City of Boulder v. Public Service Co.

• Decision Date: 08 July 1999
• Docket Number: No. 98CA0518.,98CA0518.
• Citation: 996 P.2d 198
• Parties: CITY OF BOULDER, a Colorado municipality, Brush Cogeneration Partners, a Colorado general partnership, Thermo Power & Electric, Inc., a Colorado corporation, Thermo Cogeneration Partnership L.P., a Delaware limited partnership, Thermo Greeley, L.L.C., a Colorado limited liability company, Plaintiffs-Appellants, v. PUBLIC SERVICE COMPANY OF COLORADO, a Colorado corporation; and Colorado Public Utilities Commission, a Colorado state agency, Defendants-Appellees.
• Court: Colorado Court of Appeals

996 P.2d 198

CITY OF BOULDER, a Colorado municipality, Brush Cogeneration Partners, a Colorado general partnership, Thermo Power & Electric, Inc., a Colorado corporation, Thermo Cogeneration Partnership L.P., a Delaware limited partnership, Thermo Greeley, L.L.C., a Colorado limited liability company, Plaintiffs-Appellants, v. PUBLIC SERVICE COMPANY OF COLORADO, a Colorado corporation; and Colorado Public Utilities Commission, a Colorado state agency, Defendants-Appellees.

No. 98CA0518.

Colorado Court of Appeals, Div. II.

July 8, 1999.

Certiorari Denied April 10, 2000.

Cortez MaCaulay Bernhardt LLC, Miles Cortez, Susan Bernhardt, Richard Cohn, Denver, Colorado, for Plaintiffs-Appellants.

Elzi & Gurr, Kathryn A. Elzi, William M. Dudley, Denver, Colorado, for Defendant-Appellee Public Service Company.

Gale A. Norton, Attorney General, Martha Phillips Allbright, Chief Deputy Attorney General, Richard A. Westfall, Solicitor General, Mana L. Jennings-Fader, Assistant Attorney General, Denver, Colorado, for Defendant-Appellee Colorado Public Utilities Commission.

Opinion by Judge PLANK.

Plaintiffs, various entities selling electricity to defendant Public Service Company of Colorado (PSCo), a Colorado corporation, appeal the dismissal of their complaint asserting claims against PSCo and the Colorado Public Utilities Commission (PUC). We affirm.

I. Background

A. Legal Background

In 1978, Congress enacted the Public Utilities Regulation Policies Act (PURPA), codified at 16 U.S.C. § 824, et seq. (1999), to encourage the development and operation of facilities utilizing alternative electrical generation technologies not dependent upon fossil fuels as well as certain cogeneration technologies. 16 U.S.C. § 824a-3(a) (1999); Phoenix Power Partners, L.P. v. Colorado Public Utilities Commission, 952 P.2d 359 (Colo.1998).

Pursuant to PURPA, regulated and unregulated electrical utility companies are, in general, required to purchase the output and capacity of facilities qualified under the act as such producers, known as qualified facilities (QFs). The price the utility companies must pay is set by the Federal Energy Regulatory Commission (FERC), but that price may not exceed "the incremental cost to the electric utility of alternative electric energy," which is defined in 16 U.S.C. § 824a-3(d) (1999) as:

the cost to the electric utility of the electric energy which, but for the purchase from such [QF], such utility would generate or purchase from another source.

PURPA required FERC to adopt regulations to implement the act, and further directed the state regulatory commissions, such as PUC, to enact rules implementing FERC's regulations after public hearing and comment. 16 U.S.C. §§ 824a-3(a) and 824a-3(f) (1999).

FERC promulgated regulations requiring, among other things, that utility companies pay to QFs their full "avoided cost" for the power purchased, subject to certain exceptions not relevant here. 18 C.F.R. § 292.304(b)(2). "Avoided cost" is defined in 18 C.F.R. § 292.101(b)(6) as:

the incremental costs to an electric utility of electric energy or capacity or both which, but for the purchase from the [QF], such utility would generate itself or purchase from another source.

Nevertheless, FERC also permitted utilities and QFs to contract for a lower purchase price should they agree to do so. 18 C.F.R. § 292.301(b).

PUC adopted rules as required by PURPA to implement FERC's regulations, requiring electric utilities in Colorado to purchase electricity and capacity from QFs at their avoided cost according to a tariff submitted annually by the utility and approved by PUC. Alternatively, the QFs and electric utilities may contract for a price, to be based upon the utilities' avoided costs at the time of delivery or at the time the contract is formed. See Rules Implementing Sections 201 and 210, PURPA, Small Power Production and Cogeneration Facilities, Rule 3.500, et seq., 4 Code Colo. Reg. 723-19 (Colorado PURPA Rules). Such a contract, called a Power Purchase Agreement (PPA), must be reviewed and approved by PUC. Colorado PURPA Rules, Rule 5.300, 4 Code Colo. Reg. 723-19.

