Court Opinion

ID: 5173573
Source: CourtListenerOpinion
Date Created: 2022-01-02 05:14:19.091736+00
Date Added: 2024-06-11T08:26:11.535842
License: Public Domain

JOHNSON, Justice.
This is a contract case involving the interpretation of a portion of a Power Sales Agreement (the Agreement) between Afton Energy, Inc., (Afton) and Idaho Power Company (Idaho Power). The primary issue presented is whether the purchase price and terms of payment for power set forth in the Agreement are subject to adjustment according to other provisions of the Agreement. The trial court decided that they were not, and we affirm.
I.
THE FACTS
The underlying facts concerning this case are thoroughly stated in two prior decisions of this Court. Afton Energy, Inc. v. Idaho Power Co., 107 Idaho 781, 693 P.2d 427 (1984) (Afton I/III) and Afton Energy, Inc. v. Idaho Power Co., 111 Idaho 925, 729 P.2d 400 (1986) (Afton IV).
The provisions of the Agreement that are at issue here are as follows:
*853ARTICLE IV: PURCHASE PRICE AND METHOD OF PAYMENT
(A) Firm Energy. Idaho shall pay Seller monthly for Firm Energy delivered and accepted at the Unit Avoided Energy Cost rate specified in Appendix “A”.
(B) Dispatchable Capacity. Seller shall be paid for Dispatchable Capacity made available to Idaho in accordance with Appendix A. The applicable Capacity Price for purposes of computing Capacity payments is $350 per kilowatt-year, except as may be adjusted as provided in Appendix A or Appendix B. The Capacity Price is derived from Table 1, Appendix A. Idaho’s obligation to pay Seller for Capacity furnished to Idaho shall commence as of the Operation Date.
Payment for the Capacity provided in each 12-month period following the Operation Date will be made in twelve (12) equal monthly amounts.
(C) Following the Initial Period, the purchase price specified in (A) and (B) above and the method for determining the Capacity specified in Appendix A, as well as all other rates, terms and conditions set forth in this Agreement, will be subject to the continuing jurisdiction of the Idaho Public Utilities Commission and will be subject to change or revision by order of the Idaho Public Utilities Commission upon a finding, supported by substantial competent evidence, that such change or revision is just, fair, reasonable, sufficient, non-preferential and non-discriminatory. In no event will such a revision result in a purchase price higher than the purchase price that would have been paid without such a change or revision by the Idaho Public Utilities Commission.
(D) If, during the Initial Period, the Idaho Public Utilities Commission determines or approves new purchase prices for power generated by cogeneration or small power production facilities which purchase prices, had they been in effect during the Initial Period, would have resulted in Idaho’s paying Seller a lesser amount than Idaho paid Seller based on the rate, terms and conditions set out in this Agreement, Seller agrees to repay Idaho, without interest, the difference between the total dollars paid during the Initial Period under this Agreement and the lesser dollar amount which would have been paid under the revised purchase price schedule adopted by the Idaho Public Utilities Commission during the Initial Period. Any such repayment will be made by reducing the Capacity payments made to the Seller during the ten-year period following the Initial Period. In no event will the amount of such repayment exceed $300,000 per year.
ARTICLE XIII: LEGAL DISPUTE
It is understood and agreed that a bona fide legal dispute exists between Seller and Idaho as to the authority of the Idaho Public Utilities Commission to order Idaho to enter into contracts containing rates, terms and conditions with which Idaho does not concur. Idaho proposed the following language:
The rates, terms and conditions set forth in this agreement are subject to the continuing jurisdiction of the Idaho Public Utilities Commission. The rates, terms and conditions under this agreement are subject to change and revision by order of the Commission upon a finding, supported by substantial competent evidence, that such rate, term or condition change or revision is just, fair, reasonable, sufficient, non-preferential and non-discriminatory.
The Idaho Public Utilities Commission rejected that language. Seller and Idaho are in agreement that if, as a result of a legal determination as to the Idaho Public Utilities Commission’s authority to dictate rules, terms and conditions or to order that contracts be entered into by Idaho, it is determined that the Idaho Public Utilities Commission has such authority, then the purchase price and terms set out in paragraphs (A) and (B) of Article IV will be in effect for the full term of the Agreement. If the legal determination results in a finding that *854the Commission does not have'that authority, paragraphs (C) and (D) of Article IV of the Agreement will be applicable.
Following the decision of this Court in Afton IV, Afton filed this action seeking a declaratory judgment against Idaho Power declaring that paragraphs (A) and (B) of Article IV are in effect for the entire thirty-five year term of the Agreement. Idaho Power counterclaimed requesting a declaratory judgment declaring that paragraphs (C) and (D) of Article IV are in full force and effect. Both parties filed motions for summary judgment seeking relief on their respective claims. The trial court ruled that Afton had prevailed in the legal dispute described in Article XIII of the Agreement and that paragraphs (A) and (B) of Article IV of the Agreement were in full force and effect. Idaho Power has appealed from the trial court’s decision.
