Court Opinion

ID: 9550367
Source: CourtListenerOpinion
Date Created: 2023-08-07 18:34:33.397938+00
Date Added: 2024-06-11T15:21:27.418401
License: Public Domain

BISTLINE, Justice,
dissenting.
I (A)
The first co-generation case in Idaho was Afton Energy, Inc. v. Idaho Power Co., 107 Idaho 781, 693 P.2d 427 (1984). Idaho Power fought strenuously before the Public Utilities Commission, and then in this Court for its views which were adopted by Justice Bakes, and well stated by him in his dissent, that the Commission did not have jurisdiction and power to order Idaho Power to purchase power from, Afton.1 He wrote that the “Commission’s jurisdiction must stem from state law. The commission has no inherent power, and its powers and jurisdiction derive in their entirety from enabling statutes, and ‘nothing is presumed in favor of its jurisdiction____’ Afton Energy is attempting to enforce contractual rights granted by federal law ... it is not true ... that the federal statute or regulations can grant jurisdiction to a state administrative agency which has not been given that jurisdiction by the Idaho legislature.” 107 Idaho at 790-91, 693 P.2d at 436-37. He “vehemently” disagreed with the Court’s opinion which held otherwise, and on rehearing continued to adhere to those views. Justice Shepard on the rehearing stated that he had earlier adhered to those same views, and continued to do so. That the issue was rather hotly contested in this Court is perhaps an understatement, as witnessed by the fact that Justice Shepard openly made the unprecedented move of voting with the majority “solely to the end that should a petition for rehearing be filed I may be able to, and most assuredly will, cast a meaningful vote to grant rehearing.” 107 Idaho at 793, 693 P.2d at 439. That is all behind us, and it is much doubted if any court in the fifty states judicially rejected the right of Con*195gress to pass such legislation. In today’s opinion for the Court Justice Shepard merely mentions the legislation without comment other than that “it is clear that the Idaho Public Utilities Commission is granted authority to, and is the appropriate forum to resolve whether a co-generator or small power producer has satisfied the criteria for ‘qualified facility’ status, and to determine whether a regulated utility has an obligation under PURPA to purchase power from an applicant.” At 192, 755 P.2d at 1230.
In the Afton case, Idaho Power’s resistance to co-generation was based solely on its objection to the concept of having to deal with such concerns at all. If it raised any objection to Afton Energy’s qualifications, I do not remember them, and believe that it can safely be said that such was not an issue before the commission or on appeal in this Court. It can also be safely said that co-generation as envisioned by the Congress is becoming a reality in Idaho.
Even while this case has been under consideration, the Idaho Statesman under date of of June 15,1987, carried an article which informed its readers that there are now at least 85 small Idaho-based producers with 56 contracts to feed Idaho Power, 17 with Utah Power and Light, 11 with Washington Water Power, and one with Pacific Power & Light. What that means is that the commission, as a result of the PURPA legislation, since 1984 had to accommodate at least 85 more cases and probably more. This is a lot of cases when added to the PUC’s primary already burdensome task of supervising the rate-making cases of the big public utilities in the state.
The article, to this reader at least, tends to explain the stance taken by the commission in rather summarily dismissing the complaint lodged with it by Empire Lumber, a company which may be no greater or no smaller than Evergreen Forest Products, featured in the Idaho Statesman.
By RANDY STAPILUS
The Idaho Statesman
Snuggled deep in the forest country of Adams County is a key generator of the electric power revolution.
The generator, in a sawmill run by the Evergreen Forest Products Co., uses castoff bark, chips, sawdust and shavings. They are burned to make steam, which turns turbines, which creates electricity — more than five megawatts of it a year, or enough for 1,000 electrically heated homes.
The power plant produces even more juice than its founders had hoped. The electricity goes to, and brings money from, Idaho Power Co.
“That’s been a very, very good plant; it really has,” said Dick Barrell, a partner in Tamarack Energy Partnership, which assists Evergreen with the power production.
The sales help stabilize the mill’s finances, he said. The generator also helps dispose of wood waste, he said. “That has always been a problem.” Small generators such as the one at Evergreen have broader benefits, too, Barrell said. “These small plants can (start operating) much faster than the large plants,” he said. And they generally use renewable resources.
However, power generation by such small producers as Evergreen, the first generator to sign a contract with Idaho Power, has created some problems for major utilities.
For many years, utilities would not buy power from small producers. But the Public Utilities Regulatory Policies Act (PURPA), enacted by Congress in 1978, required utilities to purchase the output of small-scale producers. Terms of those purchases are set by — and vary widely among — utility commissions in the various states.
