence on keenly American Decem- Power on or about NOT dered Water B. THE DOES SUP- RECORD 19, 1985. ber DECI- THE COMMISSION’S PORT AR- OR WATER POWER’S SION THAT IT DID NOT GUMENT ON DEPENDS C. PURPA’S SUCCESS SIZE LOCATION

KNOW THE OR FULFILLING THE UTILITIES EMPIRE’S FACILITY OF LEGAL OBLIGATION TO THEIR POWER OFFER TO PURCHASE Power the Commission and Water Both QUALIFIED FROM FACILITIES to con- argue Empire was not entitled size Although Congress decided on CSPP tract with Water because most desirable alternative to facility power un- as the Empire’s and location produc- utilities’ electric traditional electric not argument This does survive known. impedi- tion, Congress encountered two Empire reading has close of the record development power: of CSPP ments to the petition in its and briefs. shown re- “(1) electricity utilities traditional clearly Empire The record discloses power from and to sell luctant developed for its mill at planned facilities, to, the nontraditional power Kamiah, type that oth- same ener- (2) regulation of alternative these Empire er mills had installed. did govern- by state and federal gy sources simply option produce seek an electric- imposed upon non- ments financial burdens long ity engaged in a instead discouraged and thus traditional facilities protect Empire's process term econom- Mississippi, v. development.” their FERC viability. ic The record further shows 750-51, 2132-33, 102 S.Ct. at 456 U.S. at negotiate with continued to Congressional Record. citing to the Water Power until Water Power two concerns direct- PURPA attacks these unlawful- ly legally rates as withdrew its mandated 210 of directs the ly. Section PURPA a) regulations that: pay. Only promulgate after FERC to price pur- to offer to require electric utilities (see action Commission’s Power’s unlawful (16 qualifying facilities chase Brief, 39) p. complaint file its did 824a-3(a); b) exempt qualify- U.S.C. § negotiations. Negotiations and abandon from state and federal laws facilities solely Power refused ended because Water U.S.C. governing electric utilities. existing to offer the costs even avoided 824a-3(e). § undisputed it’s though avoided legally January until provisions key operative costs were available These are the 14, permit the de- provisions 1986. of PURPA which independent generation velopment of the employer people As the of over 200 in the industry previously was stifled Kamiah, designs Empire area of had clear legal regulation utilities. Without the and produce electricity to mill. at its Kamiah from obligation purchase power to to offer 1985, 10, At least of October exemption the from qualified facilities and Power and the Commission were aware regulations, fails. state and federal PURPA Empire’s qualified the and size location Regula- Congress Energy the Federal sup- facility. simply The record does not regulated utili- tory Commission knew that port argument by Water Power purchase quali- voluntarily a ties would not given contrary, to the the and, energy capacity ac- facility’s fied facility showing qualified FERC record explicit- cordingly, PURPA to provided for at filing filing complaint of a the Com- regulated pur- to ly require facilities undisputed The mission. record further 824a-3(a)) (16 and for the chase U.S.C. § ignore Em- continued to that Water Power require regulations under PURPA 292.207(c)) (18 even to the pire’s demands for a contract to purchase utilities C.F.R. § contract, qualified facility. Empire’s ten- point ignoring from certifying, D. PURPA AND FEDERAL 207 on the Court states that REGULA- option REQUIRE qualified facilities have the to self- TIONS WATER POWER certified, certify, they once can demand TO PURCHASE ELECTRICITY utility. regulated from the FROM EMPIRE AT AVOIDED (the pro- importantly, power small “Most COSTS self-certification) required ducers’ notice of above, requires As noted electric PURPA case, pur- electric utilities—in this FPL —to purchase electricity quali- from utilities small energy qualifying chase from the 824a-3(a). fied facilities. 16 U.S.C. Util- § power production facility at favorable purchase energy ities must their electrical 824a-3(a)(2), 3(6).” rates. 16 U.S.C. §§ at incremental or avoided costs. 16 their 221. Light Florida Power and at 824a-3(b) and 18 C.F.R. 292.203. U.S.C. § § Assuming, arguendo, that Water Power facility, option, qualifying at Empire was not had reason to believe that require utility purchase may 16, September qualified facility before energy purchase as it becomes available 1985, argument Empire it has no “legally energy pursuant to a enforce- facility qualified not a after October obligation,” specified over a term. 18 able FERC, Empire the date filed with 292.304(d). facility If the chooses C.F.R. § had self-certified. notification latter, “legally obli- enforceable point, question, from at least that Without purchases are gation” the rates for such legally obligated to offer Water Power was calculated on either the avoided costs based power electric delivery time of or avoided costs at the cost rates then in effect. the avoided obligation is in- calculated at the time the statute, federal There is no in federal basis 292.304(d)(2). curred. 18 C.F.R. § argue law to regulations, or federal case fa- regulations FERC’s also define which contrary. qualify

cilities for this beneficial treatment. regulations, independent gen- Under FERC INTENDED PURPA E. CONGRESS if meet the erating qualify facilities REGULA- TO DISPLACE STATE size, ownership use and cri- maximum fuel QUALIFIED FACILITIES OF TION regulations. teria of 18 C.F.R. FERC’s and the Commission’s Water Power’s 292.203. § are free contention that State Commissions facility regulations, these Under qualified facilities must fail regulate self-certify or file for may, option, at its law. As noted light of federal and state 18 C.F.R. certification with FERC. above, impediments to the major one of the preamble regula- these 292.207. The § perva- development CSPP qualifies, quite clear that a tions is regulation that eco- and federal sive state does, it meets the criteria set out if it when discouraged cogenerators nomically Qualifi- Filing a Notice Section producers. Water Power power small signals previous the with FERC cation now have the Court the Commission facility. 45 FR 17962 qualification of the Congress in- that this is not what believe 1980). (March 20, facility quali- Once the adopted and direct- PURPA tended when choice, fies, to offer utility has no regulations that promulgate ed FERC to facility. power of the purchase all of from state and qualifying facilities exempt 292.303. 18 C.F.R. § 16 electric utilities. governing laws federal 824a-3(e). The Commissionwould Federal Circuit Court The decision of the U.S.C. § although a believe District of Columbia the Court Appeals for the of PURPA, this qualify under facility may Federal Light Co. v. Power Florida benefits,” for Commission, project only “qualifies F.2d a 711 Energy Regulatory do not include somehow point. benefits (D.C.Cir.1983), precisely on which is 219 purchase utility offer to having regulated a regulations at Section Interpreting FERC’s

211 Court, considering whether a state, ar- This electricity. The the Commission long-term, a facility is entitled to qualified are gues, finally which facilities determines contract, quoted legislative fixed-rate facilities, qualified Congress or FERC. history: This assertion must also fail. make clear that The Conferees wish Congress this situation ex- addressed encouraged under cogeneration to be

pressly, adopting requirement of The establishment this Section ... from exempt qualifying FERC facilities utility them would type regulation over regulations. and federal In discuss- state firms significant disincentive to act provision, Congress explains that ing this pow- cogeneration and small interested qualified is the ex- determination of status Cong. Sec- production. 1978 er U.S.Code press province agency: federal tion 7831-32. Admin.News is to purpose of this determination 787, P.2d Energy, 107 Idaho at 693 Afton provide a means to insure such Court then states that the FERC 427. This facility through Commis- is identified similarly implementing regulations PURPA (FERC) purposes of for sion action contemplate utility-type regulation do not any showing in fact included in Finally, paid rates to CSPPs. this over 210(e) exemption under of the Federal § fact, recognizes that one Court “[i]n Act____ intend, in The conferees Congress’ objectives enacting main respecting providing requirements cogeneration encourage PURPA was to by qualifying facilities to be established power production exempting and small rule, that the Com- the Commission pervasive regula- from state rate CSPPs requirements provide mission under 788, at 693 P.2d 427. Energy tion.” Afton person may in advance ascertain Power and Commission would Water operation facili- of construction or ignore Congressional now intent ty whether or not such will meet and, impose regulation upon, there- state the criteria contained those definitions. fore, discourage development cogenera- Cong. Admin.News 1978 U.S.Code & power production. tion small Added) (Emphasis Congress F. NEITHER POWER NOR It is clear that intended to WATER EM- exercising THE COMMISSION DENIES preempt regula- state from QUALIFIED A PIRE’S STATUS AS tory jurisdiction qualifying over facilities. FACILITY In Company Consolidated Edison v. Pub- York, lic Commission New 63 Service thorough dis- A review record 153, N.Y.2d N.Y.S.2d 472 N.E.2d Power nor closes that neither Water (1984) dismissed, appeal 470 U.S. 1075 challenged Empire’s has ever Commission (1985), Appeals the New York Court of fact, in qualified facility. status as a recognized Congress preempted briefs, their Water Power and Commis- regulating qualified states from facilities. is, and at all sion both admit that II “The issue is Part second whether was, facility. qualified relevant times (FPA) (see 16 Federal Power Act U.S.C. Yet, fulfill its le- Power refused to com- seq.) preempts et PSC from § purchase power gal obligations to offer to pelling utilities to offer to Empire at its avoided cost and the from qualify only facilities that under the condoned this action. There is Law. This Court holds that Public Service argument equity or in that would no law Edison, 483 N.Y.S. does.” Consolidated obligations to shirk its allow Water Power 159, 472 N.E.2d. at State com- 2d at purchase power under PURPA to offer to simply not free to consider facility missions are avoided cost qualified from a at the imposed determining standards in state rates on file with the Commission. Empire for City facilities are entitled to the benefits of Kamiah has a vital need which urges this viability and Lumber’s continued of PURPA. require Regulations purchase Court to Water Power to and under PURPA entitle Empire’s capacity energy purchase at in rates to an offer to effect as of the date of Washington Water Power’s Water Power at the then purchase September refusal to in of 1985. existing avoided cost. phrase

THE COURT: Let me add one if, fact, you to that. Even as a matter of CONCLUSION picked and haven’t haven’t the site question There is no that Water Power Because, picked let’s assume the size. legal obligation September shirked its that, found that. because the Commission purchase power from Em- 1985 to offer to Now, your question let me add that to pire’s qualified facility at Water Power’s say legal is that the issue by the avoided cost rates established Com- case. compelling mission. Rather than certainly MR. That is a ORNDORFF: legal responsibility, Power to fulfill its I legal question. don’t believe the record encouraged Commission has condoned findings supports the Commission’s erroneous Water Power’s actions based on that— authority regulate as conclusions to its agree you I that dis- THE COURT: “Qualified Facilities” created federal agree separate ques- That’s a on that. law. If cities such as Kamiah are Idaho’s assuming got to decide. But tion we’ve today’s competitive to survive in lumber did, legal that the record is that industry, regulated utilities such as Water decide, whether question got we’ve compelled pur- to offer to Power must be QF October, filing, filing in power just neigh- chase as other utilities site and the size is ade- setting out the boring required states are in, quate grandfather your rights in competition from mills found, though, even as the Commission Lumber. you argue, you I wrongfully know Moreover, candid admis- there were some picked you didn’t hadn’t had a site argument rehear- sions made at the oral on picked? have a size completely escaped the ma- which have I believe MR. ORNDORFF: admissions, jority. these or at Most of Bakes. true Mr. Justice least statements in the nature of admis- Orndorff, I un- as sions, THE COURT: part in answer to for the most were that the bench, found Empire’s derstand the Commission questions from the oral folks had only engineering study your presentation, opening argument: might fuel study whether done your argument I take it that is that megawatt or a for either a 3.75 available that, you assuming you once filed even megawatt plant. Are correct didn’t know what the site was and finding? was, nonetheless still had the size right of the time filed it. There some fixed MR. ORNDORFF: Now, ques- September a clear 16th prior it seems to me that’s studies done law, law, any federal that we can tion of refused to offer when Water right if that’s the issue. want to decide the rate. As far rate or contract at right issue that make sure we have the being deny- studies a basis as those focusing on. we’re right, I facility, a contract ing qualified not make that that PURPA does submit Bakes, Mr. Justice MR. ORNDORFF: being qualified one of the criteria for picked up on the you’ve I think that to a contract. have—I facility entitled rehearing that is in central issue that on using that disagree the Commission brief, QF filing of the is a that the as to reach a conclusion anyway looking QF, question and in federal entitled to a qualified facilities are naming QF naming site and does the contract. the Federal the size of the under relating a studies, quotes, in Well, no suppose were THE COURT: after feasibility stud- No megawatt plant? 9.9 10th, October Wa- your certification of ies? 11th back on October ter Power came said, megawatts “yes, buy we’ll 9.9 no fuel

