Portland Gen. Elec. Co. v. Fed. Energy Regulatory Comm'n

Decision Date25 April 2017
Docket NumberC/w 15-1275,No. 15-1237,15-1237
Citation854 F.3d 692
Parties PORTLAND GENERAL ELECTRIC COMPANY, Petitioner v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent Northwest & Intermountain Power Producers Coalition, et al., Intervenors
CourtU.S. Court of Appeals — District of Columbia Circuit

Lawrence G. Acker, Washington, DC, argued the cause for petitioner Portland General Electric Company. With him on the briefs was Gary D. Bachman, Washington, DC.

Eric Lee Christensen, Seattle, WA, argued the cause for petitioner PáTu Wind Farm LLC. With him on the briefs were Peter J. Richardson and Gregory M. Adams.

Carl M. Fink was on the briefs for intervenors Northwest & Intermountain Power Producers Coalition and Community Renewable Energy Association in support of petitioner in case No 15-1275.

Elizabeth E. Rylander, Attorney, Federal Energy Regulatory Commission, argued the cause for respondent. With her on the brief was Robert H. Solomon, Solicitor.

Eric Lee Christensen, Seattle, WA, Peter J. Richardson, and Gregory M. Adams were on the brief for intervenors PáTu Wind Farm, LLC in support of respondent in case No. 15-1237.

Lawrence G. Acker and Gary D. Bachman, Washington, DC, were on the brief for intervenor Portland General Electric Company in support of respondent.

Before: Tatel and Srinivasan, Circuit Judges, and Silberman, Senior Circuit Judge.

Tatel, Circuit Judge:

This is a dispute between a small Oregon wind farm and the utility serving Portland over how much of the former's power the latter must purchase. The Federal Energy Regulatory Commission ruled that under the Public Utility Regulatory Policies Act and the power-purchase agreement between the parties, the utility must purchase all of the wind farm's power, though it rejected the wind farm's insistence that the utility do so by utilizing a technology known as dynamic scheduling. Both petition for review, and for the reasons set forth in this opinion, we dismiss the utility's petition for lack of jurisdiction and deny the wind farm's on the merits.


The centerpiece of these consolidated petitions is section 210 of the Public Utility Regulatory Policies Act of 1978 (PURPA), which Congress enacted in the wake of the 1973 energy crisis in order to "encourage conservation and more efficient use of scarce energy resources." FERC v. Mississippi , 456 U.S. 742, 757, 102 S.Ct. 2126, 72 L.Ed.2d 532 (1982) ; see PURPA, Pub. L. No. 95–617 tit. II § 210, 92 Stat. 3117, 3144 (codified as amended at 16 U.S.C. § 824a-3 ). To accomplish this objective, section 210 seeks "to reduce reliance on fossil fuels" by increasing the number of what are known as energy-efficient cogeneration and small power-production facilities.

American Paper Institute, Inc. v. American Electric Power Service Corp. , 461 U.S. 402, 417, 103 S.Ct. 1921, 76 L.Ed.2d 22 (1983). Cogeneration facilities capture otherwise-wasted heat and turn it into thermal energy; small power-production facilities produce energy (fewer than 80 megawatts) primarily by using "biomass, waste, renewable resources, geothermal resources, or any combination thereof." 16 U.S.C. § 796(17)(18). PURPA refers to both as "qualifying facilities." This case concerns a small power producer.

Recognizing that various obstacles were frustrating the development of such facilities, including the reluctance of traditional utilities to buy their power, see Mississippi , 456 U.S. at 750, 102 S.Ct. 2126 (describing "imped [iments to] the development of nontraditional generating facilities"), Congress enacted in section 210 a "self-contained scheme" to mitigate those obstacles as well as to stimulate markets for non-traditional power, Niagara Mohawk Power Corp. v. FERC , 117 F.3d 1485, 1488 (D.C. Cir. 1997). Subsection (a) of section 210 directs FERC to promulgate broad, generally applicable rules that encourage small power production by, among other things, requiring utilities to sell power to and buy power from such facilities at favorable rates, as detailed in subsections (b) through (d). See PURPA § 210(a)(d). Subsection (e) authorizes FERC to ease the regulatory burdens on these facilities by exempting them from the Federal Power Act, as well as from certain federal and state regulations. Id. § 210(e). Subsection (f), in turn, requires state public-utility commissions to implement FERC's rules at the local level. See id. § 210(f). And subsections (g) and (h) establish a mechanism to enforce PURPA rights, allocating distinct responsibilities to state and federal forums. See id. §§ 210(g)(h). We shall have more to say about these provisions in Part II, infra .

