Spectrum Glass Co. v. PUD of Snohomish County

119 P.3d 854
CourtCourt of Appeals of Washington
DecidedSeptember 14, 2005
Docket54460-8-I
StatusPublished

This text of 119 P.3d 854 (Spectrum Glass Co. v. PUD of Snohomish County) is published on Counsel Stack Legal Research, covering Court of Appeals of Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Spectrum Glass Co. v. PUD of Snohomish County, 119 P.3d 854 (Wash. Ct. App. 2005).

Opinion

119 P.3d 854 (2005)

SPECTRUM GLASS COMPANY, INC., Appellant,
v.
PUBLIC UTILITY DISTRICT NO. 1 OF SNOHOMISH COUNTY, Washington, Respondent.

No. 54460-8-I.

Court of Appeals of Washington, Division 1.

July 5, 2005.
Publication Ordered September 14, 2005.

*855 Phillip H. Ginsberg, Attorney at Law, Shelley Hall, Stokes Lawrence, Seattle, WA, for Appellant.

Christopher C. Cramer, Michael Alan Goldfarb, Law Offices of Michael Goldfarb, Seattle, WA, for Respondent.

SCHINDLER, J.

¶ 1 Spectrum Glass Company (Spectrum) contends the trial court erred in dismissing its breach of contract and promissory estoppel claims against Snohomish County Public Utility District No. 1 (the PUD) on summary judgment. Spectrum claims there are material issues of fact regarding whether the rate contained in its Bridge Contract with the PUD was subject to change, and whether the PUD promised Spectrum a fixed rate. We conclude the only reasonable inference from the extrinsic evidence is that the rate in the Bridge Contract was subject to change. Because the applicable rate was set by contract, Spectrum's promissory estoppel claim fails as a matter of law. We affirm the trial court's decision to dismiss Spectrum's claims for breach of contract and promissory estoppel.

FACTS

¶ 2 Spectrum is a glass manufacturer that has operated a factory in Snohomish County since 1979. Spectrum's manufacturing process is energy-intensive because the glass furnaces used in Spectrum's factory must be kept continuously hot to prevent molten glass from hardening and destroying the furnaces. The PUD is a municipal corporation that supplies power and water to residents of Snohomish County and Camano Island. The Board of Commissioners of the PUD (the Commission) has the exclusive authority to set utility rates, and the Commission is required to charge the lowest rates sufficient to cover its costs.[1] Spectrum is the PUD's sixteenth-largest electricity customer.

¶ 3 Since at least 1983, Spectrum purchased electricity from the PUD under the PUD's Rate Schedule 35. Schedule 35 is a "closed" rate schedule that was available and limited to certain customers who purchased electricity from the PUD under that rate schedule as of November 1, 1983.[2] Over the years, there have been several different versions of Rate Schedule 35 with different rates set by the Commission. It is undisputed that in 1995, Spectrum knew the rates under Rate Schedule 35 had changed in the past and were subject to change in the future.

¶ 4 In May 1995, Spectrum told the PUD it was planning to expand its manufacturing facility and would have increased electricity needs. Spectrum wanted a fixed rate with the PUD and a reliable electricity source that would prevent power outages.

¶ 5 In 1996, other electric utilities solicited the PUD's largest customers to buy electricity at lower wholesale electricity rates than the PUD was able to offer under its existing supply contract with the Bonneville Power *856 Administration (BPA). To avoid losing customers, the PUD proposed a new rate schedule and energy contract for its largest customers. In August 1996, the Commission in Resolution 4525 adopted Schedule 50, a new rate schedule for "market-based service," and a contract for sales under Schedule 50.[3] The PUD planned to buy large blocks of electricity at a low, wholesale price and enter into four- or five-year fixed rate contracts with its larger customers in order to provide the Schedule 50 rates. The Schedule 50 contracts would result in savings to the PUD's larger customers.

¶ 6 Under Schedule 50, eligible customers could choose between a fixed or an adjustable rate. The pricing methodology in Schedule 50 allowed the PUD to negotiate discounts for each customer based on the cost of providing service to that customer. Schedule 50 also allowed a customer to purchase electricity service from the PUD upon termination of the Schedule 50 contract under "then-existing rate schedules."[4]

¶ 7 Spectrum was eligible for a Schedule 50 contract. But because the Commission had not yet had time to negotiate a Schedule 50 contract with Spectrum in December 1996, Spectrum and the PUD entered into a five-year contract for electricity service under Schedule 35, the "Primary Service Contract."[5] The Primary Service Contract provided Spectrum a sufficient quantity of electricity for its increased electricity needs. The rate specified in the Primary Service Contract was the Schedule 35 rate.

¶ 8 In April 1997, the Commission adopted Resolution 4626 and delegated the power to execute Schedule 50 contracts to the PUD's General Manager. The General Manager entered into four- and five-year Schedule 50 contracts with several large commercial customers.

¶ 9 In May 1997, Spectrum and the PUD agreed to a Schedule 50 "Power Sales Contract" (Schedule 50 Contract). Spectrum decided to enter into a four-year rather than a five-year Schedule 50 Contract. The Schedule 50 Contract term was from January 1, 1997, through December 31, 2000, and superseded the December 1996 Primary Service Contract. The rates and discounts for each year of the Schedule 50 Contract were set forth in "Exhibit A." The discounts listed in Exhibit A to Spectrum's Schedule 50 Contract were nine percent for the first year, seven percent for the second year, just under four percent for the third year, and one-half of one percent for the fourth year.[6] Exhibit A specifically states that the rates for the term of the contract were fixed rates. "The rates used for the term of this contract for the calculation of the bill prior to applying the percentage reduction will be the rates in effect as of January 1, 1997."[7] Spectrum negotiated with the PUD to include in its Schedule 50 Contract a provision giving Spectrum the option to return to Rate Schedule 35 when the four-year Schedule 50 Contract expired.

SERVICE FOLLOWING CONTRACT TERM.

Upon the expiration of the Term or earlier termination of this Contract for any reason, the Customer may, upon reasonable advance notice to the District, commence taking service under the District's Rate Schedule 35, or if the Rate Schedule 35 is not available, any retail tariff of the District which is a successor to Rate Schedule 35; provided, further, that the Customer acknowledges and agrees that such service may be conditioned on payment by the Customer of any specific costs (which costs the District and the Customer hereby agree are not intended to constitute an exit fee) incurred by the District in acquiring any additional capacity to provide such *857 service.[8]

¶ 10 In 2000, as the end of Spectrum's Schedule 50 Contract approached, Spectrum began negotiations with the PUD for another service contract. Because of the possibility the PUD would offer another long-term arrangement when the five-year Schedule 50 customers' contracts expired, the PUD wanted a one-year "bridge contract" with Spectrum.

¶ 11 Spectrum's Chief Executive Officer Charles "Shorty" Seel, Vice President and Treasurer Forrest Hunt, and Plant Engineer David Lawrence Grega met with Garth Williams, the PUD representative, at least four times in 2000 to negotiate a contract for 2001. Spectrum wanted to resume service under Schedule 35 because it offered the best rate, as compared to the PUD's other retail rate schedules. Williams told Spectrum the Schedule 35 rate would increase sometime in 2001, and estimated the increase would be approximately three percent. Sometime in May 2000,[9]

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119 P.3d 854, Counsel Stack Legal Research, https://law.counselstack.com/opinion/spectrum-glass-co-v-pud-of-snohomish-county-washctapp-2005.