and There were MR. ORNDORFF: The long you megawatt plant. do think How a 9.9 at Kamiah.” studies as to Laten, Donald design get plant Empire, and Mr. engineer then to you have engineer that assisted the same those rates? who was grandfather and still on line Tam- the consulting engineer, not aas The contract form MR. ORNDORFF: project, cer- Wood Power merack but the Empire presented Water facility size of the tainly looked at the very had a December of 1985 —had it. He testi- comfortable with and was drop trade as a dead known the what’s hearing. Tryer, Mr. who was the fied at up and date; facility had to be that the the familiar with a consultant was also Now, I think running by a fixed date. very familiar with the size of goes or ’89. This back that date was ’88 and had done projects the wood waste typical this years, but that’s a few other five or six work with extensive is a fixed date area that there and he was projects in the northwest up be run- facility has to come the size sight comfortable with all to have not unusual at ning. It’s there were isolated project. of the While as to construction provisions milestones only doesn’t, they are not studies plant so process building in the in the record. evidence utility accurately can determine that the Well, take one let me THE COURT: coming or not the resource is whether dealing in that line then. We’re more on. generates steam that a boiler that Orndorff, Mr. I’d like to THE COURT: turbin, doing? that what we’re fires a go Huntley’s ques- back to Mr. Justice generator? A turbin tion, really you’ve which I don’t think Yes, Mr. Justice. MR. ORNDORFF: ques- directly. thought his addressed Now, Okay. what THE COURT: basis, of the tion was that the or a basis sizing of the finding that the about only findings that the Commission’s Or- the Commission facility, this is from feasibility studies in the evidence were referring to der, facility, sizing megawatt relating those to the 3.175 or 9.9, upon capacity is not based Was, fact, megawatt plant. equipment. configuration any known only evidence and the evidence before Now, they entitle—is the Commission are the Commission? say that since as October entitled to Justice, MR. ORNDORFF: Chief design to show us 10th aren’t able There only it was not the evidence. produces equipment known testimony Clough, from Mr. who was your appli- megawatts, that therefore 9.9 President of that those studies serious, merely specula- it’s cation is opinion, indeed made but that his were grandfather don’t tive and therefore we opinion people he you. to, Pot- including a letter from talked Hunt- Mr. Justice MR. ORNDORFF: latch, ample that there was more than difficulty ley, I a real Idaho, an in fact there is fuel in northern engineering getting into the testimony his of fuel was overabundance wheth- trying to determine business and plant. in northern Idaho to fuel qualified qualified facility because er a made, true, that is studies design of its produce specific it can only as to the avail- yet are not the evidence facility, when it doesn’t generating ability of fuel. have a contract. get beyond if the Commis-

THE Let me it down I think look COURT: happened look at what’s There sion’s guess get as I I can it. Order narrow 214 industry, megawatt 9.9 there’s, wood hydro course, there’s and then plants

waste are a common fact of life in geothermal. wind and Those are the states, our California, sister Oregon, broad classifications. Within each of throughout northwest, say those, and to you there are criteria that have to suggest that —to that this is some kind fulfill for a plant, pow- wood waste small piece of novel equipment production, that regulations is of er provide questionable ability perform, certainly provides and the law that it cannot be in doesn’t focus on the existing projects megawatts, excess of 80 you have to Idaho, location, Oregon identify California and pretty size. It’s where much 207(a). these projects set forth in many are common in thought. schools of They’re necessary THE Okay. COURT: you. Thank addition to a sawmill in order to survive MR. you ORNDORFF: Thank Mr. present in the economy. So to focus on Chief Justice. that engineering pre-condition ig- as a instance, For Washington Water Pow- certainly nores the federal mandate presentation: er’s 207(c) ignores PURPA just what re- THE COURT: nothing So has to do ally is out there in the universe of what’s then with worrying Water Power practical to plant. equip- build a That there would plant never be a on line. known, ment is it exists and the fact that figure that doesn’t into it at all? It’s you spent— haven’t just question you didn’t want to be THE Okay. COURT: I understand subjected grandfather to the rates? argument and I had ques- one more correct, MR. STRONG: That’s Your tion, forgot I’ve I’ll now. remember it Honor. you get Oh, when up back here. I know THE challenge COURT: No Em- what as to keep it was. We brandishing this pire’s ability go out and find a “qualified” word 9.9 or around. What does it megawatt generator? really qualified, mean to be other than is less megawatt than a certain capaci- Well, MR. STRONG: Water Power ty? simply knowledge was without of this proceeding as to whether there would be

MR. ORNDORFF: Utility The Public megawatts, 9.9 and therefore was under- Regulatory Policies Act designed by standably reluctant to enter into a trans- Congress independent generat- create guaranteeing grandfathered action rates sources of from waste— appeared they when it an wanted THE COURT: See if can be more option facility up for some size of to 9.9 specific. something quali- What makes megawatts at the then old obsolete rates. fied? presentation: On the commission’s MR. Okay. ORNDORFF: In the creating course of system, Congress this I appreciate MR. WOODBURY: this projects tried to limit which opportunity represent waste the Idaho Public going to be entitled present to the benefits of Utilities Commission and to their PURPA, one being reasoning of those benefits justification for the dis- right utility pur- that a had to complaint brought offer to missal of the by Em- that, Congress chase. To do pire Company against Washing- set out the Lumber mandate adopt regulations to FERC to ton Water Power.

defining qualified regu- facilities. Those you’re right THE COURT: While adopted lations were in 1980and are there, you go ahead answer through set forth in 18 CFR question propounded forms,

There actually Strong. policy are two there What state qualified are three forms you you facilities Idaho did advance — waste, Commission, generally. dismissing There is a bio-mass advance designed retaining jurisdiction, appoint- reasonably other action to im- instead of plement regulation the sales and somebody to sit in on ing a mediator or purchases qualifying between and out an hearings hammer these facilities electric purchasing and our utilities. outfits, to one agreement between these produce electricity in to of which wants consequence of no small Also Idaho, today the as we learned 602(c)(2) that a qualifying which indicates helped out filing amicus brief also state law from exempted facility is economy little of a substantial with the field. particular in this regulation city in Idaho. north guidelines and rules of are the What by the Com- implementation established Mr. Justice Bist- MR. WOODBURY: requires that The Commission mission? line, I that the would Commission believe review, ap- filed it for contracts be community of Kami- sympathize with the Al- effective rates. proval and lock-in of development like see the ah com- requires that a However, ternatively, it in northern Idaho. project qual- the with it wherein position plaint be has the taken the Commission filed which establish negotiate ifying facility that it is not facts function entitled We can otherwise terms. that it is or arbitrate contract would show can, parties, if the impose we our will ato contract. Power, want to tell them we

on Water analysis focuses in its The Commission negotiate good But we’re not faith. maturity project, of a the status on the for the going negotiate that contract negotiations applies a “but- the parties. feel there is freedom of We that looking maturity the for” test. way that PURPA and contract and the project it the determination of makes up, for us to FERC rules have been set progress has or not substantial whether parties negotiate themselves— occurred. Justice Bakes mentioned Afton decision and the Commission’slan- me. Didn’t—excuse THE COURT: that, guage in is also go out of the there similar Didn’t some document year language 1980 which that a de- about the the Commission’s Commission fact, true project place velopment mentioned whether or takes in a being complaints not, made or along continuum which certain mile- Washington was not Water Power passed. The stones must be Commission good people that working in faith with negotiation req- indicates that active is a co-generators. become small wanted to qualifying They for a contract. uisite to complaint process to have I’m not familiar don’t want MR. WOODBURY: negotiation. I think that document. used an alternative to with that an expressed has attitude They ready, Commission must parties feel that may be perhaps the utilities Em- willing and able contract. it’s— qualifying facil- pre-disposed to stonewall door, pire, must when came into co-generators. ities and position ready in a that it was have been willing complete itself to a bind

contract.

The from 18 CFR has 401. That authorizes grant of power ^[******] empowers the Commission to issue regulations, disputes imple- as the resolve on a Commission feels case basis engage case and to Energy Federal menting arm Regulatory developer acquiring and defer Commission in administer- level, ing PURPA on a state it has the sources. other power to assess continuing qualifi- Well, you suggest- THE COURT: are cation, qualifying facility. status aof you, you get then that a can particular case, In this the Commission before contract, you your facility have to have FERC, filing found that short of with substantially thought built? I in the Empire had nothing develop, done ac- to build, real world here that in order to quire develop proceed a—to or acquire or you get needed a contract to order megawatt a 9.9 facility. your financing.

The findings of the Commission in this Well, under- my STRONG: case were MR. that Empire perfect failed to Woodbury can standing, maybe its entitlement to a a lock-in under- My to respond this better. of those rates. time That at no was it has been standing is that this standard ready, willing contract, and able to a to all of the contracts which applied it had satisfy that failed to the Commis- Idaho. in the of approved State been sion’s failed, standards and that it neces- suggesting you not that But I’m all, binding most to make a offer. project physically to have a sarily have THE you agree COURT: Granted know, have, may You as we all built. thing the Commission that this wasn’t stages there are various project, of a enough to, along far to entitle them what starting blueprint up actual to word, going pick I’m to out the bona fide physical construction facility. status, applicant. you serious doWhat may And it be that along somewhere im- think standard is that must be progress, that there legally is the en- as posed on the Commission to when obligation upon commitment forceable they QF. judgment? can make that How I suggest would clearly that it far along way is something must be? back at beginning where was, where facility there was no qualifying STRONG: When MR. development whatsoever, where the enter into facility developer willing 9,900 record indicates that kilowatts was upon legally obligation a enforceable partly upon chosen based the constraints to defer utility rely can which tariff; which megawatt is a 10 power acquisitions and when other tariff, partly upon regulatory constraints willing to enter QF ready, and able in the of Washington, State and that obligation. that sort of enforceable into partly represented ceiling and be- Now, obviously ap- standard would testimony lieve there was to the effect In the in different circumstances. ply that it wasn’t until there was an assur- which Em- Light guaranteed Power and case ance of the Florida rate that cited, project going was pire case involved make the determination existence, or at already going what size of the was Clearly, if be. had come largely constructed. It be least 3,750 facility, offered kilowatt to look that would utility for a able reasonable along have been somewhere contin- existing an a self-certification and suggesting uum. I’m not that would fall largely one construct- project or that was one side line or the But other. decision, can yes, we and make the ed clearly, it’s even that sort of commitment reasonably rely upon that commitment them a give reliable, wouldn’t something so different would have been 9,900 kilowatts which contract. than claiming they’re right to sell. Well, way one MR. STRONG: that’s summarizing the issue Mr. Justice Bist- we leave Before THE COURT: line, point thought but I’d like out— up with a me come question, let to hear from something I’d like your thought THE COURT: believe, Commission, I said on. summary it. spent in the Empire had something about $200,000 quarter of a area between reliability It’s would be MR. STRONG: get into this trying in to million dollars be taken the which would factors one fig- you disagree with that Do project. in deter- by the Commission into account ure? willingness mining there a whether legally obli- into a enforceable to enter cor- I that’s the MR. STRONG: believe correct. gation. That's figures. range rect careful- Empire had listened Counsel substantial, THE I COURT: Which argument closing the oral ly, and people mean a lot of in Idaho think would of what had review an excellent presented substantial; that that’s position Your said: been utility, that working the con- under the straints of PURPA probably which is not you Mr. Thank MR. ORNDORFF: you to doing what want do but the, one of I think One Chief Justice. it, you’d like to nevertheless be able to impor- most the important probably — ahead, plan long range planning. You just case is to review part tant talk that. I right. like All think I fol- afternoon, heard this what we’ve quickly low. it just likely And isn’t that I’ve heard. least I think or at wanting to co-generator get small into negotiate with Water Power sought to producing electricity business of September of ’85. Had ’84 from until conjunction existing mill with an lumber 4(c) language in a difficulty with some plan in the also ahead and here wants opening as the brief rate contract fixed ahead, $250,000, spent planning they’ve from has a attached in this matter letter acquired generator, I they small Perry then President Swisher clear the dis- reasonably think its’ Commission, telling Water Power can- Huntley you had that course with Justice 4(c) not insist language. Order came not, larger plants you concede are out from the specifically in- they’re hard to coun- find around the structing Water Power not to insist on ty, buy go like even can out and a small 4(c) language. parties The met on Sep- cabin, my generator for I assume tember immediately following 16th that big are that these ones available—and order, Water Power refused to they plan But planning ahead. want existing contract at the rate. Those ex- involves, usually ahead as Justice isting rates remained in effect until Janu- out, pointed financing Huntley ary During 14th. that time took they like that will they to know would every solidify position act could to you’d like to have a contract. And qualified facility as a entitled reliable, they’re know that sought negotiate It rates. with Water Isn’t to be where the issue is. seems tendering It contract. filed a You think that aren’t QF stating it? facility, the size of the produce facility. It filed a com- If it didn’t produce.

