Desert Power, Lp v. Public Service Com'n

• Decision Date: 23 November 2007
• Docket Number: No. 20061111-CA.,20061111-CA.
• Citation: 173 P.3d 218,2007 UT App 374
• Parties: DESERT POWER, LP, Petitioner, v. PUBLIC SERVICE COMMISSION and PacifiCorp, Respondents.
• Court: Utah Court of Appeals

173 P.3d 218

2007 UT App 374

DESERT POWER, LP, Petitioner, v. PUBLIC SERVICE COMMISSION and PacifiCorp, Respondents.

No. 20061111-CA.

Court of Appeals of Utah.

November 23, 2007.

Rehearing Denied December 18, 2007.

Stephen F. Mecham, Salt Lake City, for Petitioner.

Sander J. Mooy and Dean Brockbank, Salt Lake City; and David L. Elmont, St. George, for Respondents.

Before BENCH, P.J., ORME, and THORNE, JJ.

OPINION

BENCH, Presiding Judge:

¶ 1 Desert Power, LP (Desert Power) petitions this court for review of an order issued by the Public Service Commission (the Commission) in which the Commission determined that Desert Power could not be excused from performing its contract with PacifiCorp by virtue of an event of force majeure. Specifically, Desert Power argues that the Commission erroneously interpreted the force majeure provision of the contract and that, under a correct interpretation of that provision, it would be entitled to relief as a matter of law. We conclude that the Commission's factual finding that Desert Power was partially responsible for the delays it claims were events of force majeure precludes Desert Power from qualifying for relief even under its proposed interpretation of the contract. Because Desert Power failed to raise any objection regarding the factual findings in its requests for clarification or its application for reconsideration Desert Power failed to preserve any challenge to these findings for our review. Accordingly, we affirm.

BACKGROUND

¶ 2 In 2001, Desert Power constructed a simple-cycle power plant near Rowley, Utah.¹ In 2004, Desert Power undertook an expansion of the plant that would convert it to a combined-cycle cogeneration facility.² As a result of this expansion, Desert Power would become a "qualifying facility" under applicable federal and state law.

¶ 3 On September 24, 2004, Desert Power entered into a long-term Power Purchase Agreement (the Purchase Agreement) to sell power from its expanded facility to PacifiCorp. Under the terms of the Purchase Agreement, the Desert Power combined-cycle power plant was to be commercially operational, subject to certain conditions, by May 9, 2006. For its part, PacifiCorp would provide the system that transmitted the power from the plant to the consumer.

¶ 4 In order to connect with the PacifiCorp transmission system, Desert Power was required to provide PacifiCorp with considerable technical information regarding the equipment it would be installing in its expanded facility. Among these pieces of new equipment was a steam turbine and generator set (STG). Desert Power began looking for a new STG in 2004 and ultimately found an STG that met its specifications in early 2005. Desert Power filed its formal request with PacifiCorp to increase its interconnection capacity in February 2005 and provided additional technical data in June 2005. With this technical data, PacifiCorp began a study to determine whether the interconnection system was capable of handling the intended amount of power. On October 20, 2005, PacifiCorp notified Desert Power that it had modified its original interconnection design to ensure the safety and integrity of the interconnection system. The new design was based on the specific technical data that Desert Power had provided five months previously and would require equipment and parts not originally contemplated by the parties, some of which could not be obtained for several months.

