FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

WINDING CREEK SOLAR LLC,

Plaintiff-Appellant/

Cross-Appellee,

v.

CARLA PETERMAN; MARTHA 

GUZMAN ACEVES; LIANE RANDOLPH;

CLIFFORD RECHTSCHAFFEN;

MICHAEL PICKER, in their official 

capacities as Commissioners of the 

California Public Utilities 

Commission, 

Defendants-Appellees/

Cross-Appellants.

Nos. 17-17531

17-17532

D.C. No.

3:13-cv-04934-

JD

OPINION

Appeal from the United States District Court

for the Northern District of California

James Donato, District Judge, Presiding

Argued and Submitted February 13, 2019

San Francisco, California

Filed July 29, 2019

Before: M. Margaret McKeown, William A. Fletcher,

and Mary H. Murguia, Circuit Judges.

Opinion by Judge McKeown
2 WINDING CREEK SOLAR V. PETERMAN

SUMMARY*

Public Utilities

The panel affirmed the district court’s judgment after a 

bench trial and summary judgment in favor of the plaintiff 

in an action brought under the Public Utility Regulatory 

Policies Act against Commissioners of the California Public 

Utilities Commission.

PURPA requires electric utilities to buy all the power 

produced by alternative energy generators known as 

Qualifying Cogeneration Facilities (“QFs”) and to pay the 

same rate they would have if they had obtained that energy 

from a source other than the QFs. QFs are guaranteed their 

choice of this “avoided cost” rate as calculated either at the 

time of contracting or the time of delivery. Plaintiff was a 

QF that wanted to develop a solar generating facility in 

California.

To regulate the terms under which electric utilities 

purchase power from QFs, the CPUC established the 

Renewable Market Adjusting Tariff (“Re-MAT”) program. 

The panel held that Re-MAT violated PURPA’s 

requirements because it capped the amount of energy 

utilities were required to purchase from QFs and because it 

set a market-based rate, rather than one based on the utilities’ 

avoided cost. California did not offer a PURPA-compliant 

alternative. The panel held that, with no PURPA-compliant 

program available, PURPA preempted Re-MAT.

 * This summary constitutes no part of the opinion of the court. It 

has been prepared by court staff for the convenience of the reader.
WINDING CREEK SOLAR V. PETERMAN 3

The panel further held that the district court did not abuse 

its discretion to fashion equitable relief when it declined to 

award plaintiff its preferred remedy of a particular contract.

COUNSEL

Eric Lee Christensen (argued), Beveridge & Diamond,

Seattle, Washington; Thomas Melone, Allco Renewable 

Energy Ltd., New York, New York; for Plaintiff-Appellant.

Christine Jun Hammond (argued), Pouneh Ghaffarian, and 

Arocles Aguilar, California Public Utilities Commission,

San Francisco, California, for Defendants-Appellees.

David Bender, Earthjustice, Madison, Wisconsin, for Amici 

Curiae Montana Environmental Information Center, Idaho 

Conservation League, and Vote Solar.

Gregory M. Adams, Richardson Adams PLLC, Boise, 

Idaho; Irion Sanger, Sanger Law PC, Portland, Oregon; for 

Amici Curiae Community Renewable Energy Association, 

and Northwest and Intermountain Power Producers 

Coalition.
4 WINDING CREEK SOLAR V. PETERMAN

OPINION

McKEOWN, Circuit Judge:

The district court observed that “[d]espite the complex 

regulatory and factual background” in this case, “the key 

legal issues turned out to be straightforward.” We agree. 

The result here follows from straightforward application of 

a handful of regulatory requirements.

The Public Utility Regulatory Policies Act of 1978 

(“PURPA”), 16 U.S.C. § 2601 et seq., requires electric 

utilities to buy all the power produced by alternative energy 

generators known as Qualifying Cogeneration Facilities 

(“QFs”). 18 C.F.R. § 292.303(a). And it requires these 

utilities to pay the same rate they would have if they had 

obtained that energy from a source other than the QFs. 

18 C.F.R. § 292.304. QFs are guaranteed their choice of this 

“avoided cost” rate as calculated either at the time of 

contracting or the time of delivery. 18 C.F.R. 

