Opinion ID: 2575983
Heading Depth: 1
Heading Rank: 10

Heading: the contract term ordered by the commission is supported by substantial evidence and is consistent with federal law

Text: ¶ 58 Lawton asked the Commission to set the term of the PSA at twenty-five years. The Commission rejected this request and set the term at twenty years. PSO argues that the Commission-ordered contract term merely exacerbates the contract's substantive inequities and inefficiencies in violation of PURPA and the FERC's regulations. The Attorney General argues that ratepayers will be harmed by a contract of twenty years duration that reduces PSO's flexibility to rely on market purchases because market purchases will provide electricity to consumers at a lower cost than the PSA. OIEC argues that in today's market a long-term contract is a contract of three to five years duration. Lawton responds that the twenty year term ordered by the Commission is supported by substantial evidence and is consistent with PURPA and the FERC rules implementing it. Lawton points to testimony from Commission Staff that a short-term contract would discourage cogeneration in Oklahoma and that a long-term contract is desirable to protect ratepayers from the volatility of the electricity market. ¶ 59 In Smith, [86] we held that a qualifying facility is entitled to full avoided costs set for the duration of a long-term contract, [87] but did not address what constitutes a long term contract. Neither PURPA nor the FERC rules require any particular contract length, leaving the decision on this issue to the discretion of the state regulatory authority to be resolved on a case-by-case basis. Evidence was introduced in this case that in light of market forecasts, five years constitutes the long term, but the Commission, relying on other evidence, was unwilling to rely on predictions of future market conditions. Instead, the Commission concluded that the ability of PSO to purchase power at a known, set price for twenty years would provide greater protection to ratepayers while at the same time promoting the goal of PURPA to encourage cogeneration. The Commission's choice of a twenty-year term does not violate PURPA or the FERC rules implementing it and is supported by the record.