United States District Court, D. Colorado
POWER 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 o the Colorado Public Utilities Commission, FRANCES A. KONCILJA, in her official capacity as Commissioner 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 DENYING PLAINTIFF'S MOTION TO REOPEN CASE
AND DISMISSING CASE AS MOOT
CHRISTINE M. ARGUELLO UNITED STATES DISTRICT JUDGE
This
matter is before the Court on Plaintiff sPower Development
Company, LLC's (“sPower”) Motion to Reopen
the Case (Doc. # 92), as well as the parties' various
Notices updating the Court on the status of a rulemaking
proceeding and application proceedings (Doc. ## 91, 93, 94).
For the reasons discussed herein, the Court denies
sPower's Motion to Reopen the Case and dismisses this
action in its entirety as moot.
I.
BACKGROUND
The
Court recited the applicable factual and procedural
background of this matter in its June 18, 2018 Order Adopting
the Recommendation of United States Magistrate Judge (Doc. #
69) and in its November 15, 2018 Order Granting
Defendants' Joint Request for Administrative Closure
(Doc. # 90). Those Orders are incorporated herein by
reference. Additional factual and procedural background will
be reiterated only to the extent necessary to address
sPower's Motion to Reopen the Case and the parties'
Notices.
As the
Court previously explained, sPower develops and builds
electric generation facilities, including qualifying
facilities (“QFs”), powered by renewable energy
sources in Colorado.[1] (Doc. # 62 at 3.) sPower initiated this
action on March 15, 2017, against Defendant Colorado Public
Utilities Commission (the “PUC”) and its
Commissioners[2] to challenge the PUC's promulgation of
Rule 3902(c) of its Rules Regulating Electric Utilities.
(Doc. ## 1, 62.) Defendants Public Service Company of
Colorado (“Public Service”) and Black Hills
Colorado Electric, Inc. (“Black Hills”), with
whom sPower had unsuccessfully attempted to enter long-term
contracts for the purchase of sPower's energy and
capacity, joined this action shortly thereafter. (Doc. ##
58-60); see (Doc. # 46-6 at 2.)
At the
time sPower brought suit, Rule 3902(c) stated:
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) (2017) (emphasis added). The
bid, auction, or combination procedure-in other words, a
competitive solicitation or a request for proposals- referred
to in Rule 3902(c) is a component of the electric resource
planning (“ERP”) process, which each regulated
utility undergoes every four years. 4 C.C.R. §
723-3:3603(a); 4 C.C.R. § 723-3:3611. Importantly,
“[t]hrough [PUC] Rule 3902(c), QFs are awarded a
contract ‘only' if they win a competitive
bid.” 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, *2 (Dec. 19, 2016); see also 4
C.C.R. § 723-3:3611(a) (“It is the
Commission's policy that a competitive acquisition
process will normally be used to acquire new utility
resources.”).
sPower
argues that “[c]ontrary to [the Public Utility
Regulatory Policies Act of 1978 (‘PURPA'), 16
U.S.C. § 824a-3(a), ] and the [Federal Energy Regulatory
Commission's (‘FERC')] regulations implementing
PURPA, ” Rule 3902(c) unreasonably restricts “the
rights of [QFs] to enter into long-term obligations by
requiring QFs, such as those [sPower owned], to win a
competitive solicitation process before they may enter into a
contract or legally enforceable obligation with a regulated
electric utility in Colorado.” (Doc. # 62 at 2.)
sPower's sole claim is for declaratory relief; it seeks a
declaration by the Court that “the second
sentence of [Defendant PUC's] Rule 3902(c) is
inconsistent with and does not comply with the requirements
of PURPA or FERC's regulations implementing PURPA,
” as well as an order enjoining the PUC “from
enforcing the second sentence of Rule 3902(c) or otherwise
taking any action inconsistent with . . . PURPA.”
(Id. at 16-18) (emphasis added).
On July
25, 2018, approximately a month after the Court denied the
PUC's Motion to Dismiss, see (Doc. # 69), the
PUC issued a Notice of Proposed Rulemaking
(“NOPR”) to strike the sentence in Rule 3902(c)
with which sPower takes issue, the second sentence:
“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 process.” PUC Proceeding No. 18R-0492E,
Notice of Proposed Rulemaking, Decision No. C18-0601 (July
25, 2018); see 7 C.C.R. § 723-3:3902(c); (Doc.
# 74-1.)
On July
30 and 31, 2018, sPower filed 18 new applications with the
PUC, “requesting the adjudication and enforcement of a
legally enforceable obligation under PURPA requiring
[Defendant] Public Service (for 17 of the applications) and
[Defendant] Black Hills (for one of the applications) to
purchase energy and capacity” from sPower's QFs.
See (Doc. # 86 at 3.)
On
August 22, 2018, Defendants filed a Joint Motion Requesting
Administrative Closure on the grounds that “[t]he
rulemaking proceeding at [the PUC, concerning Rule 3902(c)],
along with the 18 sPower application proceedings, could
resolve or significantly impact the proceedings in this
case.” (Id.) The Court granted Defendants'
request and administratively closed this matter on November
15, 2018. (Doc. # 90.) Weighing the five String Cheese
Incident factors relevant to staying a civil action,
see Atkins v. HCA-HealthONE, LLC, No.