§ 292.304(d)(2). Winding Creek Solar LLC is a QF that 

wants to develop a 1 MW solar generating facility in Lodi, 

California.

To regulate the terms under which electric utilities 

purchase power from QFs, the California Public Utilities 

Commission (“CPUC”) established the Renewable Market 

Adjusting Tariff (“Re-MAT”) program. Re-MAT violates 

PURPA’s requirements, because it caps the amount of 

energy utilities are required to purchase from QFs and 

because it sets a market-based rate, rather than one based on 

the utilities’ avoided cost. California does not offer a 

PURPA-compliant alternative. With no PURPA-compliant 

program available, PURPA preempts Re-MAT.
WINDING CREEK SOLAR V. PETERMAN 5

BACKGROUND

I. THE PUBLIC UTILITY REGULATORY POLICIES ACT

In an effort to reduce American dependence on fossil 

fuels, Congress enacted Title II of PURPA to facilitate 

development of alternative energy sources. PURPA aims to 

eliminate “(1) the reluctance of traditional electric utilities to 

purchase power from and sell power to non-traditional 

facilities, and (2) the financial burdens imposed upon 

alternative energy sources by state and federal utility 

authorities.” Indep. Energy Producers Ass’n, Inc. v. Cal. 

Pub. Utils. Comm’n (IEP), 36 F.3d 848, 850 (9th Cir. 1994).

Congress directed the Federal Energy Regulatory 

Commission (“FERC”) to adopt “such rules as it determines 

necessary to encourage cogeneration and small power 

production.” 16 U.S.C. § 824a-3(a). FERC’s regulations 

under PURPA define the criteria for certifying alternative 

energy producers as QFs. IEP, 36 F.3d at 851; 18 C.F.R. 

§§ 292.201–.211. The regulations benefit QFs by requiring 

utilities to purchase the energy produced by QFs. IEP, 

36 F.3d at 851; see also 16 U.S.C. § 824a-3(a). Two features 

of this regulatory scheme are relevant here.

First, the so-called “must take” provision requires 

utilities to purchase all of the energy a QF provides. The 

regulations mandate that “[e]ach electric utility shall 

purchase . . . any energy and capacity which is made 

available from a qualifying facility . . . [d]irectly to the 

electric utility.” 18 C.F.R. § 292.303(a)(1).

Second, the pricing scheme requires utilities to pay QFs 

a rate derived from the utility’s “avoided costs.” “Avoided 

costs” are the costs a utility would have incurred but for the 

purchase from a QF, either by purchasing the energy from 
6 WINDING CREEK SOLAR V. PETERMAN

some other source or by generating the energy itself. 

18 C.F.R. § 292.101(b)(6). FERC regulations give QFs two 

options for calculating avoided costs. “[T]he rates for 

[energy] purchases shall, at the option of the [QF] . . . be 

based on either: (i) [t]he avoided costs calculated at the time 

of delivery; or (ii) [t]he avoided costs calculated at the time 

the obligation is incurred.” 18 C.F.R. § 292.304(d)(2) 

(emphasis added). In other words—and key to this appeal—

PURPA allows QFs to choose whether the avoided-cost rate 

a utility pays will be calculated at the time of contracting or 

the time of delivery.

II. CALIFORNIA’S PURPA PROGRAMS

The CPUC implements PURPA programs in California. 

Californians for Renewable Energy v. Cal. Pub. Utils. 

Comm’n, 922 F.3d 929, 931 (9th Cir 2019). In 2012, the 

CPUC created Re-MAT, one of several California programs 

regulating the terms of utilities’ contracts with alternative 

energy sources, such as wind farms or solar producers. ReMAT was intended to establish competitive market-based 

rates for energy from alternative sources. QFs accepted to 

Re-MAT are assigned to a queue “on a first-come-firstserved basis.” Every two months, in what is essentially an 

auction, the utility serving a given area offers the QFs at the 

head of the queue contracts at a pre-defined Re-MAT price, 

which QFs can accept or reject. QFs that reject the contract 

keep their place in line until the next offering two months 

later.

Two additional features of Re-MAT are significant here. 

