Empire Lumber Co. v. Washington Water Power Co.

755 P.2d 1229, 114 Idaho 191, 1988 Ida. LEXIS 100

• Court: Idaho Supreme Court
• Decided: May 12, 1988
• Docket: 16634
• Status: Published

Opinions

SHEPARD, Chief Justice.

This is an appeal from a decision of the Idaho Public Utilities Commission denying a motion for an order directing Washington Water Power Company to enter into a contract with Empire Lumber Company for the purchase of electricity pursuant to the Public Utility Regulatory Policies Act. We affirm.

In 1978 Congress, as a part of the National Energy Act, enacted the Public Utility Regulatory Policies Act (PURPA), P.L. 95-617, 92 Stat. 3117 (1978). Section 210 of that Act requires electrical utilities to purchase the power produced by co-generators or small power producers which obtain qualifying status under the Act. Pursuant to section 201 of the Act, co-generators or small power producers must meet three criteria to become Qualified Facilities (QF). Those criteria encompass size, fuel, and ownership. Upon satisfaction of those criteria, the owner or operator is required to furnish notice to the Federal Energy Regulatory Commission (FERC). FERC promulgated regulations implementing sections 201-210 of PURPA.

The implementation of PURPA as it relates to co-generation and small power producers, and the regulations promulgated by FERC, have been largely left to the regulatory authorities of the individual states. PURPA, section 210(f), provides in part: “Each state regulatory shall ... implement such [FERC] rule ... for each electric utility for which it has ratemaking authority.” The FERC regulation, 18 C.F.R. § 292.401(a) (1980), further provides:

Such [state] implementation may consist of the issuance of regulations, an undertaking to resolve disputes between qualifying facilities and electric utilities under subpart C (arrangements between electric utilities and qualifying cogeneration and small power production facilities under § 210 of (PURPA)) or any other action reasonably designed to implement such subpart.

The Idaho Public Utilities Commission is the agency authorized and directed to supervise and regulate electrical utilities, and has ratemaking authority over such utilities. I.C. §§ 61-501, 61-129; Grever v. Idaho Telephone Company, 94 Idaho 900, 499 P.2d 1256 (1972). The Commission, as part of its statutory duties, determines reasonable rates and investigates and reviews contracts. I.C. §§ 61-502, -503. The Commission also has jurisdiction to hear complaints against utilities alleging violation of any provision of law or of any order or rule of the Commission. I.C. § 61-612. See, Afton Energy Inc. v. Idaho Power Company, 111 Idaho 925, 729 P.2d 400 (1986). Thus, it is clear that the Idaho Public Utilities Commission is granted authority by the Idaho statutes to, and is the appropriate forum to resolve whether a co-generator or small power producer has satisfied the criteria for “qualified facility” status, and to determine whether a regulated utility has an obligation under PURPA to purchase power from an applicant.

In the instant case, Empire Lumber Company has, since the passage of PURPA, investigated the construction of a co-generation plant to produce electrical power for sale to Washington Water Power. Empire has proposed the construction of a facility to burn waste wood products for the production of electrical power at mills at either Kamiah, St. Maries, or Weippe, all of which are within the service area of Washington Water Power. In 1983 Empire purchased used equipment from Crown Zellerbach and retained a consulting engineer for advice as to the development of a PURPA power project. During 1984 and 1985 Empire attempted to negotiate an agreement with Washington Water Power under which Washington Water Power would purchase electric power from Empire. Those negotiations were largely unsuccessful. In June 1985, Washington Water Power presented Empire with a contract proposal, however objections were made to certain terms, i.e.:

Section 4 —Terms of Agreement

Section 9 —Liquidated Damages

Section 12 — Payments

Section 15 — Indemnity Insurance and Performance Bonds

Section 16 — Security

The last negotiating session between Empire and Washington Water Power took place on September 15, 1985. On September 23, 1985, Empire filed a complaint with the Idaho Public Utilities Commission requesting that the Commission order Washington Water Power to execute a long-term, fixed-rate contract at the avoided cost rates.¹ It was not until October 10, 1985, that Empire filed its notice of a 9.9 MW QF at Kamiah, Idaho.