location of that it will for the plaint, contract, which as Counsel Commis- contract than that under stated, pre-requisite it is a sion the remedies provide Water Power right. facts grandfathering your damages it damages, liquidated get really are that in order to a contract protect itself. Without needed to be, will, dependable pro- if and to order, simply refused and Water Power ducer, order re- it needed Commission no consequence, there was as a sign. quiring Water Power reached. filing complaint Janu- Between That contract THE COURT: 14th, ary did not have a the Commission that Water you’ve your brief attached fact, 20th, hearing and in until December weeks after Janu- Power sent three opinion until March 4th of didn’t issue its the size of the ary suspension, did it set disap- the rates had well after plant and plant and the location in its second peared. The Commission things? those order, might from 277 of the just read record, accordingly, states “Rates are I believe it did MR. ORNDORFF: given negotiating process. the first Bakes. Justice negotia- They beyond are the one factor Power THE How did Water COURT: tion. Water Power cannot withdraw They pick the that. didn’t arrive at anymore than it can sell the Brook- them plant source of the or the size. Was that Bridge.” very I lyn find it difficult to negotiations? the result of How did that negotiat- understand how can have a come about? ing negotiations to that are destined — MR. ORNDORFF: Mr. Justice Bakes lead to a contract that satisfies Water 20, the record shows at the December is Power’s needs to know that there a hearing, Water Power’s Exhibit 102 producer, when in fact Water reliable Empire’s was in fact contract that was rates, sells Brook- Power withdraws the presented Now, project. to Bridge they’ll and never be a Water Power. all of lyn the relevant why information that it subse- process failed and Where this minds, meeting quently presenting never a of the used in there was its contract simply chose to simply Water Power readily They QF available. had the room, refused to offer out of the walk notice, they certainly complaint. had the negotiations, and from the rates They knew the size and the location of on, September, ended. What point from facility. the doing every- left with was Empire was I think Washington Counsel for Water law and state thing it could under federal accurately stated going what was though perfect right. Even law to Washington on with Water Power. That effect, in the rates remained is, they simply did not want to offer the nothing absolutely did Commission existing QF. They rate on declined keep place. given and it that one take September they suspended 16th and 16th, September rates from unlawfully Quite ironically, after the weeks three stated, as the Commissionhas until Janu- suspended, rates were Power did Water 14th, ary denying Empire a contract. Empire send to a contract. I believe that contract is attached in the form of Water given summary by addition to the contract, Powers’ new is attached to Em- Orndorff what had been said at oral pire’s brief. submits that argument, emphasize I want to if close Afton, had received an order similar to similarity of what was said counsel for contract, it would have reached a empire just and for the commission in contract, size, would have had that import QF obtaining area of the satisfy and Power’s need to know Empire: certificate for COMMISSION

EMPIRE grant Bakes, The has Commission MR. ORNDORFF: Mr. Justice empow- up 401. That authorizes you’ve picked central 18 CRF think that on the regulations, brief, to issue rehearing ers the Commission on that is issue that disputes case basis and to QF question resolve on case filing is a federal that the reasonably engage de- QF, QF naming other action looking does the and regulation signed implement of sales naming under site and the size of the qualifying purchases facilities between Regulations and PURPA the Federal under purchasing electric utilities. purchase from to an offer to entitle existing Washington at the then Water Power consequence is Also of no small avoided cost. 602(c)(2) qualifying fa- indicates that a cility exempted phrase from state law THE Let me add one COURT: particular if, fact, regulation in field. as a matter of haven’t that. Even Because, picked the site and haven’t size. imple- guidelines and rules of What are the that, let’s assume because the Commission by the Commission? mentation established Now, your let me add that found that. requires that contracts legal question say of this is that the issue review, approval lock-in of filed it for case. Alternatively, requires effective rates. quali- complaint certainly legal be filed with it wherein That is a MR. ORNDORFF: fying facility supports establish facts which would question. the record I don’t believe findings entitled to a contract. show that it is otherwise the Commission’s that— agree you disagree THE COURT: did, assuming record that. But that the decide, got legal question that the we’ve October, QF filing, filing whether setting adequate to out the site and the size is in, though, grandfather your rights even as found, wrongfully you the Commission I know argue, picked hadn’t had site picked? didn’t have a size MR. ORNDORFF: believe that is true Mr.

Justice Bakes. complaint that a peruses It is known The interested reader fatal. who to parties into court —so get the opinion will note a men- serves to for Court QF certificate is evidence by speak Empire having certified tion of been —and hearing. Again I mention that QF, as a and that for a 9.9 at the FERC (at 193, opinion is one of the megawatt of the Court’s 755 P.2d author yet has to embrace 1231,1232), dissenters who but also that there is no discus- Afton he and Justice rule of legal as to the status of the sion whatever Afton —where correctly com- view, clearly unable to QF my certificate. the Bakes were holder of which purpose of PURPA —for explains very prehend well the City of Kamiah brief holding in a reason I find no substance having such a certificate. Cer- effect of the intent of counsel, “deems it clear that at oral which tainly the comments utility require an electric go long PURPA is not argument excerpted, last above pur- a contract to enter into company of that brief. way fortifying the content entity only desires from an which chase opinion for the Court On review amount of option to sell some obtain an (at 194, 1232), 755 P.2d at it becomes evi- generated at some power to be electrical appeal was turned dent the whole Id. capacity.” size or plant of unknown deeming too much. away by a Chief Justice mentioned, filing complaint of a in the As nothing I can find There is courtroom— into the QF brings parties requires that pertinent authority which That is the true basic filing mightiest. even the prior must obtained status be parties complaint. When function of a complaint, acquire it afterward have clashed in court weapons with their power co-generation plants. Com- evidence, it is applied. then the law mission Orders 15746 and 16025. my

Since by interest was my increased review of holding the deemed of the 1987 IV opinion, resort was had to the more suc- In order purchase to effect the pow- cessful complaint, which is: Afton er Power, from Afton to Idaho Jones has COMESNOW Afton Energy, Inc. hereaf- met with Idaho Power’s officers from ter referred to as “Afton” and for com- time to time over the last nine months. plaint against Co., Inc., Idaho Power Initially, Idaho Power informed Jones hereafter Power,” referred to as “Idaho that it power would not his alleges as follows: the reason that Afton was not located

within Idaho Power’s service area. Sub- sequently, opinion an by was secured FERC and the establishing corporation Afton is a formed for the that Idaho obligated Power was pur- purpose building, owning operat- power chase long as as it would be ing co-generation plant Afton, Wyo- delivered to system. their Jones was ming. The President of Afton is one next informed Idaho Power that he Jones, Darrell M.P. hereafter referred to produce would need to first documenta- co-generation “Jones.” plant The tion that he power could deliver the situated large beside a lumber mill in Idaho Power. Once this was secured Afton and will use wood waste from sur- (See attachments), Jones was informed rounding national forests for fuel. The that Idaho Power pur- would still not plant megawatts is 6.5 generate and will chase his an unless order to do so 52,000,000 electricity. kilowatt hours of was issued the Commission. Subse- mill lumber is located within five quently, Idaho Power informed Jones miles of the Idaho State border and of application that an for that Order would employees the 300 who work at the lum- however, made days, within a few ber mill or in connection logging with its application such despite never made operations, more than one-half live and persistent requires by Jones for the (in work loggers) the case of in Idaho. same and the continued by assurance Idaho Power that it would be made with- II days. in Idaho public Power is a utility head- quartered Boise, in subject Idaho and to V jurisdiction regulation of the Ida- date, On this Jones was informed Commission,

ho Utility Public hereafter corpora- Idaho Power the officers of the “Commission,” referred to as Id. Code 61, changed tion had their minds and that Sec. 612. applica-

Idaho Power will not submit an purchase tion to the Commission for the III of Afton’s for the reason that the power purchase high. rate was too Utility Regulatory Policy Public Act of hereafter referred to as “PURPA,” delegates to the states and VI

therefore, Commission, rights obligation provision alleges Afton that Idaho enforce the of Power has Accordingly, intentionally PURPA. deliberately protracted the Commission orders, has negotiation purchase established certain in es- for the of its sence, obligate Idaho power. Despite frequent Power to assurances

221 good project going couple years, of have been Idaho Power that Afton is a back we cogeneration. particu- in And it willing to interested and that Idaho Power stood in larly applies the Afton situation for power, has in acquire its Idaho Power well, couple reasons. reason of fact, continually employed delaying tac- that — primary proximity of our But the reason is designed discourage Jones and tics long chip pulp to the market. We’re fi- destroy complete his efforts ways away. plant. nancing of this that, hog fuel and And as a result WHEREFORE, petitions hereby Afton being chips and wood residues that are immediately order the Commission mill developed at the have no market value. attached Idaho Power enter into the Presently they’re large dumped into two Agreement to further- Power Sales burners, and that 200-foot—two 200-foot more, good in in an cooperate faith and lap out just wood is consumed. The flames expeditious manner to consummate high. top of it feet sometimes power to sale of its Idaho Power. hog fuel And that same could be used as day July, DATED this 16 cogeneration plant. fuel for a So rather ENERGY, AFTON INC. burners, burning it in if open than these By/s/ Darrell Jones you dropped it into a and used boiler Jones, Darrell M.P. quantity residue, you same would devel- President op year of about 50 million kilowatt-hours a electricity. cogeneration And so becomes pleading A notice accordance with at very attractive for that waste alternative Procedure, rules least the Idaho of Civil area. fuel hearing brought Idaho Power PUC It here ex- room. that Mr. Jones although Wyoming, Afton located is— plained what had been done to him his primary trading of the Idaho area is out a small power producer effort to be area, well In addi- Falls as Pocatello. co-generator:1 that, percent it’s of all the tion to the—70 developed that comes the mill is timber into My president name is Darrell I’m Jones. employees of Idaho. There’s 130 out Company of a called—a newly formed cor- Idaho, Afton, about half whom live poration Energy, called Afton Inc. The And half who in Afton. the other live corporation address of that 1712 Pacific in- employees who are there’s another Avenue, Everett, Washington. logging just And operations. volved in the give intend to do kind of a just What trees, those percent like the about 75 brought narrative as to what has us to and work in people live Idaho. point. explain like to I’d a little bit oh, About, say ago, I’d 18 months after background attempt- of Afton and what it’s study completing preliminary feasibility a ed to do and then its with involvement cogeneration plant, seri- on a we undertook Idaho Power and what tried to accom- we negotiations Valley with Power ous Lower plish then speak there and to what we’d there, to Light, utility which is our local & done, possible, really, if like to see which is power under buying ask them about our I our guess, complaint. embodies exactly they And sure PURPA. weren’t it, do do they they could or how could what in Wyoming Afton is located five about up that followed a discussion with the Idaho At Afton is a miles from border. meetings BPA Portland then several primarily mill that large produces lumber at Portland with BPA. studs. I have an interest in that lumber mill as some mills in explained as well other lumber BPA is And it was to me that time, Act, the Pacific Northwest. And for some affected Northwest testimony 1. His was in narrative form. Inter- been omitted. by way question ruptions of comment have prohibits effect their local utilities I through went the contract. There publishing avoided releasing costs or were a of number clauses in there that avoided any costs that makes economic Specifically, concerned me. very was sense in building terms of cogeneration a concerned majeure about the force clause. plant. Valley Lower Light Power & products It’s not unusual for compa- forest disappointed they because understood the five, nies every to have strikes four or six economic benefits to the community of hav- years; seems to me that the lan- cogeneration a plant there. guage in majeure the force clause was particularly people going hard on who were that, In they’re addition to at the tail end cogeneration plants to have and forest of a system. transmission having And products companies. cogeneration a plant size, on line of this help steady system. And so language. And we went over that I had they were in seeing develop- favor of many Kline, conversations Bart ment of cogeneration plant despite attorney Power, for Idaho visited little bit fact they didn’t have the avoided costs Barclay with Don on it. putting made sense in terms couple There awere of other clauses we together cogeneration plant. well, Pretty reviewing went over. after they But did indicate that if there was them, accepted the fact that Idaho Power way some that they pow- could deliver our going was not willing to—not to discuss er system, out of their transmission any alterations or modifications. That was they would willing to wheel it. And so contract, their standard form connection, in that began looking we to a kind took it as it is or didn’t take way that power. we could deliver our And it. we followed downstream from Val- Lower And so with that in mind and after anoth- ley Light Power & to BPA’s lines at Tinc- Meyers letter to Dave er October—dated up, away. which is about 20 miles And 22, whereupon I had October asked him to Tincup, picks up there at BPA the lines and clarify pricing arrangement, a later straight run as a shot from there over telephone good conversation he was Goshen, Goshen, Idaho. And at enough clarify that with me. power comes into a substation where Idaho Power has the interconnect. Both Idaho early When that was all done in Novem- Power and Light Utah Power & use that ber, prepared I indicated I was fact, facility. busing sys- it’s a unified standard form contract and that I wanted tem. And systems both come in at that meeting purpose signing point. point And I at that contract. called Barclay and informed him of that. talking Valley

