Western Wind War Widens: FERC Announces Intent to Sue Idaho PUC Over Rejected PURPA Contracts

November 23, 2012

In a major escalation of an ongoing dispute between wind developers and the Idaho Public Utilities Commission ("IPUC"), the Federal Energy Regulatory Commission ("FERC") on November 20 issued an order giving notice that it will take enforcement action directly against the IPUC for violations of the Public Utility Regulatory Policies Act ("PURPA"). The order marks the first time FERC will take action under PURPA directly against a state utility commission.

The order is the latest, and most significant, offensive launched in a battle going back to 2010, when the several utilities filed a petition with the IPUC claiming that wind developers in Idaho were artificially segregating wind projects so that the projects could qualify under the 10 aMW ceiling for PURPA treatment. PURPA, passed in 1978, in most cases requires utilities to purchase power from qualifying small power production facilities at a favorable avoided-cost rate. On February 7, 2011, the IPUC issued an order stating that it would investigate the utilities' claims and would, in the interim, reduce the PURPA eligibility ceiling in Idaho from 10 aMW to 100 kW. Subsequently, the IPUC rejected a number of wind contracts on the ground that the generators exceeded to 100 kW threshold.

In two different orders, issued on October 4, 2011, and April 30, 2012, FERC concluded that IPUC's rejection of wind contracts on the basis of the 100 kW threshold violates PURPA, but declined to take enforcement action against the IPUC, leaving enforcement action to the wind developers. Apparently, FERC has finally lost patience with IPUC. This week's order again concludes that the IPUC's rejection of small wind contracts (in this case, contracts for output from the Murphy Flats wind farms in southwest Idaho) violates PURPA. But this time, FERC has taken the next step, concluding that it is necessary to take direct enforcement action against IPUC to remedy the violations.

Perhaps reflecting his background as a former Chairman of the North Dakota PUC, Commissioner Tony Clark dissented from the order, arguing that FERC should define the law under PURPA, but allow developers to pursue enforcement action on their own behalf in federal court. He also expresses concern that PURPA has become a "cudgel" by which electric consumers are being forced to pay for uneconomic renewable projects.

FERC's November 20 order was issued in Docket No. EL12-108.

If you have any questions about FERC, renewable energy development, PURPA, or other utility-related matters, please contact a member of GTH's Energy, Telecommunications and Utilities practice group practice group. We have years of experience in energy regulation, the Northwest's energy industry, complex administrative matters, appellate litigation, and related fields.