II.
THE LEGAL DISPUTE WAS WHETHER IDAHO POWER WAS REQUIRED TO PURCHASE POWER FROM AF-TON AT A FIXED RATE FOR THIRTY-FIVE YEARS.
As this Court said in Afton I/III, these cases began when the Idaho Public Utilities Commission (the Commission) “ordered Idaho Power to ‘agree to purchase from Afton Energy, Inc., cogenerated power in the amount and for the time period tendered by Afton, at the avoided cost rates for Idaho Power Company that have previously been prescribed and approved by this Commission and that are currently in effect.’ ” 107 Idaho at 783, 693 P.2d at 429.
Article XIII of the Agreement attempts to describe the “bona fide legal dispute” that existed between Afton and Idaho Power at the time Idaho Power appealed this order of the Commission. None of the formulations of this dispute contained in Article XIII accurately and succinctly describe the nature of the dispute. Simply stated, the legal dispute was that Afton wanted to sell Idaho Power cogenerated power for thirty-five years at the avoided cost rates that had previously been established by the Commission and that were in effect in 1982, and Idaho Power denied its obligation to purchase the power for that period and at those rates.
III.
AFTON PREVAILED IN THE LEGAL DISPUTE AND ARTICLE IV(A) AND (B) ARE IN EFFECT.
In Afton I/III this Court clearly upheld Afton’s position in the legal dispute by affirming the Commission’s order that Idaho Power must purchase power from Afton for the period and at the rates Afton sought. Only if this Court had reversed the Commission’s order would paragraphs (C) and (D) of Article IV of the Agreement have become applicable pursuant to Article XIII of the Agreement.
In Afton I/III this Court also held:
An agreement such as the one entered into between Afton Energy and Idaho Power, while not constituting a tariff, is a special type of contract. The Commission should apply the fair, just and reasonable standard, in a manner not inconsistent with federal law to the extent that it may be applicable, to determine whether the rates need to be adjusted in this particular type of contract. 107 Idaho at 793, 693 P.2d at 429.
This ruling was not intended to indicate that the Commission’s order was incorrect or that Afton had not prevailed. The authority given to the Commission by this Court to determine whether the rates need to be adjusted is not the same as the continuing jurisdiction of the Commission provided in paragraph (C) and the repayment provisions of paragraph (D) of Article IV of the Agreement. The following differences are noted:
1. Paragraph (C) would have taken effect only following the initial period of ten years of the Agreement. The authority granted by this Court to the Commission in Afton I/III tb consider adjustment of rates became effective when the decision was final. As Afton IV pointed out:
*855Idaho Power, or Afton for that matter, may file an application with the Commission requesting that the contract be modified to satisfy the requirements of the Afton I/III standard.
Ill Idaho at 929-30, 729 P.2d at 404-05.
2. Paragraph (C) would have allowed change or revision of the purchase price specified in paragraphs (A) and (B) of Article IV “as well as other rates, terms and conditions set forth in [the] Agreement.” This Court in Afton I/III authorized the Commission only “to determine whether the rates need to be adjusted.”
3. Paragraph (C) would have provided that the purchase price could never be revised higher than that provided in paragraphs (A) and (B). There is no similar limitation on the authority given to the Commission by this Court in Afton I/III.
4. Paragraph (D) would have applied if the Commission were to have determined or approved “new purchase prices for power generated by cogeneration or small power production facilities.” The authority granted to the Commission by this Court in Afton I/III applies only to adjustments to the rates contained in the Agreement between Afton and Idaho Power, and would not cause the rates in the Agreement to be automatically modified if the Commission established new purchase prices for other cogenerators or small power producers.
5. Paragraph (D) would have required repayment by Afton of overpayments by Idaho Power during the initial period of ten years, if the Commission reduced purchase prices for power generated by cogeneration or small power production facilities below the rates Idaho Power was obligated to pay Afton under paragraphs (A) and (B) of Article IV of the Agreement. Nothing in the decision of this Court in Afton I/III would require repayment by Afton if the rates in the Agreement were adjusted by the Commission.
Afton has prevailed in the legal dispute between Afton and Idaho Power that they attempted to describe in Article XIII of the Agreement. Therefore, paragraphs (A) and (B) of Article IV are in effect. The rates contained in paragraphs (A) and (B) may be adjusted by the Commission at any time, if the Commission determines that such an adjustment is “fair, just and reasonable” and “not inconsistent with federal law to the extent that it may be applicable.” Afton I/III, 107 Idaho at 793, 693 P.2d at 439.
IV.
CONCLUSION
The order of the trial court awarding summary judgment to Afton and denying Idaho Power’s motion for summary judgment is affirmed.
Costs to Afton.
No attorney fees on appeal.
BISTLINE and HUNTLEY, JJ., concur.
SHEPARD, C.J., dissents without opinion.