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FERC Initiates PURPA Enforcement Action against Idaho PUC

On November 20, 2012, FERC granted a petition for enforcement and announced that it will take the Idaho Public Utilities Commission (“Idaho PUC”) to court for failure to adhere to the Public Utility Regulatory Policies Act of 1978 (“PURPA”) and FERC’s PURPA regulations and precedent.  In what appears to be the culmination of FERC’s frustration with the Idaho PUC’s apparent refusal to give effect to FERC’s prior interpretations of PURPA, this most recent order suggests FERC will now actively enforce its interpretation of the law through the courts.  It is not known when and in what venue FERC will file the enforcement lawsuit.

The case arose out of a petition for enforcement filed by Murphy Flat Power, LLC (“Murphy Flat”), the developer of a wind project in Idaho, asking FERC to require the Idaho PUC to honor three power purchase agreements between Murphy Flat subsidiaries and the Idaho Power Company.  The Idaho PUC had previously rejected the agreements on the grounds that they were executed one day after the effective date of an Idaho PUC ruling that lowered the quantity of certain QF power eligible for avoided cost rates, even though negotiations had commenced earlier.  In two 2011 cases, FERC found the Idaho PUC’s decision not to recognize the contracts was contrary to PURPA and FERC regulations, holding that a QF, by committing itself to sell to an electric utility, also commits the electric utility to buy from the QF.  Until now, however, FERC declined to initiate enforcement actions to enforce its interpretation of PURPA against the Idaho PUC. 

In the order, FERC rejected arguments by the Idaho PUC that such challenges to a state commission’s application of PURPA are beyond FERC’s jurisdiction, and that the petition was procedurally improper.  FERC held that the petitioners have separate federal rights to relief that are not prejudiced by the lack of available relief at the state level.

FERC Commissioner Tony Clark dissented from FERC’s decision, suggesting that FERC’s decision was contrary to FERC’s longstanding policy of allowing an entity to “fight its own fight” in a court of law on PURPA issues.  He further described the order as “an act of exasperation” by FERC.  Commissioner Clark added 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.”

A copy of the order is available here.