So after with Lower Pow- said, well, get And he he would to me back Light er & and with some discussions with on it. BPA, though it looked reasonable we wheeling arrangement. could achieve a get He didn’t back to me on it. called a connection, And in that I contacted Idaho later, meeting couple days and a was set early

Power. This October last up at that time in his office with Bart year. in that Kline. He indicated conversation they that were somewhat concerned about Barclay, I I was directed to Don and cogeneration plant engi- how this would be spoke prospects to Don about the of our they neered and and how would work selling power And he to them. said going to make that it was wanted sure they possibility. that would entertain that good And in be reliable and source. so requested they And then I send to me connection, contract, that I had the contractor— they their and sent their con- fly representative tract to me. I 16th received that October Bumstad/Woolford — year. to Boise with me and— last Seattle case, that in fact that that wasn’t they’re a And Bumstad/Woolford. It’s had arised and that the this issue plants in California cogeneration very large builder obligated purchase utility there was in the they do a lot of work and California to their building long as it was delivered They’re power as industry. products forest that, picked up IAnd plant area. plant or the boiler service cogeneration Very Bryson, president who’s the now. at Emmett called John for Boise Cascade me very large com- He advised company and a in California. responsible the PUC issue had arised— thing, that that pany. the same and that that was had arisen California event, Bum- asked But in we—I position California. salesman, and out a to send stad/Woolford And we However, Thiele me. no idea—or felt they sent Fred with said he had he Idaho, I met in Barclay, Bart Kline and but he the case in met—Don be like that would office, the contract. and we reviewed And he speak Don’s to that. couldn’t said he Burger, who is I a Glenn suggested call really if it meeting not sure At that —I’m Regulatory Com- Energy the Federal prior to that meet- meeting just was that I called— Washington, D.C. mission meeting. ing. just prior to that It was Bart Kline in- They informed me—Don—or Burger con- Burger. Mr. I to Mr. talked Company had met on formed me that the said, in California Bryson Mr. firmed what matter had decided that as a this issue and you can deliver that if and that they go- not Company policy that area, they are that service power to their why ing buy my power. And the reason it. purchase under PURPA obligated being it was wheeled was because like to he that would And he also indicated their service district. within thing devel- of how this kept abreast oped. up. That was That was—I should back earlier this meet- about two weeks before I the Idaho suggested that call also He Barclay. they said it Don And did, my first I was And PUC. Company policy and just a matter of was I Idaho PUC. talked contact with buy they didn’t intend to McMahon, he would and he said that Jack being developed out of their service that in his of- attorney review some area. Mike re- whereupon, Gilmore fice. And legal prepared a memoran- searched it and probably late—ear-

This would have been in November. This is all dum. Yeah, it ly to mid November. November was. legal opinion indicated the ’81. The Bryson Mr. thing that was said same McMAHON: 1981.

MR. And Burger Mr. at FERC. California and They me—it was ear- informed Uh-huh. opinion, receiving that whereupon, I—after They me that ly advised November. I him that Barclay. I advised I called sign my contract because was wouldn’t Compa- opinion that had received that disappointed. I being And was wheeled. they were wrong ny’s position was PURPA, I didn’t I didn’t understand But my power. obligated that wasn’t choice that understand that very upset Barclay sounded discouraged Mr. just Power had. was Idaho upset that the steps were taken caught in those kind of be- felt like was his developed without knowl- opinion the North- position relative to BPA’s tween again, he said that he And Compa- edge of it. Act and Idaho Power west Power get and that he’d back to review it going buy they’re not ny’s decision me. power. wheeled him, to me. I called that, get back I He didn’t days after was a matter of

Just he indicated at that time that for- and was individual visiting with another appropriate. And meeting would be that a industry; they and indicated products est at that time backing he also indicated—I’m along we assumed that the contract would up signed a little bit. But presented, maybe indicated would be be as it was helpful engineers interconnection, if some going who were modification for the put project together certainly pricing stay came. would same, problem that there would be no then early We came to Boise—this was that. met December—and with Bart Kline and time, From time to I checked with Mr. Barclay. plant Don went We over the and just Kline and to make sure that we were going what it was to do and the whole kind running still the same course. And he layout of it. were, assured me that we that when fi- meeting, And out of that Idaho Power nancing arranged and the letters requested things that we do several before were they secured that be would in a they willing sign They were a contract. position go sign. ahead and they said that would like a letter from January through April. This was Energy the Federal the—to indicating self-certified; they that we had May I received in all the letters that they also indicated wanted a letter required. I had also at that time Wyoming indicating Wyoming did financing plant. secured the on the jurisdiction; not have and they then in- I called Mr. Kline and indicated I am they dicated also wanted letters from prepared go signature ahead with the on Valley Light, Lower Power & BPA and the contract. And he at that time indicated Light Power & the arrange- Utah Company that the would need to review the delivering system ment to their for agreement wheeling agree- transmission going to be done. ment, sufficient, the letters weren’t they rough and that And I said I didn’t like wanted to see a draft feel it was neces- agreement. on that letters, sary get all those that it seemed position going me their wasn’t to be BPA, Whereupon, I called indicated that they signed changed if this contract and draft, rough we’d have to have a and that now, gave whereupon duty it to me couple they prepared within a of weeks go upon get me to out and these would be rough very proposed draft of the trans- they they letters. And said would not agreement. mission And that was sent to sign give and not me a contract until moving Mr. Kline. And we are now into place. were in those documents May end and the first of June. helpful that it would be for me I also said June, In the first of after Mr. Kline had financing to have that in order to secure agreement, had the transmission he indi- they they signed contract. And said that cated to me he coming had a vacation they the contracts until would up and was of in kind the middle of this go that I would have to those letters and thing, preliminarily but he had reviewed it they getting those letters and then about thought okay. it was He did indicate okay, I’ll just talk to me. And I said that he’d have to check with the trans- everything’s going okay assume that department possibly one other mission get and that we’ll—Pll in the meantime department, any- couldn’t see but that he arrange financing. those letters and thing wrong with it. months, couple, vacation,

In the next three or four I checked While he was spent I amount of did that. a tremendous at the Com- telephone with two individuals people gotten, time—I in our pany. and other involved Their names I haven’t company engineers get they both told me that can later. And —consultants it, they equity people spent agreement a lot of saw bankers the transmission However, working arrange- problems no with it. they time on the financial saw there seemed to be a cogeneration plant. for the All did indicate that ments a contract. I em- Company to outside—we would have part on the as concern really phasized again important my how Company not the was whether or fi- get my nancing And that is the scheme was in order going contract. October, appreci- I accomplished, and would thing I had heard of that since last first applica- just very I ate it much he made pursue And I didn’t it. November. if top priority. telling the order assumed that what Mr. Kline was tion for Company me was the truth and that the forthcoming in a application was not ready sign my contract. stood pest days. I called and made a of couple of every day I myself, practically thereafter. When Mr. Kline returned from his vaca- type tion, going and who’s he indicated asked where it was that transmission about where agreement again okay, it and talked to his secretaries was and that was typed couple times by the that I had it was. And it was verified two individuals always someplace, and it was be- he away. talked to while was He did indi- and sent was, somebody was however, very ing around cate that it bad tim- shuffled project, they very looking at it. on this that busy they with some work that had and 16th, I Mr. Kline July called And on suggestion that it his that I for a wait that as again. And he advised me of period pushing of time reasonable before 15th, 10:00, July previous morning at this issue to a conclusion. held some meeting that in a that was out, they Company,

