Afton Energy, Inc. v. Idaho Power Co.

761 P.2d 1204, 114 Idaho 852, 1988 Ida. LEXIS 110
CourtIdaho Supreme Court
DecidedSeptember 2, 1988
DocketNo. 17052
StatusPublished
Cited by2 cases

This text of 761 P.2d 1204 (Afton Energy, Inc. v. Idaho Power Co.) is published on Counsel Stack Legal Research, covering Idaho Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Afton Energy, Inc. v. Idaho Power Co., 761 P.2d 1204, 114 Idaho 852, 1988 Ida. LEXIS 110 (Idaho 1988).

Opinions

JOHNSON, Justice.

This is a contract case involving the interpretation of a portion of a Power Sales Agreement (the Agreement) between Afton Energy, Inc., (Afton) and Idaho Power Company (Idaho Power). The primary issue presented is whether the purchase price and terms of payment for power set forth in the Agreement are subject to adjustment according to other provisions of the Agreement. The trial court decided that they were not, and we affirm.

I.

THE FACTS

The underlying facts concerning this case are thoroughly stated in two prior decisions of this Court. Afton Energy, Inc. v. Idaho Power Co., 107 Idaho 781, 693 P.2d 427 (1984) (Afton I/III) and Afton Energy, Inc. v. Idaho Power Co., 111 Idaho 925, 729 P.2d 400 (1986) (Afton IV).

The provisions of the Agreement that are at issue here are as follows:

[853]*853ARTICLE IV: PURCHASE PRICE AND METHOD OF PAYMENT

(A) Firm Energy. Idaho shall pay Seller monthly for Firm Energy delivered and accepted at the Unit Avoided Energy Cost rate specified in Appendix “A”.
(B) Dispatchable Capacity. Seller shall be paid for Dispatchable Capacity made available to Idaho in accordance with Appendix A. The applicable Capacity Price for purposes of computing Capacity payments is $350 per kilowatt-year, except as may be adjusted as provided in Appendix A or Appendix B. The Capacity Price is derived from Table 1, Appendix A. Idaho’s obligation to pay Seller for Capacity furnished to Idaho shall commence as of the Operation Date.
Payment for the Capacity provided in each 12-month period following the Operation Date will be made in twelve (12) equal monthly amounts.
(C) Following the Initial Period, the purchase price specified in (A) and (B) above and the method for determining the Capacity specified in Appendix A, as well as all other rates, terms and conditions set forth in this Agreement, will be subject to the continuing jurisdiction of the Idaho Public Utilities Commission and will be subject to change or revision by order of the Idaho Public Utilities Commission upon a finding, supported by substantial competent evidence, that such change or revision is just, fair, reasonable, sufficient, non-preferential and non-discriminatory. In no event will such a revision result in a purchase price higher than the purchase price that would have been paid without such a change or revision by the Idaho Public Utilities Commission.
(D) If, during the Initial Period, the Idaho Public Utilities Commission determines or approves new purchase prices for power generated by cogeneration or small power production facilities which purchase prices, had they been in effect during the Initial Period, would have resulted in Idaho’s paying Seller a lesser amount than Idaho paid Seller based on the rate, terms and conditions set out in this Agreement, Seller agrees to repay Idaho, without interest, the difference between the total dollars paid during the Initial Period under this Agreement and the lesser dollar amount which would have been paid under the revised purchase price schedule adopted by the Idaho Public Utilities Commission during the Initial Period. Any such repayment will be made by reducing the Capacity payments made to the Seller during the ten-year period following the Initial Period. In no event will the amount of such repayment exceed $300,000 per year.

ARTICLE XIII: LEGAL DISPUTE

It is understood and agreed that a bona fide legal dispute exists between Seller and Idaho as to the authority of the Idaho Public Utilities Commission to order Idaho to enter into contracts containing rates, terms and conditions with which Idaho does not concur. Idaho proposed the following language:
The rates, terms and conditions set forth in this agreement are subject to the continuing jurisdiction of the Idaho Public Utilities Commission. The rates, terms and conditions under this agreement are subject to change and revision by order of the Commission upon a finding, supported by substantial competent evidence, that such rate, term or condition change or revision is just, fair, reasonable, sufficient, non-preferential and non-discriminatory.
The Idaho Public Utilities Commission rejected that language. Seller and Idaho are in agreement that if, as a result of a legal determination as to the Idaho Public Utilities Commission’s authority to dictate rules, terms and conditions or to order that contracts be entered into by Idaho, it is determined that the Idaho Public Utilities Commission has such authority, then the purchase price and terms set out in paragraphs (A) and (B) of Article IV will be in effect for the full term of the Agreement. If the legal determination results in a finding that [854]*854the Commission does not have'that authority, paragraphs (C) and (D) of Article IV of the Agreement will be applicable.

Following the decision of this Court in Afton IV, Afton filed this action seeking a declaratory judgment against Idaho Power declaring that paragraphs (A) and (B) of Article IV are in effect for the entire thirty-five year term of the Agreement. Idaho Power counterclaimed requesting a declaratory judgment declaring that paragraphs (C) and (D) of Article IV are in full force and effect. Both parties filed motions for summary judgment seeking relief on their respective claims. The trial court ruled that Afton had prevailed in the legal dispute described in Article XIII of the Agreement and that paragraphs (A) and (B) of Article IV of the Agreement were in full force and effect. Idaho Power has appealed from the trial court’s decision.

II.

THE LEGAL DISPUTE WAS WHETHER IDAHO POWER WAS REQUIRED TO PURCHASE POWER FROM AF-TON AT A FIXED RATE FOR THIRTY-FIVE YEARS.

As this Court said in Afton I/III, these cases began when the Idaho Public Utilities Commission (the Commission) “ordered Idaho Power to ‘agree to purchase from Afton Energy, Inc., cogenerated power in the amount and for the time period tendered by Afton, at the avoided cost rates for Idaho Power Company that have previously been prescribed and approved by this Commission and that are currently in effect.’ ” 107 Idaho at 783, 693 P.2d at 429.

Article XIII of the Agreement attempts to describe the “bona fide legal dispute” that existed between Afton and Idaho Power at the time Idaho Power appealed this order of the Commission. None of the formulations of this dispute contained in Article XIII accurately and succinctly describe the nature of the dispute. Simply stated, the legal dispute was that Afton wanted to sell Idaho Power cogenerated power for thirty-five years at the avoided cost rates that had previously been established by the Commission and that were in effect in 1982, and Idaho Power denied its obligation to purchase the power for that period and at those rates.

III.

AFTON PREVAILED IN THE LEGAL DISPUTE AND ARTICLE IV(A) AND (B) ARE IN EFFECT.

In Afton I/III

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Related

Afton Energy, Inc. v. Idaho Power Co.
834 P.2d 850 (Idaho Supreme Court, 1992)

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Bluebook (online)
761 P.2d 1204, 114 Idaho 852, 1988 Ida. LEXIS 110, Counsel Stack Legal Research, https://law.counselstack.com/opinion/afton-energy-inc-v-idaho-power-co-idaho-1988.