Hearings were held on Empire’s complaint, wherein Empire argued that Washington Water Power was required pursuant to PURPA to enter into a contract for the purchase of power from Empire, and Washington Water Power argued that Empire had no specific sized plant or configuration in mind for its project which were required by PURPA, and thus was not ready, willing and able to sign a contract with Washington Water Power. Thereafter the Commission issued its order dismissing Empire’s complaint, and concluding that “at no time was Empire ready, willing and able to sign a contract with Washington Water Power.” In its order, the Commission stated:

Implicit in this guideline is the requirement that (Empire) have knowledge of the facility’s size and design specifications. While we do not look for virtual completion of a project as a prerequisite to ordering a purchase power contract, substantial progress towards its completion should be evident.

Thereafter, Empire filed a petition for reconsideration which was granted, and a further hearing was held in May 1986. The Commission then issued its further order, again dismissing Empire’s complaint. While the Commission discussed rates which must be offered to a QF, the Commission again concluded that Empire had not “perfected its entitlement” to a contract.

The Idaho Constitution authorizes this Court only limited jurisdiction to review orders of the Public Utilities Commission. ID. CONST, art. 5 § 9.1.C. § 61-629 further defines that limited jurisdiction, and this Court has held:

The Commission is a fact finding, quasi-legislative body authorized to investigate and determine issues presented by a utility’s petition for increased rates. Where its findings are supported by competent and substantial evidence this Court is obliged to affirm its decision. Boise Water Corp. v. Idaho Public Utilities Commission, 97 Idaho 832, 838, 555 P.2d 163, 169 (1976); Application of Pacific Telephone & Telegraph Co., 71 Idaho 476, 480, 233 P.2d 1024, 1026 (1951).

See also Utah-Idaho Sugar Co. v. Intermountain Gas Co., 100 Idaho 368, 376, 597 P.2d 1058, 1066 (1979) stating, “[I]n reviewing findings of fact we will sustain a Commission’s determination unless it appears that the clear weight of the evidence is against its conclusion or that the evidence is strong and persuasive that the commission abused its discretion.” In the instant case, as stated, the Commission held that Empire was at no time “ready, willing and able to sign a contract with Washington Water Power.” As aforestated, a co-generator or small power producer must comply with FERC regulations to obtain a QF status. The Commission found that Empire did not file its notice of a QF status under PURPA until October 10, 1985, after Empire had filed its complaint in the Idaho Public Utilities Commission against Washington Water Power. The record before the Commission supports the findings by the Commission that the output of Empire’s proposed facility is still an unknown, and that the sizing of the facility is not based upon the capacity or configuration of any known equipment. The Commission concluded that “[AJpart from filing a Notice with FERC, Empire has taken no action to acquire, design or construct a 9.9 MW facility.” The evidence before the Commission reveals that the feasibility study conducted by Empire in 1984 was concerned with the amount of fuel required for a 3.75 MW or a 5 MW plant at Kamiah, Idaho. The evidence further reveals that prior to the filing of the complaint before the Idaho Public Utilities Commission, Empire had not committed to build a plant of any particular size or capacity. Hence, we hold that the evidence clearly supports the decision of the Idaho Public Utilities Commission that Empire was at no time ready, willing and able to enter into a binding contract with Washington Water Power.

We deem it clear that the intent of PURPA is not to require an electric utility company to enter into a contract to purchase electrical power from an entity which in essence only desires to obtain an option to sell some amount of electrical power to be generated at some plant of unknown size or capacity. Such an entity must first become a QF, and in the instant case any concrete facts relating to the proposed generation facility were not known by Washington Water Power during the negotiation process, and such facts, as were defined, became known only following the filing of the complaint with the Idaho Public Utilities Commission. The evidence clearly supports the decision of the Idaho Public Utilities Commission that at no time during negotiations was Empire ready, willing and able to sign a contract with Washington Water Power. The decision of the Idaho Public Utilities Commission is affirmed; costs to respondent.

DONALDSON, BAKES and HUNTLEY, JJ., concur.

1 . "Avoided cost” means the incremental costs to an electric utility of electric energy or capacity or both which, but for the purchase from the qualifying facility or qualifying facilities, such utility would generate itself or purchase from another source. 18 CFR § 292.101(b)(6) (4-1-86).