And I as I the officers of the that laid had done a tenta- way before, again. my buy my power tive but I laid out in detail had decided not to financing plans. I that it was not because it was told him how critical it And he said wheeled, not through was that I move because and immediate- recognized it problems They with it. ly consummate a with Idaho other Power, didn’t, very good project, it was I I was a but that And ran the if they and that didn’t losing financing project, expensive on the too risk feel likely Company could that kind maybe indefinitely and more than like the afford permanently. And I told him that I didn’t a cost. I feel like could wait until a later date. very upset I Mr. Kline And became July telephone, just and I told him I can’t And talked about a date of 15th on the we maybe everything this. You’ve been—I’ve as a time when would be understand been primrose path and the there nine closed done time that led down any problems getting thinking all the time that wouldn’t be months said, I I forthcoming, contract. And If could abso- contract was and now am that, lutely promise among problems me And he all then fine. advised other said, No, price promise you right. I can’t that. And I that now the isn’t Well, case, said, got if that’s the I’ve said, got I keep And You’ve mind push you get see if this con- we can’t had a I’ve tremendous amount of re- signed. tract project, only liance on this me but 30th, lawyers Kline advised accountants and and bankers and On or about June people engineers equity permit Mr. Jim Bruce me that Mr. Swisher and people, just I relative to this is- and that couldn’t understand had had conversation Company good agreed would not how the could in faith lead sue and was along though buy going the order but that me the contract was without whereup- signed forthcoming, the order be to be for all this time and then would up. him I the contract would delivered. And throw this issue told ap- timing. exactly my He indicated the wasn’t sure what action would asked about be, plication probably couple just take a that I would have to do whatever come, whereupon days, Whereupon, the order would made the most sense. I decid- days appropriate ten at the action and within weeks ed the most would be to —two complaint, file a complaint point and the has is, at this if there that it be done —but brought hearing good us in today. part to this faith on the of Idaho Power. All saying I kind I’m is request of wanted to mention a I’d like to little bit on that the Commission order—I assume gone the extent of how far we had that’s the on the appropriate remedy Power to enter financing, relying on the assurances of the —Idaho agreement into the that I have attached to Company that a “contract would be forth- complaint. the And if negotiations there is coming. that need to be done to any- consummate 9th, July On diligence there was a due thing that’s in that I’m contract—and meeting equity offering for the of the ITC is, any aware of if there that —that plant Seattle, and ETC at in our where Company good do that faith. attorneys— language There is in that standard con- meeting There was a with the underwrit- tract that change, allows for I proposes er package who and sell the any never problems had with that. equity in plant cogeneration the—in saying Commission, I’m Ias plant public. to the That was called a due it, understand change has the diligence meeting equity for the people. contract, public if policy says, any so And meeting was held Seattle on that, time in the future. In addition to July 9th. aware, Ripley, large as are portion of We had in attendance attorneys four flexible, price adjustable, contract is York, attorneys New three from Se- understand, I quarterly, much as de- attle, accountants, we bankers, had the in- pending upon energy may what the rate be. total, vestment firm itself. In there was Only capacity portion capacity com- probably 15 people there. And it was all ponent of the contract is fixed. But re- geared around, course, of the under- gardless that, capable both of them are standing that project go this was a being changed by the Commission. immediately would be that, And if they didn’t believe then there forthcoming and that only was the loose way plant no that this could be financed. evidence, on just end the deal. And that’s And I emphasized. think that should be guess I evidence of the extent of —further know, get You all the time I this feed- the work and reliance that we had had on back from Idaho Power that just there’s no contract, being this delivered into our way they can enter into long- these promised many hands like it was so times. agreements, despite term the law. But I severely I believe that Afton has been my wish were in shoes and tried to damaged procrastination as a result of the one cogeneration these find —-finance and, believe, I delay deliberate of Idaho plants without some kind assurances consummating arrangement. price is going to be relatively out-of-pocket I would estimate that our ex- period some long You time. fixed for approaching can’t penses any are somewhere around do it way. other And if $200,000. that, my been shoes and tried to secure fi- addition to as has been nancing for year the last and á half Power, made known Idaho the lost reve- projects, you these a believer in would be cogeneration plant in the nue is about three my position. a half million dollars year. any problem We don’t have with the I would like the Commission to order price existing under the contract. structure Company proceed with the con- asking given All we’re is that we be that we had relying tract been on for benefit of that contract which was relied on months, nine and that it be some done for the last nine months. if expeditiously, any and that there is need change any said, to alter or terms the contract I asked this. I I don’t understand said, coming that is attached—and don’t know of where Idaho Power is from. Right. WARD: And just It seems to me that it makes a lot COMMISSIONER background some material on this there’s economic sense to enter into con- more filing. that attached to the go through it all the tract than does to you involvement that would have with Yes, right. that’s THE WITNESS: I the PUC on what understood would be right. All WARD: COMMISSIONER your rate case and if were to And Idaho Power today, you sign it? think, I neophyte, I’m a when comes regulates and how it works and Yesterday, the PUC THE WITNESS: You bet. fact, industry. before, I didn’t them day anytime year. even call in the last resort, knowing until kind of a last not exactly position they’d be relative to what Jones, WARD: Mr. do COMMISSIONER Idaho Power. present any you intend to other witness- gotten never into the situation be- I’ve es? Idaho I am tween PUC and Power. aware THE No. WITNESS: closed, recently that a rate case has and assume, I COMMISSIONER WARD: reading anyone paper, been like I’ve Ripley brought you out are an since Mr. just I else. And assumed that there are argu- attorney, you may also want some ap- economic sanctions some that can be Ripley. from Mr. ment after we hear faith, plied you, if in bad don’t enter into— But further factual evidence whatev- proceed or in faith don’t cogenera- bad with er? tion contracts. like to THE No. And I’d WITNESS: Well, pretty up. I think that well sums it although I am a member emphasize that emphasize, though, again I would like to bar, in- practiced, I never of the never point Ripley brought up, that Mr. and a matter of practice. tended to It was is, know, you although there are a going going school or to law to business of contracts number that have been let for school, I school. and went to law cogeneration/hydroelectric in the state that very WARD: A wise COMMISSIONER of, that very I am aware are built and few decision. yet are And the reason

fewer financed. Well, Mr. COMMISSIONER SWISHER: why very, very is because it becomes diffi- Chairman, you proceed, let one before cult, impossible, not these if finance express some concern. Commissioner things payment without a schedule some- allegation complaint Part of the thing like what’s in that standard form testimony morning part of the this is it, my contract. And without makes Jones, part of Mr. an assertion on deal unworkable. Energy, financing Afton you, Thank Commissioners. project permanently Afton could be Okay, Mr. passage WARD: irreversibly

COMMISSIONER lost because question get outlining in one before we of time he his testi- Jones. Just that was morning. attorneys. you mony The contract at- your complaint is fact tached to concern, you lawyer since are a My form contract. standard too, Ripley since Mr. is and since Mr. law, practiced never Jones has It has some modifica- THE WITNESS: live, needs to be allowed to patient out Kline and worked tions that Bart die on the table. go- it’s relative to interconnection. Since power going to be want, to be a that’s you if I’ll take a So brief recess opposed to inter- scheduled to them as talk to Mr. Kline and allow them, lot of connecting Barclay, helpful. there is a if that would dealing preparation is paragraphs a lot of But I don’t think extended the—or necessary. have been struck. interconnection megawatts. like and a Would a brief recess before about six half And it cross? a fairly percentage. becomes small would, Yes, that, probably MR. RIPLEY: Mr. Chair- In addition most important, man. that that’s a cal- theoretical practical It is culation. not a calculation McMAHON: MR. Mr. Chairman? practice happen because what will Yes. COMMISSIONER WARD: Afton, generated will be recess, MR. McMAHON: Before we it will never leave Afton. The Afton question? I could ask consuming power district. area is The Yes. COMMISSIONER WARD: power purchased —all their is Jones, MR. McMAHON: Mr. in Idaho up It to Bonneville. comes Bonneville response your complaint, one Power’s to system. into and moves their When we you may of concerns that their is not be put line, generate power Afton on it will power 35-year this for the able to deliver vicinity that that will right in be con- my understanding And contract. is that practice in vicinity in that will sumed goes your to concern Bonneville Power lines. not move down those wheeling contract fear and a that Bonne- point. In There’s one other discus- will, and ville can cancel that at therefore I recently, them more sions with when 35-year they’d paying you be on a basis limitation, three-year asked about that only get might years’ three or four this a trans- they indicated that since is power out of that. lines large transmission mission line— long-term planning they

And could talk about location have where such your plant opposed as to local inter- how that whole wheel- done on them forget exactly they ing thing what call works? connect—I because it’s trans- the other lines—but plant THE Yes. WITNESS: lines, large transmission mission lines— Afton, Wyoming. would be located in anticipate they pretty can well what the you, I to And as mentioned going running is to be there on capacity have to from Afton would be wheeled basis, may long-term that not even Valley Light’s Lower Power & to—or necessary to that three-year have no- then to lines and Bonneville down in there. tice of termination prepared And Bonneville what Goshen. point, And I think there’s one other —a form kind of contract that standard regardless is that of everything and that they apparently had used other cases said, I have Afton is willing else to ac- wheeling arrangements. for And such cept that and that as a assume risk. We form contract there is a that standard duty the power have the to deliver BPA in there indicates that clause that Idaho. We demonstrated that can we three-year of cancellation give can notice it, and that for deliver we assume we will wheeling arrangement. That’s years. the full 35 If for some reason we most cases. kind of standard in don’t, up set in the there is recourse I And reviewed that with them. I has been contract that believe standard well, said, they guess things. two One and been blessed reviewed the PUC that happen- is the likelihood of them and PUC. And would by Idaho Power very, very they remote because they have the same that would assume years can ten out now that tell language using to come right develop any additional don’t intend reason Afton if for some it failed after generating capacity on those lines feel help I can’t that from a deliver. bump capacity our would cause them to standpoint way there practical is no Afton being that’s wheeled from to Gosh- happen. that that will that, Plus, en. there addition complaint it the had attached to megawatts that are transmitted The Afton over 300 Company Idaho putting lines are into standard Power on those and we which ap- had been hammered out appropriate which are to consideration in proved hearings as a result of Empire’s those case: beginning commission conducted general Some comments are in order. 1980 its procedures endeavor set some First, appreciate we the fact that Idaho compliance with the mandate of thorough job pro- Power has done a PURPA. tecting ratepayers by searching out attempting Afton, to eliminate all defending against risks as- Idaho Power project. trust, sociated with Company argued that the We commission however, authority (jurisdiction) lengthy delay no to order Idaho in- completing process volved in own tendered standard will agreement. form agreed, accepted practice The commission not become the doing and in dealing cogenerators so made some comments much and small power producers. counsel for the commission later delay Such can ir- argument make at oral on the Ener- reversibly destroy the ability some Afton rehearing: gy sponsors to obtain financing. It is not adequate an reply key answer to In summary, Idaho Power’s first af- Company personnel busy have been with firmative defense precise is correct. The general rate cogeneration case. The relief requested by Inc.,— Energy, Afton power program and small stay. is here to namely, that Idaho Power be ordered “to Company’s obligation It is the to see that enter into the attached Power Sales staffed, adequately it is by, if need with Agreement” beyond jurisdiction —is personnel. full-time of this grant. Commission to The Com- mission, nonetheless, continues to en- instrument, And in the same Order No. practice dorse the of having available for 17478, issued its order to Idaho Power public inspection standard form contracts was, Company, sign which not to that set forth the terms and conditions contract, purchase co-generated sponsors available to typical projects, power: in the absence of circumstances that re-

quire negotiations individual on a site ORDER specific basis. IT IS

Finally, THEREFORE ORDERED that while it is true that the Com- Company agree purchase Idaho Power jurisdiction mission lacks to dictate con- Inc., Energy, cogenerated from Afton tract terms between utility quali- and a power in the amount and for the time fying facility, the Commissionretains the period by Afton, (and, tendered at the authority indeed, avoided duty) to re- cost rates for Idaho Power quire Company that utility power from a previously prescribed been qualifying utility. ap- state commission “[A] proved by this Commission and may comply that are requirements with [§ 210’s] currently in effect. Idaho by Power must issuing regulations, by resolving dis- proof submit to the Commission putes case-by-case basis, on a Secre- byor tak- tary complied that it has with this ing any other Order reasonably designed action on or before the close of the give effect to business FERC’s rule.” FERC v. 9, day Monday, August on 1982. Mississippi, 102 S.Ct. at 2133 footnote utility omitted. A cannot evade that re- DONE Order of the Idaho Public quirement by inserting contract terms Boise, Idaho, Utilities Commission at this onerous, that are ambiguous, so or day August, 3rd unconscionable as to kill project. Counsel for Idaho Power’s own remark is concluding its written decision on all that I have been able to find which hearing Afton, complaint any the com- serves as kind of a basis for its com- mission made general some argument president comments ment at oral that the Power, Bruce, appeared, years later had been and a few

of Idaho Orndorff represent Em- jail represented if Power didn’t and continues to threatened Idaho certainly every reason to pire. Afton. Ida- He the contract tendered sign it, just under that what as a cause ho Power did but not believe was seen regarded similarly ordered to I would threat other it was than Afton Empire’s case. power. signing Afton’s And in buy paragraph it insisted on the which that, sincerely if believe the member- sequel. brought us a Afton has new together ship gather of this Court were to opinion final Taking reading look at the 1987 communal record exercis- for some Court, es, from the Boise quote justly As this case would be decided. 193, (at 1231) Corp. case 755 P.2d at now, it has been. carry any weight the reader when doesn’t Returning briefly 219, P.2d page only note to do is careful to that it has page supra, and the discussion binding findings which are Court filing complaint, it is of a function from the commission because emanate interesting to note the commission case, this case is in a rate-increase 3, 1986, order seem- point one its March case, rate-setting in a are not. Even we requirements ingly recognized that some obliged to review the record and ascertain fulfilled while the case was before could be findings. I do not whether sustains the R., reciting, the commission. After disagree findings ought commission making entail that “In most cases this will given respect due in cases these PURPA offer, showing comprehensive binding highly come before us—but I doubt which size specificity design and reasonable our Idaho un- constitution binds us willingness indicating a characteristics equivocally where commission we review terms and rely proposed on of cases which involve PURPA. Our oath went thereunder” the commission proceed upholding involved the of the Consti- office Empire has that “In case on to declare this as that tution United States as well require- these complied any of not Accordingly, of on of the State Idaho. 14, January 1986. ments on or before we ascertain wheth- PURPA review should not to rates autho- it is entitled Therefore preemptive legislation has er the federal 6, July 1984.” by No. on rized Order faithfully adhered to. been January 20281. The 14th of No. Order was, believe, Washing- event, however, on which reviewing date In either on existing Power’s tariff of comparing it to the Water then I record and ton the Afton record, compel- cost rates would cease. avoided Empire am left with dilatory procrasti- ling that the belief order that is also noted that same It indis- of utilities are nating tactics the two 19, 1985, Empire did make on December grade culpability tinguishable Pow- comprehensive binding offer to Water good faith. lack of by er, finding somewhat watered indicate its will- adding I the did not problem that in Empire’s Afton In re- completely bind itself. fought obligation ingness out was only issue knew, but did gard to that the commission PURPA —for administer the commission state, there a stalemate had been aware of reason none of us were Power insisted some terms Water only law. Other- over of that facts case— contract, one I, primary having had we known the facts wise Afton modification, and had to do with that the two of which Empire we would seen re- properly in Afton’s case would-be which was treating the two utilities for stipulation parties disdainfully by served co-generators equally equally— determination. future and stand-offish. that “nor order stated his own That same Although Mr. Jones drafted Af- Power represented to Water even proceedings complaint, in later

