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sPower Development Co., LLC v. Colorado Public Utilities Commission

United States District Court, D. Colorado

November 15, 2018

sPOWER DEVELOPMENT COMPANY, LLC, a Delaware limited liability company, Plaintiff,
v.
COLORADO PUBLIC UTILITIES COMMISSION, an agency of the State of Colorado, JEFFREY P. ACKERMANN, in his official capacity as Commissioner and Chairman of the Colorado Public Utilities Commission, FRANCES A. KONCILJA, in her official capacity as Commission of the Colorado Public Utilities Commission, WENDY M. MOSER, in her official capacity as Commissioner of the Colorado Public Utilities Commission, PUBLIC SERVICE COMPANY OF COLORADO, and BLACK HILLS COLORADO ELECTRIC, INC., Defendants.

          ORDER GRANTING DEFENDANTS' JOINT REQUEST FOR ADMINISTRATIVE CLOSURE

          CHRISTINE M. ARGUELLO UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on all Defendants' Joint Motion Requesting Administrative Closure. (Doc. # 86.) For the following reasons, the Court grants Defendants' request for administrative closure.

         I. BACKGROUND

         The Court's June 18, 2018 Order (Doc. # 69) recites the applicable factual and procedural background of this case and is incorporated herein by reference. Additional factual background will be reiterated only to the extent necessary to address the instant motion.

         A. CONTROLLING LAW AND REGULATIONS

         In Section 210 of the Public Utility Regulatory Policies Act of 1978 (“PURPA”), Congress directed the Federal Energy Regulatory Commission (“FERC”) to prescribe rules requiring electric utilities to sell electricity to, and purchase electricity from, qualifying facilities (“QF”).[1] 16 U.S.C. § 824a-3(a); F.E.R.C. v. Mississippi, 456 U.S. 742, 751 (1982). Relevant here is FERC's rule that provides QFs with two mechanisms to sell their electrical output to a utility: (1) on an “as available” basis, with the purchasing utility's avoided costs[2] calculated at the time of delivery; or (2) pursuant to a contract or “legally enforceable obligation” for a specified term, with the purchasing utility's avoided costs calculated at the time of delivery or at the time the obligation is incurred. 18 C.F.R. § 292.304(d).

         PURPA requires state regulatory agencies to implement FERC's regulations. 16 U.S.C. § 824a-3(f). Defendant Colorado Public Utilities Commission (“PUC”), the state's regulatory agency, instituted “the use of competitive bidding in an electric utility resource acquisition process to establish the avoided cost for capacity purchased from [QFs].” In the Matter of the Application of Pub. Serv. Co. of Colo. For Approval of Its 2016 Elec. Res. Plan., 16A-0396E, 2016 WL 7430542, at *1 n.4 (Dec. 19, 2016) (collecting PUC decisions). At issue in this case is Defendant PUC's Rule 3902(c):

A utility shall use a bid or an auction or a combination procedure to establish its avoided costs for facilities with a design capacity of greater than 100 KW. The utility is obligated to purchase capacity or energy from a qualifying facility only if the qualifying facility is awarded a contract under the bid or auction or combination procedure.

4 C.C.R. § 723-3:3902(c) (emphasis added); In the Matter of the Application of Pub. Serv. Co. of Colo. For Approval of Its 2016 Elec. Res. Plan., 2016 WL 7430542, at *2.

         B. FACTUAL BACKGROUND

         Plaintiff sPower Development Company, LLC (“sPower”) develops and builds electric generation facilities powered by renewable energy sources-including QFs. (Doc. # 62 at 3.) sPower is a certified “qualifying small power producer” and currently owns and is developing eleven QFs in Colorado. (Id.)

         In April and May of 2016, sPower contacted Defendant Public Service Company of Colorado (“Public Service”), a public electric utility, “regarding proposed renewable power generation projects and requested information from Public Service regarding QF pricing for these projects.” (Id. at 11.) Public Service informed sPower of the competitive solicitation process established by Defendant PUC's Rule 3902(c). (Id. at 12; Doc. # 46-6 at 8.) sPower then unsuccessfully attempted to enforce PURPA's must-buy provision, 16 U.S.C. § 824a-3(a), against Public Service by citing the provision in a written request to Public Service for “long-term contracts . . . for the purchase of energy and capacity from [sPower's] QFs.” (Doc. # 46-5 at 2.) On August 8, 2016, Public Service informed sPower that it could not enter into a long-term contract to purchase energy and capacity from sPower's QFs because sPower had not engaged any competitive bidding process, as required by Rule 3902(c). (Doc. # 46-6 at 2.)

