Resolute Wind 1 LLC v. N.M. Pub. Regulation Comm'n

• Decision Date: 09 February 2022
• Docket Number: S-1-SC-37320
• Citation: 506 P.3d 346
• Parties: RESOLUTE WIND 1 LLC, Appellant, v. NEW MEXICO PUBLIC REGULATION COMMISSION, Appellee, and Lea County Electric Cooperative, Inc., and Western Farmers Electric Cooperative, Inc., Intervenors-Appellees. In the Matter of the Formal Complaint of Resolute Wind 1 Against Lea County Electric Cooperative, Inc. Case No. 18-00211-UT
• Court: New Mexico Supreme Court

506 P.3d 346

RESOLUTE WIND 1 LLC, Appellant,

v.NEW MEXICO PUBLIC REGULATION COMMISSION, Appellee,andLea County Electric Cooperative, Inc., and Western Farmers Electric Cooperative, Inc., Intervenors-Appellees.

In the Matter of the Formal Complaint of Resolute Wind 1 Against Lea County Electric Cooperative, Inc. Case No. 18-00211-UT

NO. S-1-SC-37320

Supreme Court of New Mexico.

Filing Date: February 9, 2022

Jason Marks Law, LLC, Jason A. Marks, Albuquerque, NM, for Appellant

Judith Ellen Amer, Associate General Counsel, Santa Fe, NM, for Appellee

Newell Law Firm, LLC, Michael T. Newell, Lovington, NM, for Intervenor-AppelleeLea County Electric Cooperative, Inc.

The Law Office of Jamison Barkley, LLC, Jamison Barkley, Santa Fe, NM, for Intervenor-AppelleeWestern Farmers Electric Cooperative, Inc.

Charles F. Noble, Santa Fe, NM, for Amicus Curiae Coalition for Clean Affordable Energy

Earthjustice, Sara Gersen, Los Angeles, CA, Robin L. Cooley, Denver, CO, David C. Bender, Madison, WI, for Amici Curiae Vote Solar, Sierra Club, Coalition for Clean Affordable Energy

Virtue & Najjar, PC, Daniel A. Najjar, Carla Rossana Najjar, Santa Fe, NM, for Amicus Curiae New Mexico Rural Electric Cooperative Association

VIGIL, Chief Justice

{1} This appeal turns on a familiar and straightforward legal principle: contested proceedings—whether judicial or, as in this case, administrative—are not susceptible to summary disposition in the face of disputed issues of material fact.The New Mexico Public Regulation Commission(the Commission) ignored this blackletter principle when it summarily dismissed the complaint brought by Resolute Wind1 LLC(Resolute Wind).The Commission's summary dismissal violated the procedural due process rights of Resolute Wind and was at a minimum arbitrary, capricious, or an abuse of discretion.

{2} The Commission also erred in relying on a federal agency's determination in an earlier, unrelated matter to dismiss the complaint.

{3} The Commission's procedural and substantive missteps, whether considered separately or together, require us to annul and vacate the final order appealed from and remand the matter to the Commission for further proceedings so as to afford all parties an opportunity to present evidence in support of their respective positions.In view of this result, and as Resolute Wind readily acknowledges, it is not necessary to address the merits of the federal compliance issue Resolute Wind also raises on appeal.Nor, by extension, is it necessary to consider any jurisdictional implications that the compliance issue might create.

I.BACKGROUND

{4} The outcome of the underlying administrative proceeding ultimately may turn on the proper interpretation and application of various federal and New Mexico statutes and regulations, all highly technical in nature.Because our determination of the distinct and narrow issues outlined above is sufficient to dispose of the present appeal, a full description of the statutory and regulatory frameworks is unnecessary.Instead, we offer a glimpse of the basic aspects of those provisions that govern the dispositive issues and briefly summarize the factual and procedural backdrop of the case to give context to the Commission's rulings.

A.Relevant Statutory and Regulatory Frameworks

{5}This case arises under the Public Utility Regulatory Policies Act of 1978 (PURPA), Pub. L. No. 95-617,92 Stat. 3117(codified as amended at 16 U.S.C. §§ 2601 - 2645).PURPA was designed "to encourage the development of cogeneration and small power production facilities" in order to diversify the nation's energy sources and thereby "reduce the demand for traditional fossil fuels."Fed. Energy Regul. Comm'n v. Mississippi , 456 U.S. 742, 750-51(1982)."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.’ "Portland Gen. Elec. Co. v. Fed. Energy Regul. Comm'n , 854 F.3d 692, 695(D.C. Cir.2017)(quoting16 U.S.C. § 796(17) ).PURPA designates both cogeneration and small power facilities as " ‘qualifying facilities,’ " and "[S]ection 210(a) of PURPA direct[s] the Federal Energy Regulatory Commission(‘FERC’) to promulgate rules mandating that electric utilities purchase energy from [qualifying facilities]."Allco Renewable Energy, Ltd. v. Mass. Elec. Co ., 875 F.3d 64, 67(1st Cir.2017).Those FERC regulations are codified at 18 C.F.R. §§ 292.101 - 292.602(2018)¹ .Under 18 C.F.R. § 292.303(a), an electric utility is required to purchase "any energy and capacity which is made available from a qualifying facility."We refer to this as the mandatory purchase obligation .