15-CV-00037-WYD-KLM, 2015 WL 1298507, *4 (D. Colo. Mar. 19,
2015) (citing String Cheese Incident, LLC v. Stylus
Shows, Inc., No. 1:02-CV-01934-LTB-PA, 2006 WL 894955,
*2 (D. Colo. Mar. 30, 2006) (internal citation omitted)), the
Court concluded that it was appropriate to administratively
close the case until the NOPR regarding the second sentence
of Rule 2902(c) and sPower's 18 application proceedings
were completed and “pending a showing of good cause to
reopen.” (Doc. # 90 at 13-14.) It further ordered that
within ten days of the completion of the rulemaking
proceeding and sPower's application proceedings, the
parties were to notify the Court of the outcome of the
proceedings and to request either that the case be dismissed
or reopened. (Id. at 14-15.)
A.
RULEMAKING PROCEEDING REGARDING RULE 3902(C)
As the
Court stated above, the PUC issued a NOPR to strike the
second sentence in Rule 3902(c) on July 25, 2018. PUC
Proceeding No. 18R-0492E, Notice of Proposed Rulemaking,
Decision No. C18-0601 (July 25, 2018); see (Doc. #
74-1.) The PUC explained in the NOPR that its staff had been
hosting workshops with stakeholders to discuss possible
changes to the Electric Rules and had learned from
stakeholders that Rule 3902(c) “had not been updated to
reflect that various alternative avenues for utility resource
procurement in later-promulgated ERP . . . rules for a QF to
present a contract or legally enforceable obligation from a
utility.” (Id. at 2-3.) Striking the second
sentence of Rule 3902(c) would “clarif[y] that the ERP
process is not the only opportunity to receive a contract or
legally enforceable obligation from a utility, ”
according to the PUC. (Id. at 3.)
The
Commission received written and oral comments concerning the
proposed deletion of Rule 3902(c)'s second sentence
before and at a public comment hearing on September 14, 2018.
It later described that “several commentators,
including the Colorado Energy Office, agree[d] that the rule
is in direct conflict with existing practices and
rules.” PUC Proceeding No. 18R-0492E, Decision Adopting
Rule Revision, Decision No. C18-1045 at 7 (Oct. 31, 2018);
see (Doc. # 91-1). It also noted some
commentators' concern “that striking the rule has
directly encouraged sPower's pleadings in 18 adjudication
filings” and that utilities opposed revising Rule
3902(c) at least in part because of that concern.
Id. Finally, the Commission observed,
“Numerous participants in this rulemaking proceeding
also provide differing comments and analysis regarding
federal statutory obligations pursuant to PURPA as it relates
to Colorado's implementation of the Electric Rules,
generally, including the second sentence of the specific rule
at issue here.” Id.
On
October 31, 2018, the PUC adopted its proposed revision and
struck the second sentence because it was “in conflict
with current [PUC] rules, including without limitation Rules
3615 and 3656.” Id. at 10; see (Doc.
# 91-1). It noted that the rule change “[was]
prospective, ” like any of its rule changes, and would
go into effect on November 27, 2018. Id. at 8, 10.
As to sPower's 18 previously-filed applications to the
PUC, the PUC explained that sPower's applications were
“submitted pursuant to Rule 3002(a)(XIX) regarding
application processes that generally permit a non-utility to
file applicants for relief before [the PUC].”
Id. at 6. The majority of sPower's applications
were consolidated, and, at the time of the PUC's
decision, two proceedings were assigned to an Administrative
Law Judge (“ALJ”) and had a “statutory
deadline for a decision . . . in April of 2019.”
Id. The PUC concluded that with these “18
current adjudications pending, a determination on the request
from sPower on adjudications under the rules [was] both
beyond the limited scope of the instant rulemaking and
inappropriate” because it “implicate[d]
litigation strategies in ongoing and current
proceedings.” Id. at 8.
On
March 20, 2019, the PUC upheld the striking of Rule
3902(c)'s second sentence and denied Requests for
Rehearing, Reargument, or Reconsideration
(“Rehearing”) of its decision. PUC Proceeding No.
18R-0492E, Decision Denying Applications for Rehearing,
Reargument, or Reconsideration, Decision No. C19-0304 at 2
(March 20, 2019); see (Doc. # 91-2). It reaffirmed
that “[t]he [previous] rule language that proffer[ed] a
competitive bidding process [was] the ‘only' means
to procure a legally enforceable obligation [was]
inconsistent with other provisions in the Electric
Rules.” Id. at 7-8. The PUC's decision to
uphold its revision to Rule 3902(c) became effective on April
8, 2019. Id. at 1.
The
parties agree that the PUC's rulemaking proceeding with
respect to Rule 3902(c) is now complete. See (Doc. #
91 at 3; Doc. # 94 at 3.)
B.
sPOWER'S ...