On Tuesday, November 20, 2012, FERC issued a Notice of Intent to Act and Declaratory Order, declaring its intent to initiate an enforcement action in federal court against the Idaho Public Utilities Commission (IPUC) under Section 210(h)(2)(A) of PURPA. In doing so, FERC is challenging the IPUC’s rejection of three Firm Energy Sales Agreements between Idaho Power Company and three under-10 average MW wind qualifying facilities proposed by Murphy Flat Power, LLC (Murphy Flat). The IPUC initially rejected the agreements on June 8, 2011 because they contained avoided cost rates that the Commission changed (lowered) before the agreements were fully executed. FERC stated, in a previous declaratory order (Cedar Creek Wind, LLC, 137 FERC ¶ 61,006 (2011)), that the IPUC’s basis for rejection violated PURPA, which permits a qualifying facility in some circumstances to obligate a utility to buy its output prior to full execution of a power purchase agreement. Murphy Flat asked the IPUC to reverse its prior decision and approve the agreements in light of FERC’s Cedar Creek order, but the IPUC declined to do so, finding that the developer’s failure to seek timely reconsideration of, or appeal, the IPUC’s June 8, 2011 Order barred the developer from re-litigating the issue.
Murphy Flat petitioned FERC, asking it for relief from the IPUC’s denials. FERC, in its non-binding November 20 Order, argues that Murphy Flat has a right to enforce its PURPA rights in federal court — independent of any state rights — and that Murphy Flat’s delay of more than a year before seeking federal enforcement does not make its cause of action untimely. Unlike in the Cedar Creek order, where FERC declined to take enforcement action, FERC declared its intent to go to court to advocate for Murphy Flat’s entitlement to relief under PURPA. FERC’s Order marks a rare instance in PURPA jurisprudence where FERC elected to pursue an enforcement action on behalf of a qualifying facility — a fact noted with disapproval by dissenting FERC Commissioner Tony Clark, who lamented that “[t]he Commission 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.”
Some will view FERC’s decision as a principled defense of PURPA; however, many of Idaho Power’s customers, who will pay higher prices for their power if FERC is successful, may see it as another case of the federal government favoring Wall Street over Main Street.