The National Association of Regulatory Utility Commissioners criticized FERC’s filing of an enforcement action against the Idaho Public Utilities Commission.
The group, which represents PUC commissioners nationally, was critical the Federal Energy Regulatory Commission sued when the wind power issue already was being litigated in the Idaho Supreme Court. It put out a press release along with the Idaho Public Utilities Commission, which did not comment but added material for the release.
At issue is a federal lawsuit over the Idaho commission’s denial of power purchase agreements between Idaho Power Company and the developers of the Grouse Creek and Murphy Flats wind projects. 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 includes the 21-megawatt Grouse Creek Wind Park in Utah, which had planned to sell electricity to Idaho Power under a similar contract.
A lot of money is on the line. The proposed two 10 megawatt Grouse Creek wind farms near Lynn, Utah would have been contracted at $230 million over 20 years. The three 10 megawatt Murphy Flats projects in Owyhee County were for $299 million over 20 years.
The Grouse Creek case is scheduled for argument in August before the Idaho Supreme Court. The Murphy Flats project owners did not seek relief from the Idaho Commission’s order denying the sales agreements until 14 months later. The national commissioners’ group said that was well beyond the Idaho Commission’s statutory 21-day window when it could have filed for reconsideration and after the 42-day period when it could appeal to the Idaho Supreme Court.
“Historically FERC has allowed the parties in such a dispute to resolve their differences either through settlement or litigation between the parties themselves,” said NARUC President Philip Jones, also a commissioner in Washington state. “FERC’s decisions here seem to ignore its own longstanding practice.”
In November 2010, Idaho’s three largest electric utilities filed a petition to the Idaho commission asking that the size of the projects that qualify for published rates be lowered and the price the commission sets be investigated. The utilities said they were buying power they did not need at prices that were too high for their customers.
The press release pointed out that Idaho Power has 104 active Public Utility Regulatory Policies Act contracts generating 783 megawatts. Its average total system load is about 1,800 megawatt, meaning about 43 percent is PURPA generation.
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.
The commissioners group said PURPA developers are requesting contracts for another 188 megawatt and another 212 megawatt are in dispute or litigation, according to Idaho Power. The utility’s customers have paid $1.2 billion for PURPA projects under contract and the utility’s obligations for future payments on existing contracts is another $2.4 billion, Idaho Power claims.
The case is based on FERC’s 2011 decision that the commission’s rejection of contracts for Murphy Flat with Idaho Power were “inconsistent” with regulations and rules governing projects under PURPA. 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. FERC is challenging this so-called “bright line rule.”
But FERC Commissioner Tony Clark dissented to that decision, writing:
“More broadly, while PURPA was designed as a foot in the door for emerging renewable resources and small generators, I sympathize with concerns that PURPA is increasingly being used as a cudgel that would force consumers to bear undue burdens. … (FERC) has now put itself in an awkward position. It will invoke the power of the federal government to proactively champion a private interest that may contradict the best interests of the consumers of a state.”
NARUC’s Jones said the states and the federal government have been able to work out their disagreements without court action.
“Given the challenges the utility sector is facing, FERC and the states should be working as cooperatively as possible,” Jones said. “We understand there will be times when we disagree, but it is not at all apparent what FERC intends to achieve by taking a single state to federal court, particularly when other options are available.”