¶ 5 In a letter dated February 10, 2006, Desert Power notified PacifiCorp of its intent to invoke the force majeure provision of the Purchase Agreement. Under this provision, an event of force majeure was defined as "any cause beyond the reasonable control of [Desert Power] or PacifiCorp that, despite the exercise of due diligence, such party is unable to prevent or overcome." If an event of force majeure occurred, the Purchase Agreement provided that "both parties shall be excused from whatever performance is affected by the event of Force Majeure," as long as the party invoking the force majeure provision met certain conditions, such as (1) giving notice to the other party of the event of force majeure, (2) suspending performance only to the scope and duration reasonably required by the event of force majeure, and (3) using reasonable commercial efforts to remedy the inability to perform. Also pursuant to the force majeure provision, PacifiCorp had the right to terminate the Purchase Agreement if Desert Power "fail[ed] to remedy [its] inability to perform, due to a Force Majeure event, within six (6) months after the occurrence of the event unless [Desert Power was] diligently pursuing the remedy of such event and ha[d] good-faith efforts underway to remedy such non-performance." If Desert Power was unable to make the repairs in six months "due to lead times and parts availability," then PacifiCorp would not be entitled to terminate the Purchase Agreement until "a period of eighteen (18) months from the date of the occurrence of the event" had passed.

¶ 6 Desert Power claimed that PacifiCorp's decision to redesign the interconnection, and the ensuing delays, constituted an event of force majeure that permitted Desert Power to suspend the deadlines in the Purchase Agreement, including the May 9, 2006 commercial operation date. PacifiCorp rejected Desert Power's claim. When attempts to settle the dispute failed, Desert Power petitioned the Commission to resolve the dispute and requested that the Commission find that a force majeure event had occurred.

¶ 7 The Commission conducted a hearing regarding Desert Power's petition on an expedited schedule. Both parties submitted position statements, presented prefiled testimony, and conducted discovery. PacifiCorp presented evidence that indicated that Desert Power's own actions had created delays in the project, including evidence that Desert Power had supplied the technical information necessary for the interconnection design significantly later than PacifiCorp had recommended in its tariffs.

¶ 8 On September 20, 2006, the Commission issued an order in which it determined that no event of force majeure had occurred. The Commission noted early in the order that "PacifiCorp and Desert Power have experienced a number of difficulties in accomplishing the tasks and meeting milestones anticipated to bring the [qualifying facility] online" and that "because of miscalculations and difficulties in meeting timelines by both parties, this Commercial Operation Date was not achieved." In the small section of the order devoted to the force majeure determination, the Commission recited the positions of the parties and acknowledged that PacifiCorp and the Division of Public Utilities (the Division) had asserted "that the delays and difficulties that have been experienced result from the decisions and actions of PacifiCorp and Desert Power themselves made in the course of their efforts to develop the [qualifying facility], not from an outside source beyond the control of Desert Power or PacifiCorp." (Emphasis added.) The Commission then concluded, "We agree with the positions of Pacificorp and the Division that none of the matters Desert Power complains of are force majeure events."

¶ 9 After receiving this order, Desert Power first sought clarification of several statements contained therein. Then it applied for reconsideration. Specifically, Desert Power requested that the Commission "reconsider and reverse its determination that no event of force majeure occurred and give Desert Power the relief it should have received with extended Commercial and Scheduled Operation Dates to complete the power project." Desert Power did not object to the Commission's findings of fact or otherwise assert that the findings were insufficient. Instead, Desert Power took issue with the Commission's interpretation of the force majeure provision of the Purchase Agreement and argued that, under a correct interpretation, PacifiCorp's redesign constituted an event of force majeure. The Commission rejected Desert Power's application for reconsideration, and this request for review followed.

ISSUES AND STANDARDS OF REVIEW

¶ 10 On review, Desert Power again claims that the Commission erred in its interpretation of the force majeure provision of the Purchase Agreement and, based on the undisputed facts, Desert Power is entitled to relief as a matter of law. PacifiCorp argues that the Commission correctly interpreted the Purchase Agreement and also asserts that, even under Desert Power's interpretation, Desert Power would not qualify for relief because the Commission made a factual finding that Desert Power was partially responsible for the delays associated with the project, including the redesign of the interconnection. PacifiCorp also asserts that Desert Power failed to challenge the Commission's factual findings below and has therefore failed to preserve any issue regarding the factual findings for appellate review.

¶ 11 "Subsection 63-46-16(4) of the Utah Administrative Procedures Act (UAPA) outlines the circumstances under which a reviewing court may grant relief from formal agency action." Anderson v....