The U.S. Supreme Court has upheld FERC's regulation requiring utilities to purchase capacity and output of QFs at full avoided cost as well as FERC's regulation permitting utilities and QFs to contract for a lower price. American Paper Institute, Inc. v. American Electric Power Service Corp., 461 U.S. 402, 103 S.Ct. 1921, 76 L.Ed.2d 22 (1983) (FERC regulation requiring payment of full avoided costs not arbitrary, capricious, or an abuse of discretion, noting, inter alia, that QFs and electric utilities may contract for a lower rate).

B. Factual Background

Plaintiffs, each a QF pursuant to PURPA, the FERC regulations, and the Colorado PURPA Rules, individually entered into PPAs with PSCo at various times from 1985 through 1991. While the PPAs differ somewhat, generally each expressly sets a purchase price for the plaintiffs' capacity in accordance with PSCo's then-applicable tariff, incorporated as an attachment, with that rate fixed for the entire term, and sets the purchase price for electrical output based on the tariff applicable at the time of delivery. To qualify for the maximum price pursuant to the PSCo tariff, the term of each PPA is fifteen years.

One typical purchase price provision states in pertinent part that:

Seller agrees to sell and Buyer agrees to buy the net Metered Energy Output and Capacity Output made available to Buyer by Seller from Seller's Facility, pursuant to this Agreement and relevant terms of the Company Tariff. Monthly payments shall consist of an On-Peak capacity component, Off-Peak capacity component and an energy component, each as defined in Attachment E [PSCo's tariff]. The rates of payment for Capacity Output, through the entirety of the term of this Agreement [15 years], shall be $10.34 per kilowatt month during the on-peak periods and $7.31 per kilowatt month during the off-peak periods [with percentage reductions for operation in different tariff categories]. The rate of payment for Seller's Metered Energy Output shall be in cents per [kilowatt-hour] fixed annually during the term of this Agreement in accordance with Attachment E....

C. Proceedings in the Trial Court

Plaintiffs do not allege that PSCo has failed to pay the amounts due under the express terms of the contract. Instead, plaintiffs allege in their complaint alternative grounds for a claim of breach of contract and breach of the implied covenant of good faith and fair dealing implicit in every contract, as well as claims for enforcement pursuant to 16 U.S.C. § 824a-3(g) (1999) and § 40-7-102, C.R.S.1998. As to defendant PUC, plaintiffs seek mandamus to compel it to enforce PURPA, the FERC regulations, and its own rules; adopt a proper methodology for determining avoided costs under those rules; and generally monitor PSCo's compliance.

The trial court granted defendants' motions for dismissal, concluding that plaintiffs sought, in essence, a modification of PSCo's PUC-approved tariffs, relief that the trial court held was beyond its subject matter jurisdiction because plaintiffs had not yet exhausted their administrative remedies. The trial court did not directly address plaintiffs' mandamus claim against PUC. This appeal followed.

II. Breach of Contract

Plaintiffs contend that the trial court erred by dismissing for lack of subject matter jurisdiction their claim for breach of contract. We disagree.

When a complaint is dismissed for lack of subject matter jurisdiction, we apply a mixed standard of review. While the existence of subject matter jurisdiction is a question of law that we consider de novo, we will accept the trial court's findings of fact unless they are unsupported in the record and thus clearly erroneous. Smith v. Town of Estes Park, 944 P.2d 571 (Colo.App.1996); Lyon v. Amoco Production Co., 923 P.2d 350 (Colo.App.1996).

When the court's subject matter jurisdiction is challenged, the plaintiff has the burden of proving that jurisdiction exists, and the trial court may consider evidence outside of the complaint when necessary to resolve the issue. Smith v. Town of Snowmass Village, 919 P.2d 868 (Colo.App.1996). Documents referred to in a pleading are, in effect, incorporated in that pleading, and may properly be considered by the trial court in deciding whether to dismiss a claim on any grounds. GFF Corp. v. Associated Wholesale Grocers, Inc., 130 F.3d 1381 (10th Cir.1997).

If the plaintiff fails to establish that the trial court has subject matter jurisdiction, the court must dismiss the matter; any other order or judgment entered by the court would be void and unenforceable. C.R.C.P. 12(b)(1); Adams County Department of Social Services v. Huynh, 883 P.2d 573 (Colo.App.1994).

We are not bound by the form in which the plaintiff asserts its claim, but rather it is the facts alleged and the relief requested that decide the substance of a claim, which in turn is determinative of the existence of subject matter jurisdiction. State ex rel. Colorado Department of Health v. I.D.I., Inc., 642 P.2d 14 (Colo.App.1981).

Here, plaintiffs do not allege in their complaint that PSCo did not pay the amounts expressly set forth in the PPAs, but rather that PSCo miscalculated its avoided cost in the tariff annually filed with, and approved by, PUC. Because the tariff rates are the basis of the amounts set forth in the PPAs, plaintiffs argue that the PPAs are in essence agreements that PSCo would pay its full avoided cost, that the amounts recited in the PPAs are not express terms of the contract, and that the tariff rates understate PSCo's avoided cost. Consequently, they assert that PSCo has breached the PPAs by paying less than its full avoided cost. We are not persuaded that plaintiffs have asserted a cognizable breach of contract claim.

Under PURPA and the FERC regulations, PUC was charged with the authority and the...