Idaho Power Co. v. F.E.R.C.

• Decision Date: 24 January 1989
• Docket Number: No. 88-1078,88-1078
• Citation: 865 F.2d 1313
• Parties: IDAHO POWER COMPANY, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, Horseshoe Bend Hydroelectric Co., Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1313

865 F.2d 1313

275 U.S.App.D.C. 214

IDAHO POWER COMPANY, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent Horseshoe Bend Hydroelectric Co., Intervenor.

No. 88-1078.

United States Court of Appeals District of Columbia Circuit.

Argued Nov. 18, 1988.

Decided Jan. 24, 1989.

Brian R. Gish, with whom James B. Vasile, Washington, D.C., was on the brief, for petitioner.

Frank R. Lindh, Attorney, F.E.R.C., with whom Catherine Cook, General Counsel, F.E.R.C., Jerome M. Feit, Solicitor, F.E.R.C. and Joseph S. Davies, Attorney, F.E.R.C., Washington, D.C., were on the brief, for respondent.

Robert F. Shapiro, with whom Amy S. Koch, Washington, D.C., was on the brief, for intervenor. Rigdon H. Boykin, New York City, entered an appearance for intervenor.

Before ROBINSON, EDWARDS and WILLIAMS, Circuit Judges.

Opinion for the Court filed by Circuit Judge STEPHEN F. WILLIAMS.

STEPHEN F. WILLIAMS, Circuit Judge:

Idaho Power Company petitions this court to set aside the Federal Energy Regulatory Commission's decision to license construction of a hydroelectric plant at Horseshoe Bend, a site on the Payette River in Boise County, Idaho. See Boise Cascade Corp., 36 F.E.R.C. p 61,135 (1986) (the "Licensing Order"), request for reh'g denied, sub nom. Horseshoe Bend Hydroelectric Co., 42 F.E.R.C. p 61,072 (1988) (the "Rehearing Order"). The original licensee was Boise Cascade Corporation, but it transferred the license to its wholly-owned subsidiary, Horseshoe Bend Hydroelectric Company. In this opinion we refer to the licensee as Boise, to avoid confusion with our use of Horseshoe Bend for the project or the site. Idaho Power attacks the Commission's findings that there was a "need" for the plant and that it was financially feasible. The grounds of attack do not persuade us, and we dismiss the petition.

I. "NEED" FOR POWERER

The Commission has jurisdiction under Sec. 4(e) of the Federal Power Act, 16 U.S.C. Sec. 797(e) (1982 & Supp. IV 1986), to license dams on navigable streams. Sec. 10(a) of the Act provides that it is to issue a license only on the condition that the project will be

best adapted to ... developing a waterway ... for the use or benefit of interstate or foreign commerce, for the ... utilization of water-power development, for the adequate protection ... of fish and wildlife ... and for other beneficial public uses.

16 U.S.C. Sec. 803(a) (1982 & Supp. IV 1986). The Supreme Court has construed the subsection as creating a "public interest" test, see Udall v. FPC, 387 U.S. 428, 450, 87 S.Ct. 1712, 1724, 18 L.Ed.2d 869 (1967). The Court included within that concept a consideration of "future power demand and supply, [and] alternate sources of power," id., and the parties appear to agree on interpreting the statute (and the Court's gloss) as requiring a determination of "need." It is not clear just how the Commission relates "need" to demand and supply, which are normally conceived of as depending upon price, but no party raises the issue.

Idaho Power first argues that by considering the energy needs of the entire Pacific Northwest, FERC departed from what it terms FERC's prior policy of restricting need-for-power determinations to the much smaller area to which the applicant expressly proposed to transmit the power. Here that would mean Idaho Power itself, for the application stated that the power would "be sold to the Idaho Power Company." Joint Appendix ("J.A.") at 60. Boise's expectation of sales to Idaho Power was apparently based on its anticipation that the plant would be a "qualifying facility" under Sec. 210 of the Public Utility Regulatory Policies Act ("PURPA"), 16 U.S.C. Sec. 823a (1982), enabling it to require a utility, here Idaho Power, to purchase its output at the purchaser's "avoided cost."

Idaho Power relies on three cases for its characterization of FERC's prior policy: (1) Idaho Power Co., 25 F.E.R.C. p 61,436 (1983), on reh'g, 27 F.E.R.C. p 61,175 (1984), aff'd, Idaho Power Co. v. FERC, 767 F.2d 1359 (9th Cir.1985) ("Idaho Power I "); (2) Joseph M. Keating, 24 F.E.R.C. p 61,343 (1983), 32 F.E.R.C. p 61,290 (1985), rev'd on other grounds, sub nom. Harriet F. LaFlamme v. FERC, 842 F.2d 1063 (9th Cir.1988); and (3) Calaveras County Water District, 18 F.E.R.C. p 61,124, reh'g denied, 20 F.E.R.C. p 61,031 (1982), aff'd sub nom. Friends of the River v. FERC, 720 F.2d 93 (D.C.Cir.1983).

In fact none of these supports Idaho Power's description of FERC's previous policy. In both Keating and Calaveras FERC found a need for power within a narrow region and thus had no cause to look further. See Keating, 24 F.E.R.C. p 61,343 at 61,734; Calaveras, 20 F.E.R.C. p 61,031 at 61,056. In Idaho Power I, the applicant itself, Idaho Power, had represented that the power would not be necessary for a considerable time and that it did not intend to start construction on issuance of a license. See Idaho Power I, 767 F.2d at 1360-61. Idaho Power had in essence rested its case on a contention that the Commission should allow "site banking" by the licensees--i.e., should issue licenses to applicants in anticipation of their delaying construction until the arrival of a better moment. The Commission read the Federal Power Act as precluding such a license, and the Ninth Circuit affirmed its view. Id. at 1362-63. Thus, as FERC explained, see 42 F.E.R.C. p 61,072 at 61,321-22, 61,326 n. 5, there is no inconsistency for FERC to look to the needs of a broader region to find support for an applicant's claim that power is necessary. While it is not clear at whose initiative FERC came to extend its inquiry beyond the area implicit in Boise's application, the cited cases plainly do not bar that extension.

Idaho Power also claims that FERC simply assumed that the Horseshoe Bend power could get to where FERC had concluded it would be needed. It is quite true that FERC did not attempt to pin down either a specific destination or an available route for Horseshoe Bend power, but to characterize its reasoning as mere assumption is unfair. It noted that selecting either in advance would be treacherous, as the Pacific Northwest transmission system featured "major and varying circulating power flows that change direction and magnitude with seasonal changes in contractual agreements." Rehearing Order, 42 F.E.R.C. p 61,072 at p 61,323. But it pointed to evidence of growing interties in the region, not disputed by Idaho Power, and on that evidence (plus its finding of the existence of a potential market in the region), surmised that Boise could find a route for the power. Given the Commission's expertise, we cannot say the surmise was unreasonable.

II. "FINANCIAL FEASIBILITY" AND "LEVELIZED COST"OST"

Idaho Power first claims that in finding "financial feasibility" the Commission abandoned an approach it had employed in Utah Board of Water Resources, 27 F.E.R.C. p 61,437 (1984). There, as here, it was assessing a small power production facility that would in all likelihood be eligible under PURPA to "pu...