The amount of energy a utility must buy through Re-MAT 

is capped. California’s three investor-owned utilities are 

obligated to purchase only 750 MW through Re-MAT 

statewide. This amount is divided among the utilities 

according to their customers’ share of peak electricity 
WINDING CREEK SOLAR V. PETERMAN 7

demand. And each utility is allowed to subtract from its 

share any generation it is already obligated to purchase under 

prior CPUC programs. As a result, PG&E, which serves the 

Northern California area in which Winding Creek is located, 

is obligated to purchase just 149.848 MW of energy from 

QFs under Re-MAT. That obligation is then divided equally 

among three types of generation: “baseload,” “non-peaking, 

as-available,” and “peaking, as-available” (which includes 

solar facilities such as Winding Creek).

Additionally, in any given two-month period, PG&E is 

obligated to purchase no more than 5 MW from each 

category of generation. Once PG&E reaches this limit—

meaning once purchasing the output of the next QF in line 

would put it over the 5 MW cap—it can stop offering ReMAT contracts.

Also significant is the Re-MAT contract price. The 

CPUC set the initial price at $89.23/MWh for peaking asavailable facilities like Winding Creek. Every two months 

this price adjusts up, down, or stays the same based on QFs’ 

willingness to accept the prior offer price. If QFs will not 

supply at least 1 MW to the regional utility, and there are at 

least five unaffiliated QFs in the queue, the next contract 

price adjusts up. If QFs supply at least 5 MW at the previous 

offer price, the price adjusts down. And if QFs supply 

between 1 and 5 MW at the offer price, or there are fewer 

than five unaffiliated QFs in the queue, the price remains the 

same. The price adjustment follows a formula set by the 

CPUC.

The CPUC administers another PURPA program, the 

Standard Contract, which is available as an alternative to ReMAT. See Winding Creek Solar LLC, 153 FERC ¶ 61027, 

2015 WL 6083932 (Oct. 15, 2015). The Standard Contract 

does not cap the amount of energy a utility is obligated to 
8 WINDING CREEK SOLAR V. PETERMAN

buy. The Standard Contract offers an avoided-cost rate, 

calculated using a six-variable formula. However, three of 

the six variables (burner tip gas price, market heat rate, and 

a location adjustment factor) are impossible to determine at 

the time of contracting.

III. WINDING CREEK’S RE-MAT PARTICIPATION

Winding Creek was accepted into the Re-MAT program, 

but because it was not placed near the top of the queue, the 

company did not receive a contract offer at the initial 

$89.23/MWh price. By the time Winding Creek received a 

contract offer in March 2014, the price had dropped to 

$77.23/MWh. Winding Creek rejected this offer and later, 

lower offers because it could not develop a facility at such a 

low price.

Winding Creek initially challenged the Re-MAT 

program before FERC. See Winding Creek Solar LLC, 

144 FERC ¶ 61122, 2013 WL 4053221 (Aug. 12, 2013); 

Winding Creek Solar LLC, 151 FERC ¶ 61103, 2015 WL 

2151303 (May 8, 2015) ; Winding Creek Solar LLC, 

153 FERC ¶ 61027. After various orders and notices of 

intent not to act, Winding Creek filed suit in district court. 

Following a one-day bench trial, the district court granted 

summary judgment in favor of Winding Creek but declined 

to grant Winding Creek its preferred remedy: a contract with 

PG&E at the initial $89.23/MWh price.

ANALYSIS

We review de novo the district court’s grant of summary 

judgment. FTC v. Stefanchik, 559 F.3d 924, 927 (9th Cir. 

2009). Findings of fact following a bench trial are reviewed 

for clear error. See Husain v. Olympic Airways, 316 F.3d 

829, 835 (9th Cir. 2002), aff’d 540 U.S. 644 (2004).
WINDING CREEK SOLAR V. PETERMAN 9

Like the district court, we believe the conclusion to be 

drawn from this web of regulations is not complicated: 

California’s Re-MAT program violates, and is therefore 

preempted by, PURPA. See La. Pub. Serv. Comm’n v. FCC, 

476 U.S. 355, 368–69 (1986) (explaining that state 

regulations that conflict with federal regulations are 

preempted under the Supremacy Clause).