ton I Case No. existing U-1008-190. This Order set the rates. We shall summarize Washington avoided cost rates that holdings prior regard- here the orders (Water Company Power) then utility’s recently each of the an- obliged eogenerators to offer and small outset, nounced concerns. At the how- power producers (CSPP’s) purchased for ever, important it is to note that Idaho power. These rates have been in effect monopolist. Power is a classical It is the July since 1984. Water Power did not sole power distributor of electric at the rehearing ask for a in that case did not throughout retail level its service territo- file requesting a case revision of these ry. Historically, monopolies abused this However, rates until November privilege by overcharging for their ser- September, 1985, Water Power informed vices; legislatures responded by state potential longer CSPP’s that it would no creating public service commissions to pay the avoided costs on file with the Com- regulate price charged that could be mission. It is unclear whether Water Pow- monopoly delivery a natural for of its er offering pay a reduced rate to product. qualifying merely facilities or if it was im- Similarly, many years, Idaho Power plementing its own moratorium on inter- has monopsonist. been a is the It sole connections until a new avoided cost was purchaser of electric at the whole- found the Commission. throughout sale level its service territo- ry. Historically, monopsonists abused II SET, AVOIDED COST RATES ARE privilege by using their bottleneck at SUSPENDED AND CHANGED the retail underpay distribution level to ONLY BY THE REGULATORY COM- potential competing generators. The MISSION, NOT BY THE UTILITY Congress responded United States to this clearly It is PURPA, established under by enacting situation Utility Public statutes, state and case law that it is the Regulatory Policies gives Act. PURPA jurisdiction of the state regulatory commis- regulatory state commissions the sion to set avoided costs under PURPA. In imposes duty on them the set III, Afton Supreme the Idaho Court stated: competitive rates for the of fair, Commission apply should power by cogenerators utilities from just standard, and reasonable in a man- power producers. small ner not inconsistent with federal law to 17609, pg. Order No. the extent may applicable, that it process Due by utility is not met determine whether the rates need to be that avoided costs are adjusted particular type this of con- notification filed accurate, longer no or as in the tract. Afton case, public “not in the It is interest”. Energy, Inc. v. Idaho Power Com- Afton place the Commission that takes the 781, pany, 107 (1984). Idaho 693 P.2d 427 notice, market and ensures that after hear- gives Federal law to the regulatory ing, argument consideration, and due jurisdiction commission only to “re- just, non-discriminatory reasonable and disputes”, solve but also to set avoided utility. rates are set for the cost rates. The necessity wisdom and grows vastly out of the Water Power’s own unequal avoided cost rate bar- gaining positions (U-1008-190), contracting two case hearings extensive parties. This recognized as expert testimony held and was received not much in the case in Order No. 17609. only utility from the and the Commission Afton case, here, In that utility was unwill- Staff, but numerous intervenors. After ing a contract at tariffed avoided hearing, the Commission made find- cost rates. ings regarding Water Power’s load/re- aware, forecast, perfectly course,

We are compo- source avoided cost rate Idaho Company unhappy levels, Power with nents and other contract issues.

232 scolding thusly project that it had decided that the would The handed to Water Pow- Kamiah____ Empire propos- Empire, be located at er of little succor to which had ing project Weippe, saying along to locate the all Power either been Maries, attempts to reach an St. or Kamiah.” This is not born had “stonewalled” its agreement utility, “stonewalling” out the record. with the being appears term earlier a common Order No. entered after rehear- opinion. in this ing, explained indeed that interim rates had in fail- The fault the commission was 14, 1986, January issued and that on recognize stopped are that when “Grandfathering under the -190 rates was opponent your your dead in tracks because cogenerators made available to those it—unless you, will not meet with that’s (CSPPs) power producers small who had there is some relief to be had at the hands complaint on or filed a with the commission of some tribunal—in this case the commis- 13, 1986, January and who were before sion. determined this commission to be other- R., commission, rates.” wise entitled ... to obtain such The after-view of the that it pp. 274-275. faith” Water would have called “bad it execute a con- “ordered too, Inconsistently inaccurately, existing tract at the then rates” sounds purported to find that commission great BUT, on the other hand — Afton reason- had not “committed itself specifically order stated that it would not project design size and specificity able the execution of a contract!! That was a characteristics.” holding major of its decision that case. Adding Empire’s commission insult to in- apparently cir- The PUC staff saw the Power, jury at the hands of Water light cumstances in a much different than say final order went on to the sweetest participated at did the commission. Staff all, might words of what have been: hearing, and submitted a the December case, Empire perfected In this touched on the afterward which also brief entitlement, the Commission would have faith, or, conversely put, lack issue bad representation viewed Water Power’s good faith. (indicating September that its Before the Idaho Public changed avoided cost rates had and that Utilities Commission longer willing no to contract at the cost rates Schedule 62 avoided estab- Complainant, Company, Lumber case) evidence of lished the -190 as vs. utility and part bad faith on the of the a con- would have ordered it to execute Power Washington Water existing tract at the then rates. Respondent. Company, assert For Water Power to continue to Case No. U-1008-241 to the avoid or infer that it is not bound schedule, published in its tariff ed-costs Brief of Commission Staff rehearing, as it did in its brief on This will no indefensible. Commission 3, Jan. 1986. utility position that longer countenance a of the Idaho Pub- now the Staff COMES it by informing asserts that and files its brief lic Utilities Commission of an not contract on the basis by outlined according to the schedule op filed cost as albeit avoided obsolete 20, hearing on December its Commission unfiled posed to its self-determined but n 1985. doing little actual avoided costs it was discharging obligations its more than I FACTS pursuant exercising rights its Pub 21,1984, Public Util- March the Idaho Regulatory Policies Act On Utility lic No. 18744in issued (PURPA). R., ities Commission Order p. 277. points Company, Koyle The Staff out that Water Power did vs. Idaho Power John H. case, dealt with a appeal findings in that the Commission Commission by utility. case, remarkably similar action nor did file for new rates 29, being until direct- November 1985 after short, Company re- Idaho Power now by ed to do so Commission Order No. ap- the rates that are fuses to honor proved file at the and on Commission commencing negotia- even the for basis province It is the of the Idaho Public eogenerators small tions with or Utilities Commission to set interim rates producers. a defiance of final rate- Such upon prima brought by facie evidence unparalleled in making orders is the ex- utility showing an inaccurate avoided cost perience of this Commission. We remind rate. See Grindstone Butte Mutual Ca- Company regu- Idaho that it is a Company Company, nal v. Idaho Power utility and that announced Com- lated 860, (1978). 98 Idaho 574 P.2d 902 Unilat- pany policy in this matter makes it an Power, eral action Water even in the precise meaning outlaw—in that word’s potential cogenerators form of a letter to operating outside the law. The so- power producers, is a collateral small called “-200 rates” do not exist as attack on a final and a Commission Order They simply pro- matter of law. are clear 61- violation Idaho Code Section posal put forward Idaho Power with- 625. It no more unreasonable for would be proposed out even a effective date in a utility suspend its retail sales rates yet case that has not been heard. and set for itself new interim rates in lieu filing general rate case with the Com- mission. regulated utility It is unheard of for a charge have, for its services at rates other upon believing

Water Power could approved by posted than those at the its avoided cost inadequate, rates to be This Public Utilities Commission. is true filed for immediate interim rate relief with though Company has filed for even If the Commission. found rates and that its old rates new believes appropriate, a new interim avoided cost inadequate confiscatory. are or even To expeditiously. could be set re- This was unilaterally change rates are cently accomplished by an Idaho Power charged paid that are for sales rates Company April motion of 1985. Within purchases wage is to a collateral at- motion, days ten the Commission set orders in the tack on final Commission an interim utility. rate for the precise prohibited by manner Idaho Code Thus, July the fact that on 61-625. § Ill UTILITIES ARE TO OBLIGATED 1982, Idaho Power filed for revised QUALI- PURCHASE POWER FROM cogenera- paid cost rates to avoided FYING AND COGENERATORS power producers does not tors and small SMALL POWER PRODUCERS justification refusing provide any to obliges utility purchase power PURPA each to at rates that are now qualifying cogenerators approved from and and on file. power producers. Implementing small 17796, pp. Order 4-5. obligation resolving disputes and left inadequate, prop- If avoided costs are the regulatory body. each state See FERC v. through er avenue of relief is not refusal to 2126, Mississippi, 456 U.S. 102 S.Ct. contracts, sign do-it-yourself suspension (1982). 72 L.Ed.2d 532 utility of The must file a case and rates. utility This is not the first case where a relief, request if rate even for the interim. attempted suspend has cost avoided Washing- The should direct negotiations ignor- rates or contract negotiate good while ton Water Power to process, approved due and PURPA state law. at the rates now and on faith 234 contract, hearing signed Until time A such as a is held We would have but

file. prior signing it, spent new objectively rates are set and inde- we have security re- talking hours about the pendently by the few Idaho Public Utilities quirements hoped to and I would have Commission, proper cost the avoided must get security requirements as the best utility negotiat- be the adhered to possible my standpoint, client’s good ed under in faith. day this 3rd have the issues we would worked other submitted RESPECTFULLY to do hoped out and that’s what we January, 1986. of September meeting. at the 16th Duke M. Jonathan /s/ M. Duke Jonathan Attorney General Deputy Q In ef- BY HIGH: COMMISSIONER of the Staff of the Behalf On fect, hearing the of indicated evidence Commis- Public Utilities

Idaho proper negotiation process had not sion place prior filing the taken to the of seemingly complaint and the jmd/vs/92M first negotiation Empire true the offer herein, reading As said of the Washington resolve Water Power record not sustain the does commission’s many of the issues that had been finding, as stated Order No. “that day evidence on December 19th the be- no ready, willing at time was hearing complaint. fore the actual on the able a contract with Water Power.” true, That’s still isn't it? finding, language, On use its own A that’s true and I don’t I don’t believe “We based our decision on.” Where the hearing the believe the evidence at initial finding substantiated, is not the decision that, showed Commissioner. cannot stand. At the rehearing, the tenor of commis- of negotiation a matter The contract questions sion seem to indicate rather style get big issues style my is to the strongly that High Commissioner was at get the way quickly rid of out of the the post in command writing going ones. That’s where we were small first hand, order. theOn other Commis- to do. attempting I was and that’s what sioner Ward seemed to genuine- have been Q a time. Let’s take them an issue at ly seeing interested in cogenerator another First, output the Order said come on line: You facility is still unknown. of Q BY COMMISSIONER WARD: testimony Mr. Klaue. Do heard Tyrer, suppose at time—let’s take on you agree testimony with his September Suppose 1st of date. on the issue? September, Power had de- 1st output facility— A The Company a livered to Lumber Q depend It will still unknown. Is that had the standard rates then if I bought, and understand what can be say years. for let’s It also effect any- testimony correctly, might his 4(c) language, but with had—without fuel megawatts, up to the thing up to 10 security requirement for sort some supply. requirement provision and placed output facility is A Suppose say it stated size certain. applied at 9.9. We megawatts say they for certification size. stated Let’s vary and that could FERC 9.9 Kamiah, the other features which from availability based on the slightly of continuing jurisdic- object you to such substantially. but not equipment, contract, September in the on tion were contract, The next Q my understanding. That’s you proposed received that

