Ellis-Hall Consultants v. Public Service Commission

2016 UT 34, 379 P.3d 1270, 818 Utah Adv. Rep. 10, 2016 Utah LEXIS 92, 2016 WL 4098684
CourtUtah Supreme Court
DecidedJuly 28, 2016
DocketCase No. 20140616
StatusPublished
Cited by15 cases

This text of 2016 UT 34 (Ellis-Hall Consultants v. Public Service Commission) is published on Counsel Stack Legal Research, covering Utah Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ellis-Hall Consultants v. Public Service Commission, 2016 UT 34, 379 P.3d 1270, 818 Utah Adv. Rep. 10, 2016 Utah LEXIS 92, 2016 WL 4098684 (Utah 2016).

Opinion

*1271 Associate Chief Justice Lee,

opinion of the Court:

1 Ellis-Hall Consultants is involved in the development of wind power projects in Southeastern Utah, The aim of these projects is to sell power to PacifiCorp through its Rocky Mountain Power division. To qualify to do so, Ellis-Hall is required to enter into and secure agency approval of a power purchase agreement. But first Rocky Mountain Power is required by governing regulations to provide "indicative pricing" to a producer seeking to pursue a power purchase agreement, Indicative pricing is to be "tailored to the individual characteristics of the proposed project." Rocky Mountain Power,: Electric Service Schedule No. 38 T.B(4) (2014), And it is aimed at allowing the producer to "make determinations regarding project planning, financing, and feasibility." Id.

12 Ellis-Hall received an indicative pricing proposal in 2012. Yet Rocky Mountain Power later rescinded that proposal and refused to proceed with negotiations on a power purchase agreement under its earlier indicative pricing. It did so on the ground that the Utah Public Service Commission had since issued an order adopting a new pricing methodology. Ellis-Hall challenged that decision in a proceeding before the Commission. Ellis-Hall asserted a right to rely on the old indicative pricing proposal in negotiating a power purchase agreement. The Commission disagreed. We reverse.

I

T3 To encourage the development of alternative energy resources, federal law requires a utility to purchase wind energy and other forms of alternative power from qualifying facilities 1 at its avoided cost-what it would have cost the utility to generate the power itself or purchase it from another source. 16 U.S.C. § 8242-3; 18 C.F.R. § 292.101. The Commission establishes the methodology for determining avoided cost. It also promulgates regulatory tariffs establishing the rules for the negotiation and approval of power purchase agreements.

T4 The tariff in question here is called Electric Service Schedule 88. Schedule 88 was adopted by the Commission in 20083. It governs negotiations between a qualifying facility and. Rocky Mountain Power.

15 Under Schedule 38, Rocky Mountain Power is required to provide a qualifying facility with an indicative pricing proposal once the facility submits certain information regarding a proposed project, The pricing proposal must be “tallored to the individual characteristics of the proposed prOJect " Schedule 38 LB(G). And it is aimed at allowing the owner of the qualifying facility to "make determinations regarding project planning, financing, and feasibility." Id.

T6 Schedule 88 also notes that indicative "prices are merely indicative and not final and binding" until the parties negotiate and execute a power purchase agreement that is approved by the Commission. Id. And it identifies specific subsequent steps that a qualifying facility should take to be entitled to receive a draft power purchase agreement and to proceed toward final negotiation.

T7 Rocky Mountain Power may "update its pricing proposals" in response to "changes to the Company's avoided-cost calculations." Id. at 1.B(6)(c). But it may "not unreasonably delay negotiations" and must "respond in good faith." Id. at LB(6)(2). Beyond that Schedule 88 says little about the relationship between avoided cost methodologies and indicative pricing. It does not speak specifically to the effect of a change in avoided cost methodology on existing indicative pricing proposals. -

8 The Commission adopted a "market proxy" methodology for determining the avoided cost for wind power projects in 2005. Under that method, avoided cost was determined by reference to Rocky Mountain Power's most recent request for a proposal to supply wind energy. So this method pegged avoided cost at the level of the most recent market-based wind contract-executed in 20090-rather than looking at the current cost to generate energy. At the time this methodology was adopted, it was considered fair because Rocky Mountain Power anticipated *1272 sending out a request for a proposal and negotiating a new price each year.

9 Ellis-Hall requested indicative pricing for its wind power project in 2012. At that time the "market proxy" methodology was still in place. Soon thereafter, however, Rocky Mountain Power sought the Commission's approval for a change in methodology. Because Rocky Mountain Power had not issued a proposal in several years and the cost of producing wind energy had decreased, it argued that it was overpaying under the market proxy methodology. It also sought a stay-an order allowing it to refuse to issue new indicative pricing proposals until the Commission could decide whether to adopt a new methodology.

10 Ellis-Hall moved to intervene. It sought to challenge the requested change in methodology and to block the issuance of a stay. The Commission granted Ellis-Hall's motion to intervene. It also bifurcated the proceedings into two phases.

J11 In the first phase the Commission considered-and denied-Rocky Mountain Power's request for a stay. In so doing, the Commission explained that the request "ignore[d] the practical realities of bringing a large wind [qualifying facility] project from inception to conclusion, in assuming all five projects in the queue [including Ellis-Halll would be able to negotiate power purchase agreements before our order in Phase Two." Id. at 17. Yet the Commission also noted the possibility that "the outcome of the Phase Two hearings and the interests of ratepayers may require the application of new avoided cost calculations for ... projects not in possession of executed power purchase agreements when the Phase Two order is issued." Id.

112 After the Commission's "Phase One" order was issued, Rocky Mountain Power provided Ellis-Hall with an indicative pricing proposal based on the market proxy methodology. Before Ellis-Hall was able to negotiate a power purchase agreement with Rocky Mountain Power, however, the Commission issued its "Phase Two" order. This order "discontinue[d]" use of the market proxy methodology "for determining indicative prices for Schedule 88 wind [facilities] going forward." Order on Phase Two Issues at 18. It also adopted a new avoided cost methodology-the Proxy/PDDRR (partial displacement differential revenue requirement) method, which allowed Rocky Mountain Power to determine its avoided cost based on current energy production cost rather than the cost of the most recently executed proposal. This new methodology was expected to lower Rocky Mountain Power's avoided costs. 2 Id. Finally, the Phase Two order provided that the market proxy method was discontinued "going forward." Id. It accordingly concluded that "future requests for indicative pricing" would be governed by the new methodology, thus "ensur[ing]" that "future indicative prices ... will reflect" market costs "appropriately." Id.

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Cite This Page — Counsel Stack

Bluebook (online)
2016 UT 34, 379 P.3d 1270, 818 Utah Adv. Rep. 10, 2016 Utah LEXIS 92, 2016 WL 4098684, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ellis-hall-consultants-v-public-service-commission-utah-2016.