Re-MAT violates PURPA in two ways. To begin, ReMAT’s cap on the amount of energy utilities must purchase 

from QFs is impermissible under PURPA’s must-take 

provision. Under Re-MAT, PG&E is required to purchase 

no more than 5 MW of energy from each of the three 

categories of alternative energy sources in any two-month 

period. And each utility must purchase only a fraction of the 

750 MW statewide cap from each category of generators. 

As a result, a utility could purchase less energy than a QF 

makes available, an outcome forbidden by PURPA. 

18 C.F.R. § 292.303(a)(1).

Re-MAT’s pricing scheme also runs afoul of PURPA. 

PURPA requires a utility to pay QFs at an avoided-cost rate: 

the rate the utility would have incurred obtaining energy 

from a source other than the QFs. 18 C.F.R. 

§ 292.101(b)(6). True, state agencies may take a variety of 

factors into account when calculating avoided cost. See 

18 C.F.R. §§ 292.302(b), 292.304(e). But the Re-MAT 

price, which is arbitrarily adjusted every two months 

according to the QFs’ willingness to supply energy at the 

pre-defined price, strays too far afield from a utility’s but-for 

costs to satisfy PURPA.

The CPUC argues that Re-MAT’s noncompliance with 

PURPA is not consequential because QFs may instead sell 

energy to utilities through the Standard Contract. It is true 

that FERC has concluded that an alternative program may 
10 WINDING CREEK SOLAR V. PETERMAN

exist if a state otherwise satisfies its obligations to QFs under 

PURPA. See Winding Creek Solar LLC, 151 FERC 

at ¶ 61103 (“[A]s long as a state provides QFs the 

opportunity to enter into long-term legally enforceable 

obligations at avoided-cost rates, a state may also have 

alternative programs that . . . limit how many QFs, or the 

total capacity of QFs, that may participate in the [alternative] 

program.”). The Supreme Court has recently reiterated 

when courts must defer to agencies’ interpretations of their 

own regulations. Kisor v. Wilkie, — U.S. —, No. 18-15, slip 

op. at 11–19 (June 26, 2019). But we need not decide if 

FERC’s regulatory interpretation is due deference under 

Auer v. Robbins, 519 U.S. 452 (1997), because, either way, 

the result is the same.

Even under FERC’s interpretation, the Standard 

Contract cannot save Re-MAT because the Standard 

Contract also violates PURPA. PURPA mandates that QFs 

be given a choice between calculating the avoided-cost rate 

at the time of contracting or at the time of delivery. 

18 C.F.R. § 292.304(d)(2). The Standard Contract provides 

only one formula for calculating avoided cost, and that 

formula relies on variables that are unknown at the time of 

contracting. The Standard Contract violates PURPA 

because it fails to give QFs the option to calculate avoided 

cost at the time of contracting. This infirmity is plain from 

the face of the regulations, so we do not defer to FERC’s 

unreasoned conclusion to the contrary. See Kisor, slip op. at 

13, 17 (holding that Auer deference is only appropriate if the 

regulation being interpreted is “genuinely ambiguous” and 

the agency’s interpretation “reflect[s] fair and considered 

judgment” (internal quotation marks omitted)).

The bottom line is that two wrongs don’t make a right. 

Because neither option offered by the CPUC is PURPA-
WINDING CREEK SOLAR V. PETERMAN 11

compliant, California’s regulatory scheme is preempted by 

federal law.

Finally, the district court did not abuse its broad 

discretion to fashion equitable relief by declining to grant 

Winding Creek a contract with PG&E at the initial 

$89.23/MWh price. See Labor/Cmty. Strategy Ctr. v. L.A. 

Cty. Metro. Transp. Auth., 263 F.3d 1041, 1048 (9th Cir. 

2001). Indeed, it would be inappropriate to order a non-party 

to contract with Winding Creek under a modified version of 

the very program the court had just determined to be 

preempted by federal regulation. It is not the court’s job to 

fashion a new contract to Winding Creek’s liking. See Allco 

Renewable Energy Ltd. v. Mass. Elec. Co., 875 F.3d 64, 74 

(1st Cir. 2017) (noting that federal courts are neither 

statutorily authorized nor competent to set avoided-cost 

rates).1

AFFIRMED.

 1 The CPUC’s unopposed motion for judicial notice (Dkt. 47) is 

GRANTED.