1st item, says prime it you signed your or advised would have [the Order] in our consideration importance sign? client to

235 Q by is the made the you And made the decision complaint when effort attempting 9.9, Complainant in to resolve jurisdiction apply the Idaho for disputes prior the filing contract put you the Tariff 62 and— under are, brief, complaint. And in the there A That one of them. oh, eight or nine issues between the Com- Q begin in that is to with —inherent a Empire Washington pany Wa- and— standard contract. ter Power. Right, A the that was one of effects. fact, a was no Isn’t that there 4(c) issue, Q seemingly Now on the disputes to resolve those pri- real effort One is there are two issues there. fu- filing complaint? or the actions, ture isn’t that true? Commission A real There wasn’t a effort to resolve Right. A clean-up types those contract of issues. Q approval And by the second issue There was a real resolve the effort any Washington the Commission con- which we issues mentioned'in the four signed company? tract rate, complaint being and that Right. A 4(c) language, security, liability. complaint. were the issues in the Those Q separately. Let’s take them fu- ture Commission action: isn’t clear We mentioned the other at the items orders, letter, past Commission hearing night because before at the clarifying letter from Commissioner meeting Washing- conclusion of our orders, Swisher and a multitude of Bryan, Water Power said to Lester ton accept or will not re- Commission agree anything “Did we on or should quire being action Commission we take it to the Commission tomor- future part a contract? row?” appar- A me but said, certainly It’s clear to “Take it to the Commis- And he ently by Washington sion.” not understood Wa- Power. ter why brought That’s we the other items issue, Q approval in. Now the other Washington ratemaking Q Okay, Tyrer, thing. one last If legitimate that a Now isn’t purposes. Company mega- filed for 10.1 Power, legit- or requirement by Water watts, the standard contract would have imate issue? contract perhaps guideline. been not even a As you Well, understand it from philosophical the Tariff 62 A issue and that’s a items, that standard Washington just PUC contract would not don’t think apply and those issues talking we’re any being has involved in a business individually negotiated; review, about would be part approval, any or other aof right? in Idaho negotiated utility jurisdiction under true, A That’s but we made a decision PUC, Idaho you I don’t think slightly although for a different reason any being more involved one business factor. Water Power advised that was Utah, Montana, or Washington, Washington us that the PUC had some place. other kind or agreement of formal informal understanding that on less Well, Q mega- A 10 here’s the issue: facilities megawatts they 10 than would not be as plant represents watt a sizeable re- actively involved or as involved as source, that resource Wa- and should be on over mega- supply be facilities ter water allocated Power’s watts. you only system to Idaho or to the —and rates, Q can see can not? you— And when the effect on They basically A I sure and I think have ad- talking about A can megawatt and backed past, dressed in the both that issue off that obstacle. clear and Kettle Falls. Potlatch case proposal in De- Q require A made a written And didn’t we those cases We cember, hearing on company day total the before the jurisdictional approach, approach complaint. to this issue? interjurisdictional our Empire Company Q Why Lumber you A I did. didn’t believe proposal sooner? make a written actions, Q past So based on Commission indicated, hopes that at that meet- Washington A were you have We hearing, evening that legitimate ing, is- before approval Commission is a Power, outstanding is it could resolve issues part sue on the of Water we a contract for discus- prepared and we not? purposes. sion Well, past A based on the Q you ever tell that 4(c) Did Water Power part lan- actions and that sign prepared a contract they would not I and I will guage, have testified before Empire? now, philosophical testify that is more jur- continuing anything than else. meeting and at least one A The initial just real issue that has to be isdiction is they informed subsequent meeting had resolved. meet- they the initial me that were—at contract and present Q continuing juris- ing, I offered Let’s not talk about they standard form they said that had talking I’m about the issue of diction. those they preferred to use contracts contracts and Washington approval of these having a for internal benefit of interjurisdictional— their agreed uniform-type I contract. problems A I understand them, work within that we would ratemaking and so forth— of their contract. framework HIGH: I have noth- COMMISSIONER negoti- Q you had You mentioned ing further. previ- a contract with Water Power ated fight- I’m THE —and WITNESS: that, time, their stan- ously. Was at that much. ing that issue that negotiated you contract that dard form (Emphasis supplied.) off? negotia- as to Tyrer Mr. testified Earlier one, degree they yes. had A To the Power: tions with Water opinion, Em- Q Tyrer, your Mr. Empire went to that Q Tyrer, Mr. when engaged Company in active pire Lumber 16th, meeting, was September 23rd, September prior to negotiations ready, willing and able to a contract 1985? per- Power that would with Water they They met with us and discussed A project? construction of the mitted the they gave ground no but the issues meeting hopeful to that A We went 4(c) language. believe posture in that when that we would be negotiations prior to in active involved 4(C) language was the we left and then. hold-up initially. you me Q Tyrer, Mr. can tell what me that he Bryan informed filed its project size for their consid- it over to counsel turned Qualified Facility with the Fed- Notice of modified and if it could be eration to see Energy Regulatory Commission? eral findings. know those he’d let me megawatts. A 9.9 never re- communication was That Q availability fuel Have researched him, following that dis- ceived Empire project? vicinity of the in the cussion, they would not he said Yes, I have. A. approved rates. at the sign a contract Q research? did do that When Company Lumber Q When did Well, done my initial research was A proposal to first make a written agreed with Mr. Klaue. to work before Water Power?

237 I personally procedure quali- follow a of tions with the utilities from Wisconsin to credit-wise, fying my financially, California, Washington, clients Wyoming, Mon- reputation a industry, tana, and avail- Idaho, negotiations and these ability project. for fuel for the stopped refusal, refusal, by their stated approved a contract at the rates. Q your What were the of conclusions availability? research on fuel Chairman, MR. ORNDORFF: Mr. questions that’s all the I have. A The conclusions were that there was adequate fuel there for size whatever Tyrer’s On first Mr. examination there had facility you want upper to build with pertinent questions been these and an- megawatts. 60 limits of 50 to swers: Q you long How do think it would take BY MR. ORNDORFF: Mr. Klaue to build his if he were Q Tyrer, you your Mr. state near start future? address, please. name and business A If we entered in a contract at the Tyrer, Place, A Kenneth 885 Gossett week, beginning of next six months for Boise, Idaho. engineering year a for construction. Q Tyrer you Are same Kenneth Q Mr. Tyrer, Washington has Water who at the held in hearings testified you Power concerning contacted building 20th, matter on 1985? December project since the Commission’sMarch A I am. 4th 1986 order? Q anything testimony in your Is there No, A they have not. given 20th, on December 1985 which Q Tyrer, Mr. your opinion is it you change? would like prior September 16th, 1985 meet- A No. Empire had made substantial progress Q you assignment completion toward Would review the project? Empire gave you in Company Lumber seeking power agree- to obtain sales A They certainly had. Washington ment Water from the Pow- Q you compare progress Would er? Empire Company Lumber made towards negotiate A My assignment was to project the progress Plummer agree- for a sales made? develop ment and to the information nec- Empire A everything had done negotiation essary for that and make the in preparation Plummer had for a con- Empire Company people decisions for the tract. necessary during nego- to made those Q Tyrer, you Mr. do believe Wash- tiations. ington Water Power Lumber Q you When did first meet with Wash- Company have common interest eco- ington Water Power? development nomic in Northern Idaho? Approximately A August 1984. A I sure do. Q you subsequent meetings? Did have Q 4th, 4 Page On of the March 1985 opinion, Tyrer, re- A subsequent We number of quires every that a CSPP make must meetings they are a matter of record effort negotiate a contract. transcript hearing earlier Pages through

Is there other effort could have taken to obtain a contract which Q read Have the Commission’s de- complied prior Septem- with PURPA 4th, cision in this matter March issued rd, ber 23 1985? denying Company Lumber A I no know of other the benefits the rates effort. issued under been negotia- involved number Case U-1008-190? Yes, Q you briefly why

A I have. Could describe you? letter was sent to Q you Do believe that Lumber A The letter was sent to me because I Company every exhausted reasonable ef- Olson, Don the Senior Vice had called fort to obtain a contract from Water Washington President of Water Power— Power? SWISHER: Would COMMISSIONER Bryan A I believe we did. Lester said Tyrer. you up the mike a little Mr. move sign they absolutely that would not a You tend to be a crooner. rates, approved and in contract at the time, year’s Washington —expressing my over a con- THE WITNESS: 4(c) negotiations to gave ground little on the cern the failure of about rate, a conclu- progress rapidly more towards long-term language. fixed contract signing and also ex- contract sion Q Bryan you When did Mr. tell that he 4(c) feelings pressed my strong that existing sign would not a contract at the Purpa language was violation rates? contrary regulation and to orders 16th, September A Idaho PUC. Q Tyrer, you Mr. do recall when Wash- Turning to Q BY MR. ORNDORFF: ington Water Power’s rates were sus- letter, the last page of that the second pended? interpret you did paragraph, full how suspended A that The rates were after 4(c) regard to the paragraph that with date. language? Q you Do recall when? mean interpreted paragraph A I No, A I don’t. 4(c) firm on they going were to hold accept language and that we could either Q Tyrer, any Mr. was there action take a walk. it or we could you prior have taken to fil- could complaint in this case that would Q see, happened you after I and what signing have resulted Water Power this letter? received contract? arranged meetings future with A I any They Bryan. I met him here in Boise A I’m unaware of action. Mr. period during hearing for a brief in the willing meeting Spo- hallway and we had a 4(c) language early on and recom- kane in his office. sign it my that we not mended to client unacceptable. it was time, Power, because Q And at did Water A It Idaho ceptable? Q contract. that was entered the contract hearing that was a ter A Q Why was Mr. Yes, I Bryan ^[*] gave Tyrer, ^[*] do. Washington, future so, you? do ^[*] in at the December 20th fact, Commissions, both in 4(c) letter from Mr. Les- ^[*] recall the exhibit you jurisdiction over language didn’t ^[*] have a unac- ^[*] prior we’ve they would A At no time Mr. 4(c) search whether Section dicate a 16th BY MR. Q THE COMMISSIONER WARD: September of their Tyrer. meeting to the heard about WITNESS: At willingness change September standard contract? ORNDORFF: did 16th prior their meeting today, 16th indicate— no time change. mind on 4(c) complied meeting Did decide that did September prior they in- Louder, Section re- PURPA? Tyrer, Q do BY MR. ORNDORFF: just that I hand- you recognize the letter A I did. you?

ed Q opinion an as to wheth- youDo Yes, er— A do. Au- It consists of a letter dated opinion an it did not com-

A I have evidence. ply- 5, 1985, period of time which was that gust opinion Q based on? being What’s Empire believed that when reading It’s the rules A based negotiating by Water Power stonewalled a num- regulations and discussions with long way in goes This letter a contract. people actively involved in ber of who are ac- establishing that it was Water Power’s PURPA-type programs. re- keeping bay tions in objec- point, over At Water Power’s filing complaint: in the sulted tion, Empire’s D admitted into Exhibit Washington Water Tyrer’s testimony any with the discussions with Mr. continued letter at hand: Power?