{6} The mandatory purchase obligation is not absolute.Two exceptions are applicable in this case.First, an electric utility may transfer its mandatory purchase obligation to another electric utility which serves as the transferring utility's full- or all-requirements supplier .See18 C.F.R. § 292.303(d).However, for such a transfer to be effective, the qualifying facility must consent.Seeid.(requiring that the "qualifying facility agrees"); Small Power Production and Cogeneration Facilities;Regulations Implementing Section 210 of [PURPA], 45 Fed. Reg. 12,214, 12,235(Feb. 25, 1980)(stating that such "an all-requirements" transfer is permissible "if the qualifying facility consents").Second, an electric utility may apply to FERC for a waiver of the mandatory purchase requirement.See18 C.F.R. § 292.402(a).However, the utility must provide public notice that it is seeking the waiver.Id .

{7} On the state level, the Commission has promulgated and adopted a counterpart transfer regulation giving a "distribution cooperative having a full power requirements contract with its supplier ... the option of transferring the purchase obligation ... to its power supplier."17.9.570.13(F)(1) NMAC(Rule 570).Unlike the FERC transfer provision set out in 18 C.F.R. § 292.303(d), the Commission's rule does not by its terms require a qualifying facility's consent to transfer the purchase obligation.SeeRule 570.

{8}PURPA requires the rate at which the utility purchases a qualifying facility's power to "be just and reasonable to the [customers] of the electric utility" and bars FERC from prescribing a rate that "exceeds the incremental cost to the electric utility of alternative electric energy."16 U.S.C. § 824a-3(b).PURPA defines the term incremental cost of alternative electric energy as "the cost to the electric utility of the electric energy which, but for the purchase from [the] small power producer, such utility would generate or purchase from another source."Section 824a-3(d).In adopting its rules to implement PURPA, FERC substituted the term "avoided costs" for the term "incremental cost" that Congress chose.SeeSierra Club v. Pub. Serv. Comm'n of W. Va. , 241 W.Va. 600, 827 S.E.2d 224, 228(2019)(internal quotation marks omitted)(recognizing that costs "incremental" and "avoided" are synonymous (internal quotation marks omitted)).Stated simply, a utility's avoided cost "is the cost [the] utility would otherwise incur in obtaining the same quantity of electricity from a different source."

In re Investigation to Review the Avoided Costs That Serve as Prices for the Standard-Offer Program in 2020 , 2021 VT 28, ¶ 5, 254 A.3d 178.

B.Factual Background and Commission Proceedings

{9}Intervenor-AppelleeWestern Farmers Electric Cooperative, Inc.(Western Farmers Electric)"is a cooperative association engaged in the wholesale generation[,] ... transmission[,] and distribution of electric power to its member rural electric cooperatives[,] which then provide retail electric service to the public."Intervenor-AppelleeLea County Electric Cooperative, Inc.(Lea County Electric)"is a rural electric cooperative organized pursuant to the New Mexico Rural Electric Cooperative Act,"NMSA 1978, §§ 62-15-1 to -37 (1939, as amended through 2021), which provides energy to retail customers in Southeastern New Mexico and West Texas.Lea County Electric does not have electrical generation sources of its own and must obtain its electrical power and energy from another source, such as Western Farmers Electric.

{10}The case commenced with Resolute Wind filing a petition for declaratory order and a supporting brief with the Commission.The petition was supported by an affidavit attesting to the facts alleged.Resolute Wind contended it is a "qualifying facility" under PURPA and asked the Commission to enter its order, "after notice and hearing,"(1) declaring that Lea County Electric is obligated under PURPA to purchase the energy and capacity that Resolute Wind produces and (2) determining the proper avoided costs Lea County Electric is required to pay Resolute Wind for its energy and capacity.

{11} Resolute Wind alleged that it purchased "a two megawatt (2MW) wind turbine located in Gaines County, Texas, within 400 feet of the border with Lea County," New Mexico, which has been certified as a "qualifying facility" by FERC.Resolute Wind contended that Lea County Electric is obligated under PURPA to purchase the energy and capacity that Resolute Wind produces, asserting that the wind turbine is within Lea County Electric's service territory and is interconnected to Lea County Electric's service system.

{12} The dispute arose, according to the petition, when Resolute Wind asked Lea County Electric to fulfill the mandatory PURPA purchase obligation and Lea County Electric asserted it had transferred its mandatory PURPA purchase obligation to Western Farmers Electric, one of Lea County Electric's wholesale suppliers.Resolute Wind contended as follows: (1)Federal regulations allowed Lea County Electric to transfer its purchase obligation, but only with Resolute Wind's consent, and Resolute Wind had not consented to any...