Letters From the West

Idaho PUC, FERC settle and Idaho Supreme Court backs PUC in wind case

A hearing before the Idaho Public Utilities Commission.

A hearing before the Idaho Public Utilities Commission.

Two decisions earlier this month end a legal dispute between federal and Idaho power regulators and put a period on a 2010 fight over wind power.

A U.S. District Court in Boise has accepted an agreement between the US Federal Energy Regulatory Commission and the Idaho Public Utilities Commission, ending the federal commission’s lawsuit. Meanwhile the Idaho Supreme Court ruled that Idaho PUC acted properly when it ruled a wind developer did not meet the requirements for an automatic contract.

To settle the lawsuit the Idaho PUC “acknowledges that a legally enforceable obligation may be incurred prior to the formal memorialization of a contract in writing,” the agreement said. That was the crux of the federal case, but it may or may not help the wind developers on whose behalf it had brought the lawsuit for in the first place.

The three wind developers could still go to federal court but they will not have FERC backing.

FERC said in March that the Idaho PUC violated the law when it held that Idaho Power was not obligated to buy power produced by several wind generators because the utility did not sign contracts it had prior to December 14, 2010. The complaint was the first filed by FERC against a state public utilities commission in the 35-year history of the Public Utility Regulatory Policies Act, or PURPA.

“This agreement will allow FERC and Idaho to focus on our continued cooperation in implementing PURPA, and to use our resources there rather than litigating points incourt,” Acting FERC Chairman Cheryl LaFleur said.

Congress passed PURPA in 1978 to open up the electricity market to small producers. The law requires utilities to purchase the power at a cost equal to what it would cost the utility to build a plant to supply that power. That rate is called the “avoided cost.”

That avoided cost rate and the regulations for administering PURPA are placed in the state utility commission’s hands. But FERC oversees the states.

When it sued, FERC had already ruled that the Idaho commission violated federal law when it denied an appeal by developers for three Murphy Flat wind power projects. FERC’s complaint also included the 21-megawatt Grouse Creek Wind Park in Utah, which had planned to sell Idaho Power electricity under a similar contract.

FERC said the Idaho Commission should have recognized power contracts signed by the several wind developers by a deadline it set in 2010 as a “legally enforceable obligation.”

The Idaho Commission had said the wind developers contracts were not signed by Idaho Power by the deadline and so they were not valid.

The Idaho Commission wasn’t really challenging FERC’s position but the idea that the wind companies could come back later and force the contract issue and challenge its ruling after FERC had ruled. The Supreme Court case directly focused n Grouse Creek.

The Supreme Court ruled that the PUC’s Grouse Creek denial “was supported by substantial and competent evidence.”

“In its opinion, the Idaho Supreme Court again affirmed IPUC’s requirement that a finding of a legally enforceable obligation requires a showing that there would have been a contract but for the actions of the utility,” the court said in its opinion.

Idaho Commission President Paul Kjellander said the FERC settlement closes the book on the PURPA disputes of 2010 and allows both commissions to look to the future.

“We have a great opportunity, not just Idaho but states in general, to work cooperatively with FERC to really put meaning to the words cooperative federalism,” said Idaho Commission President Paul Kjellander.

That doesn’t mean the wind decisions are done. the two other developers still have open cases but now FERC won’t carry their banner in court.

“I am disappointed that FERC has left these projects out in the cold,” said Peter Richardson, an attorney who represents wind producers. “It will be very difficult for them to fend for themselves against the litigation power of the State of Idaho.

“It is, after all, FERC’s job to provide oversight of rogue state commissions,” he said.

 

Idaho Power also has a case before the commission arguing that the costs wind developers pay for integrating intermittent wind into is system are not enough to cover the costs.

FERC has ruled in the past that utilities must honor existing contracts on these costs so its not clear where this money will come from.

Rocky Barker is the energy and environment reporter for the Idaho Statesman and has been writing about the West since 1985. He is the author of Scorched Earth How the Fires of Yellowstone Changed America and co-producer of the movie Firestorm: Last Stand at Yellowstone, which was inspired by the book and broadcast on A&E Network. He also co-authored the Flyfisher's Guide to Idaho and the Wingshooter's Guide to Idaho with Ken Retallic. He also was on the Statesman’s team that covered the Sen. Larry Craig sex scandal, which was one of three Pulitzer Prize finalists in breaking news in 2007. The National Wildlife Federation awarded him its Conservation Achievement Award.

Posted in Letters from the West