Q Tyrer, BY MR. af- A I had two discussions. One was ORNDORFF: Bryan you you ter reviewed did referred to that Lester Exhibit discussion hallway already and I had in the I think most of this matter is on Commis- sion and the other was in his office on and it seems to unnecessar- record September ily repetitious. 16th. Q your meeting Sep- I see. Prior to COMMISSIONER SWISHER: Can . 16th, why?

tember was there other com- tell us The record of the first part hearing mission action which were aware of of the record of this hear- 4(c) spoke ing. to the issue of the lan- guage? If I MR. ORNDORFF: understand Yes, order, approving A an order the Ford one of the issues Commission’s sus- Contract and one other contract. raised the notice is unilateral Commission, rates, pension sjc ‡ jf: $ sf: that, interpret asked to hear additional Q BY the MR. ORNDORFF: Is this testimony on that issue. order, Tyrer, you Mr. that COMMISSIONER SWISHER: Yes. mentioning? part MR. And that’s the ORNDORFF: Yes, A it is. going I’m after. Q Now, Tyrer, you Mr. could describe All SWISHER: COMMISSIONER Company why Empire to us Lumber right. the issue and that’s So that 4(c) language? accept could not the you’re headed? where 4(c) my language judgment, A In posi- MR. ORNDORFF: That is our preclude long-term financing, even would suspen- tion. That’s when the unilateral financing project. It construction of the rates occurred. sion unreason- subject my would client to an All SWISHER: COMMISSIONER degree of risk because the rates able objec- right, point, if that was an to that term fixed. weren’t fixed and the wasn’t tion, Strong— Mr. subject change by any It future was Yes, was, Mr. MR. Chair- STRONG: Commission, Idaho, only of but also man. Washington. Well, COMMISSIONER SWISHER: Q nego- Tyrer, you previously Mr. have it’s overruled. qualified facility tiated a contract for a Q Tyrer, Mr. BY MR. ORNDORFF: in the Water Power that has been built important you describe the other service ar.ea? Septem- that were discussed at issues Yes, A I have. 16th, meeting? ber Q facility? was What that issues discussed A The four that.were Inc., Plummer, Idaho. A Wood Power meeting were the that of substance at Q Tyrer, did that contract have Mr. 4(c) security rate, language, in it? 4(c)-type language clause, Washing- consider and an offer to No, A it did not. site, preference for a ton Power’s Q you Power ever offer an cooperation, Did Water spirit in a an offer made 4(c)language explanation why the wasn’t if them that propose and we in the Plummer contract? Maries or preference for either St. Kamiah, we would consider Weippe over 4(c) explanation for the lan- A There making going preference their before com- guage protect it would was that — They agreed project. forward pany ratepayers. respond. nev- study it and There was Now, September Q meeting at them. response forthcoming er a 4(c). 16th, talked about 1985—we’ve Q issues resolved Were of these key the other issues What were meeting. meeting? were raised at that at that meet- Chairman, Nothing resolved go- I’m A Mr. MR. STRONG: ing. time. interpose objection an at this Q appropriate utility, you why nothing with the and then Can tell us all resolved? commence with refinements of obtaining permits studies so A Bryan position Mr. took the adamant on. that he would not a contract at the Q inspected equipment approved my standpoint, you rates. From Have negotiations bought Mr. from the Crown negoti- ended. You cannot Klaue Zellerbach, position Twisp plant? ate when there’s an adamant party’s on one side. Yes, A I have. Q anything you Is there could Q Did ever believe that 16th, September done after 1985 to ob- by the size of the would be restricted existing

tain a contract at the then rates? Twisp plant and the size that eventual- ly Bryan’s position project? A I assumed that Mr. built its Company’s position was the he and was No, A sir. certainly conveyed firm on it because he Q Why didn’t believe manner; very it in firm there was Twisp plant would restrict the size of the nothing we could do. plant? Q Tyrer, when went to that Well, my understanding A it was September meeting, 16th 1985 was it purchased Twisp plant the owner had ready, willing sign a contract able potential portion complete as a of a co- per- Water Power that would have generating system. project? mitted the construction Q your study, Leighton, you Mr. did A meeting hopeful We went to that plant ever assume where the would be posture that we would be in that when located? 4(c) left and the language we was the Yes, A I did. hold-up initially. Q Where was that location? Bryan Mr. me informed that he had A Kamiah. turned it over to counsel for their consid- Q you study Have done a fuel to deter- eration to see if it could be modified and adequate mine if there is wood waste findings. that he’d let me know those plant? available for the That communication was never re- preliminary study part A I did fuel him, following ceived from but that dis- report you. of this that’s before cussion, he they said that would not Q you any Have done other research approved a contract at the rates. you report since did this in— (Emphasis supplied). A I did not. I have obtained data from Leighton Mr. Empire. testified An regarding time to time from Mr. Klaue employee Corporation, of Potlatch he does being much how fuel is sold from the

private consulting, and was retained Weippe, mills at but I have not done Empire to cogeneration assist study further on it. project. He identified Water Power Exhib- Q Leighton, opinion do have an report it 103 as the of his evaluation of ready as to whether was to build Empire’s project. report The was dated project in 1985 if Water September testimony: 1984. His acceptable offered an contract? Q you briefly your Can summarize rec- A Yes. report? ommendations this Q isWhat that? Well, they’re A outlined on that same A I ready. believe page, essentially my recommenda- get tions to the High owner were to the facili- Commissioner on cross-examination ty qualified, which I inquired Leighton believe has taken of Mr. about the site place, proceed by obtaining selection, Twisp generator: a contract and the

Q site, through respect way I under- mind all the this. That was And with big things. stand in our we indicated the site one order process determination was made Well, Q I don’t believe the order said negotiations, indi- your information that. might cates that have been se- that site I A It seemed like it referred to—like negotia- lected well in advance say, I don’t have it here in front of me. tions. point. go through point by can’t got together A in the Mr. Klaue and Q and let’s walk I do have the order it was—I believe it summer of 1984 and through maybe you help can me on it and shortly time July was or it was after that question. zeroing in on Kamiah as to that we were question, simply On the site order likely site. the most says that the site selection was made Q existing plant Company owns during process negotiations, Zellerbach, bought from Crown when words, selection, in other the site moved, portion or that of it was during process. made sometime moved, it moved to? Is it where was major items is that One of the in Kamiah? now located output is still unknown. Kamiah, A Most of it is located how- an error? Was that Spokane. it is stored in ever some of No, A we needed to have a contract generator required sets The turbine put things together all of as far as our storage than there was facili- little better output. feel that —without a We didn’t being kept in Kamiah and that’s ties at contract, really go and con- can’t out Spokane. people waste from tract for additional Q respect supply, fuel in our With to a contract. There you when don’t have found that there was inade- order we doing point. you’re All is would be no quate supply fuel and I think it wasn’t up higher setting yourself you’re testimony, entirely upon your but based you If don’t have a your waste. cost upon testimony of Mr. Klaue. also you go out and make a con- contract—if you Do confirm that? somebody and don’t have tract with Yes, A I do. contract, pay too you’re going to have to Klaue, Empire, August president Mr. much for it. interrogated by High as

was Commissioner you need a contract before Naturally wrong first order: to what was with the waste, get the but go out and you can BY HIGH: COMMISSIONER waste, problem. the waste is no plenty of waste. having a There’s Q suppose I the reason we’re rehearing of the motion for is because statement Q go back to counsel’s Let’s indicating that there reconsideration hearing Sep- that on at the outset of in the Commission or- were some errors 16th, ready to Company was tember Fact; this Findings of der and the Washington Water sign a contract impression? your this, fact, Power; is in correct? Yes, sir, way. strongly I feel A A Yes. in

Q you those areas define Could items, and I Q respect to all the With in terms the order was erroneous in eight or ten items there think Findings Fact? which indicates even Company’s brief subject filed were the brief was of me the time I have the order front A don’t con- security and the you mentioned I came I didn’t examine it before to— Washington currence of here, one of them was that but I think many items There are a site was another. didn’t have mentioned that we was filed not too the brief which believe mind, certainly had a site and we plant for primary as a plant many items utilize long ago. There are still sign; cogeneration? Company willing to the Kamiah that the is that correct? entirety, inadequate in its It’s A No. use, right, A but we would That’s that we can equipment there’s but gotten over those signed if could have we having entertained backup. We possibly hurdles. not shut so that we’re backup system 16th, long period of time without September this for a Q on this down Now of con- penalties a matter long list of items were can’t stand any power. We they not? troversy, were we that, possible it’s so this and as a equipment some of could use Yes, they A were. or—I’m generator backup, the turbine those Q ready sign to until You weren’t it some get out value out of sure we’ll 16th, Compa- September were—so on another. way sign contract? willing ny was not megawatt Q respect to the 9.9 Now A their terms. Not on future, assuming you your plant that’s negotiation Q Okay. Yeah. So contract, plant do have that get a say underway to process you might prelimi- done order or have under resolve those issues. nary work? Yes, A sir. Leighton from time A I have asked Q And one issue— time, our plants come to we have willing give us a rate They A weren’t throughout period whole attention this really— we couldn’t either so capacity and utilize that that would 16th, Q obviously September that’s On opportunities. investigated several we’ve you apparently time found the first naturally, bought anything, We haven’t willing Company they were not We don’t have a contract. because we on the old rates? money expend any more don’t want Well, very A it was evident to me on expended. than we’ve weren’t, September yes. 16th that go Q is not to out Your intention Q timing guess trying get I’m high price very at a buy equipment new thing an down. The Commission issued existing try find instead required order Idaho to file equipment? Sep- new rates and this order was issued Yes, going possi- at all A to look we’re Now, you tember 6th. were aware bilities. September that order at least on 16th? single 10-mega- Q you located a Have High, say you’re A I Mr. would have to plant anywhere? watt expertise I’m getting me a field of very good not at. I defer to Mr. would A No. questions, you if mind.

Tyrer those don’t 12-megawatt Q you located a Or have Fine, words, Q I should ask other example, that could be scaled plant, for respect Tyrer questions these down? errors in the Commission order? No, sir, have not. A we Yes, appreciate I that. A sir. or two 5-me- Q 5-megawatt plant aOr me, Q thing you tell perhaps can One gawatt plants? you bought from power plant Crown negotiations Actually, when our A No. Zellerbach, indirectly— really haven’t re- down—we broke Yes, A sir. got to angle hard. We’ve searched Q megawatt? —is a 3.75 go we out have a before A Yes. money time and and effort spend the there, they’re out equipment, locate Q your answers And I understand your as I understand. to cross that it’s not intention Q plant essentially, So the size if I un- wrong me I’m derstand —correct if —are One, things: get

based on try two

plant megawatt under the 10 which will you qualify

allow for a standard con-

tract? Yes,

A sir.

Q secondly, you And do have fuel

supply adequate up megawatt for to a 10

plant? Very

A adequate.

Q And can infer from that that

might put plant up size to 10

megawatts depending on what lo-

cate? Depending figures

A come how the

out. reflect, my opinions

As two in this case that, fully persuaded

am as between Afton Empire, justice evenly not meted good

out the commission. What was going necessarily

for Afton is not to be

good Empire. my opinion I for first also, public

ventured that the weal was

served moved Em- commission which

pire only out of court when fault

trying cogenerator in accord- become congressional

ance mandate—all par-

because of frustration aimed at both Washington

ties—but which left injury.

Power with no visible Donovan,

Roark, Praggastis, Elkins & claimant-appellant. Phillips, Hailey, Rivers, Ketchum, argued. Kathleen E. Gen., Jones, Roger T. Atty. Mar- Jim 755 P.2d 1282 Gen., Boise, (argued), Deputy Atty. tindale HINE, Charlene M. SSA 519 Idaho, Employment. Dept, of for State of Claimant-Appellant, Baxter, County Pros. Twin Falls K. Ellen v. Falls, employer-respondent Atty., Twin COUNTY, TWIN FALLS County. Falls Twin Employer-Respondent, HUNTLEY, Justice. Idaho, Department State appeal in this is whether The sole issue Respondent. Employment, Commission erred deter- the Industrial 17082. No. claimant, Hine, mining that the Charlene Supreme Court of Idaho. voluntarily without employment left her employ- with her good cause connected May ment. County employed Charlene

Twin Falls July deputy Hiñe sheriff

Case Details

Case Name: Empire Lumber Co. v. Washington Water Power Co.

Court Name: Idaho Supreme Court

Date Published: May 12, 1988

Citation: 755 P.2d 1229

Docket Number: 16634

Court Abbreviation: Idaho