         sPower subsequently filed a motion with PUC, requesting that it find that Rule 3902(c) does not comport with PURPA, that it waive Rule 3902(c) until it is compliant with PURPA, and that it “require [Public Service] to purchase [QF] energy and capacity at Public Service's avoided cost . . . .” (Doc. # 46-7.) PUC denied sPower's motion on December 14, 2016, stating that the motion was “procedurally improper and beyond the limited scope of [the] proceeding.” In the Matter of the Application of Pub. Serv. Co of Colo. For Approval of its 2016 Elec. Res. Plan., 2016 WL 7430542, at *3. PUC concluded that the “[u]se of competitive bidding is an appropriate means by which [PUC] establishes avoided costs for purchases of QFs.” Id.

         On December 30, 2016, sPower unsuccessfully petitioned FERC to initiate “an enforcement action against [PUC] for its failure to implement PURPA consistent with federal law.” (Doc. # 46-4.) FERC has not taken any action on sPower's petition for enforcement because it currently lacks the quorum necessary to act. (Doc. # 62 at 15.)

         Finally, sPower filed the instant action against PUC and its commissioners[3]pursuant to Section 210(h)(2)(B)[4] on March 16, 2017. (Doc. # 1.) Defendant Intervenors Public Service and Black Hills Colorado Electric, Inc. (“Black Hills”) joined this action shortly thereafter. (Doc. ## 58-60.)

         On July 25, 2018, PUC issued a Notice of Proposed Rulemaking (“NOPR”), proposing to strike the sentence at issue in Rule 3902(c)-“[t]he utility is obligated to purchase capacity or energy from a qualifying facility only if the qualifying facility is awarded a contract under the bid or auction or combination process.” 7 C.C.R. § 723-3:3902(c); (Doc. # 74.)

         On July 27, 2018, sPower filed an unopposed Motion to Vacate and reset the scheduling conference in this matter set for August 8, 2018, because the NOPR proceeding “may resolve this litigation” by striking the very sentence sPower asserts does not comply with PURPA. (Doc. # 74 at 2.) sPower requested that the scheduling conference be reset on or after November 19, 2018, so that “the parties [can] focus on the NOPR proceeding . . . .” (Doc. # 74-4 at 2.) On that same day, the Court granted the Motion to Vacate and converted the scheduling conference into a status conference. (Doc. # 76.)

         sPower and Defendants met with United States Magistrate Judge Nina Wang for the status conference on August 8, 2018. (Doc. # 81.) sPower advocated for a scheduling conference in November on the grounds that by November, the status of Rule 3902(c) and the status of sPower's applications requesting the adjudication and enforcement of a legally enforceable obligation under PURPA would be finalized. This would result in the parties being able to clarify the current ambiguous state of this litigation. (Doc. # 86-1 at 4.) sPower also expressed concern that, although its current issue with Rule 3902(c) could be remedied by striking the sentence in dispute, the PUC could potentially set up “other roadblocks” such as “taking any other action that's contrary to PURPA or FERC's regulations.” (Id. at 5-6.) Although PUC maintained that its rules are compliant with PURPA, it supported the request for a scheduling or status conference for the same clarification reasons sPower articulated. (Id. at 4.) After inquiring about the relationship between the NOPR and the instant case, such as the possibility that the NOPR would moot sPower's claim, Magistrate Judge Wang suggested administratively closing this case and wait to see if any new issues would arise after the NOPR hearing. (Id. at 7-9.) Magistrate Judge Wang reasoned that “all we know [right now] is that we don't know exactly what the [NOPR] decision is going to be, when it's going to come, and how long it's going to take [all of the parties] to . . . regroup and figure out how to go forward unless a certain set of actions happen.” (Id. at 7.) In order to allow the parties ample time to confer with each other and their clients about her suggestion, Magistrate Judge Wang suggested the parties file a motion to administratively close the case by August 22, 2018. (Id. at 15.)

         On August 22, 2018, Defendants filed their Joint Motion Requesting Administrative Closure on the grounds that the NOPR would directly address sPower's concern with Rule 3902(c) and its compliance with PURPA. (Doc. # 86.) sPower filed its Response on September 12, 2018, opposing administrative closure ...


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