In 1980, FERC issued its first set of PURPA regulations, which required utilities to buy energy from small power producers "at a rate reflecting the cost that the purchasing utility [could] avoid [by] obtaining energy ... from [the small power producer], rather than [by] generating an equivalent amount of energy itself...." Small Power Production and Cogeneration Facilities; Regulations Implementing Section 210 of the Public Utility Regulatory Policies Act of 1978 , 45 Fed. Reg. 12,214, 12,215 (1980) (codified at 18 C.F.R. Part 292). This so-called avoided-cost rate usually exceeds the market price for wholesale power. See, e.g. , New Charleston Power I, L.P. v. FERC , 56 F.3d 1430, 1433 (D.C. Cir. 1995) (estimating $7 million-per-year difference between avoided-cost and market rates for one particular biomass facility). Under PURPA, state utility commissions are responsible for calculating the avoided-cost rates for utilities subject to their jurisdiction, which they may "accomplish[ ] by ... issu[ing] regulations, [by addressing particular issues] on a case-by-case basis, or by [taking] any other action designed to give effect to the Commission's rules." 45 Fed. Reg. at 12,216 ; see PURPA § 210(b), (f), 16 U.S.C. § 824a-3(b), (f).

Oregon implements its PURPA responsibilities largely through its Public Utility Commission (OPUC), which, as relevant here, has directed utilities subject to its jurisdiction to draft off-the-shelf, standard-form power-purchase agreements—replete with terms, conditions, and rate schedules—that OPUC then reviews for compliance with PURPA. See Oregon Public Utilities Commission Order No. 05-584, at 39–42 (May 13, 2005). OPUC has approved two standard-form power-purchase agreements submitted by petitioner Portland General Electric Co.: one for qualifying facilities directly linked to the utility's grid and another for "off system" facilities that must transmit their power through a separate transmission system to get to Portland's grid. See OPUC Order No. 07–065, at 1 (Feb. 27, 2007).

Petitioner PáTu Wind Farm LLC, a six-turbine, nine-megawatt generator in rural Oregon, is classified under PURPA as a small power producer. Because PáTu is not directly linked to Portland's grid, it sells power to Portland under the OPUC-approved power-purchase agreement for "off system" generators. In order to transmit its power to Portland's grid, PáTu obtains transmission services from two other entities: Wasco, a rural electric cooperative, and Bonneville Power Administration, a federal power agency. Wasco transmits PáTu's power to Bonneville, which in turn transmits it to Portland's Troutdale substation, the power-purchase agreement's designated point of delivery.

Before the ink had dried on the power-purchase agreement, the parties locked in a dispute over the nature of Portland's purchase obligation. PáTu believes that the agreement requires Portland to buy all of the power that PáTu generates at any given moment, which, for obvious reasons, varies with the strength of the wind. According to PáTu, moreover, the only way for Portland to buy all of its variable output is to do so using "dynamic transfer" services—a combination of hardware, software, engineering, and other tools that involves "electronically transferring generation from the balancing authority area in which [the energy] physically resides to another balancing authority area in real-time." Timothy P. Duane & Kiran H. Griffith, Legal, Technical, and Economic Challenges in Integrating Renewable Power Generation into the Electricity Grid , 4 SAN DIEGO J. CLIMATE & ENERGY L. 1, 45 (2013) (citation and internal quotation marks omitted).

Portland has a different view of its obligations under the power-purchase agreement. Believing it has purchased a firm product, Portland requires PáTu to set day-ahead schedules under which the wind farm commits to deliver whole-megawatt blocks of energy for each hour of the day. If PáTu overschedules—that is, if it promises to deliver 3 megawatts but delivers only 2.3—Portland pays favorable avoided-cost rates for 2.3 megawatts and requires the wind farm to make up the difference by buying an additional .7 from Bonneville. Because the additional .7 megawatts are not generated by PáTu, however, Portland pays the wind farm only the lower market rate. By contrast, if PáTu underschedules—that is, if it predicts 3 megawatts but produces 4.8—then Portland accepts and pays for only 3, forcing the wind farm to dispose of the excess 1.8 at less-favorable rates.

In December 2011 PáTu filed a complaint with OPUC alleging that Portland's refusal to pay for all power PáTu delivers, regardless of whether the power is generated by the wind farm or Bonneville, violates both the power-purchase agreement and the state's PURPA rules and regulations. It also challenged Portland's refusal to utilize dynamic scheduling. Although OPUC saw nothing in the power-purchase agreement requiring Portland to utilize dynamic scheduling, it concluded that the utility must purchase all power PáTu generates and delivers. See PáTu Wind Farm, LLC , OPUC Order No. 14–287, at 14 (Aug. 18, 2014). But drawing a distinction between power "produced" and power "delivered," OPUC appeared to leave Portland free to refuse to purchase any power produced in excess of what PáTu schedules (the underschedule situation)....

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