Knowing something about the comparative net worth of Afton Energy, and Evergreen Forest Products, or Empire Lumber Co., and the other 82 or more small power producers would be helpful. Although there are intimations in the commission’s order, picked up on by members of this Court, that it is only seeking an “option” to have the right to sell its power to Washington *196Water Power, and accordingly is aught but a speculator, neither Washington Water Power nor the commission point to any evidence adduced by Washington Water Power or the commission that Empire is without the substance to get into the business of becoming a small producer of electricity. It rather appears that the word “option” was taken out of context by the commission, and for certain is in the Court’s opinion. At page 192, 755 P.2d 1230 the majority writes that “[i]n 1983 Empire purchased used equipment from Crown Zellerback____” What it purchased was a 3.7 megawatt generator. By law it cannot exceed operating a generator producing over ten megawatts. It did not want to foreclose itself from building a plant up to 9.9 megawatts, or possibly 6 or 3.7. The commission’s brief on page 9 informs all of us justices that Empire had made substantial progress, including expenses of over $200,000 which included the 3.75 megawatt plant form Crown Zellerback. Empire made it quite clear (again from the commission’s brief and not Empire’s) that it had not been shopping for a 10 megawatt plant, or a 5 megawatt, or two 5 megawatt plants, simply because “negotiations broke down” and “we’ve got to have a contract before we go out and spend the time and money to locate equipment.” Commission’s brief, p. 10. At the same page, Empire’s response to a commission question asking, “Can I infer ... that you might put in any size plant up to 10 megawatts depending upon what you locate”?, the answer was, “[Yes] depending on how the figures come out.” Which makes sense to me, and confirms that all that Empire was saying was that they were keeping their options open as to size. It is basically unfair to suggest that Empire was simply seeking a commitment on rate so that once obtained, it could be peddled— much the same as one buys an option on a house, horse, or farm, and tries to sell it when he is unable to exercise the option, or can’t come up with the money.
The issue of location of the mill is a pretext, a red herring. Maybe not to the uninformed reader, but to anyone who knows north Idaho, it would matter little whether the plant was put in operation at Kamiah, at Weippe, or at St. Maries. Anywhere in that region there is an abundance of “cast-off bark, chips, sawdust and shavings” such as the Statesman says are utilized by the Evergreen Forest Products in Adams County, and, I would venture, in greater abundance. Moreover, the commission’s brief recites the impasse reached at the September 16, 1985, negotiating session, where there were four items on the agenda, one of which was “an offer to consider Water Power’s preference for a site (St. Maries, Weippe, or Kamiah).” Negotiations broke down when “Mr. Bryan [for Water Power] took the adamant position that he would not sign the contract at the approved rates____ You cannot negotiate when there is an adamant position on one party’s side.”
Unlike the situation in Afton, Water Power does not have available an attack on the commission’s jurisdiction. That issue has been settled.2 Instead, without bringing in any evidence to show that Empire was not qualified, even though it had qualified with FERC, as noted in Order No. 20281, March 4, 1986, which also conceded that Empire was assured of a fuel supply from wood waste.
That order, dismissing the action, philosophized:
We note Water Power’s well publicized commitment to economic development in its service territories. This indicates that the utility and Empire have a common interest in bringing this cogeneration project on line with its attendant boost to *197employment and general economic stimulation. We encourage both parties to make a concerted effort to negotiate and comprise specific contract terms with the objective of bringing this project to the grid. Until such action is undertaken by both parties, this Commission will not further consider complaints and arguments addressing specific contract terms. Voicing objections and raising concerns does not equate to active negotiation. A Complaint should not be brought to the Public utilities Commission until every effort is made to actively negotiate and conclude a contract.
A rehearing was granted, followed by Order No. 20693 which was essentially a mandate to both parties to resume negotiations in good faith, but cautioning that “This Commission will not approve a contract giving the project owner the option to size capacity for anything up to 9.9. MW.” While the order did not clarify with any precision why the commission insisted that there be a fixed capacity plant at the outset, it does serve to explain the context in which it understood itself to be using the word “option” entirely inconsistent with the meaning which to my perception has been ascribed to it at this level.
All that I understand is that federal law restricts the capacity, and it is beyond my understanding why the commission in its final order insists that the size of the plant be specified, and so one would suppose, purchased as a prerequisite showing of good faith.
In sum, it would be helpful to know if the 85 small producers now in operation were similarly required to have a definite commitment to a certain size plant, and why. The commission closes with this passage, which I do not see as explaining its positive requirement of a plant size:
Dealing dispositively with the unusual testimony and exhibits in this case renders the tone of this Order — necessarily, in our reluctant conclusion — arbitrary, repetitive and didactic. But the reality is that it is the law under which we work that is arbitrary: there are stages that must be reached before we can take jurisdiction over complaint resolution. The Commission is frustrated by a number of indications that the complainant really was offering siting options to the utility, and that thus-far unproductive capital expenditures have been made toward the goal of installing a viable co-generating facility of some importance to the economy of the Kamiah area and consonant with PURPA objectives including the utilization of renewable resources. Our frustration is that the steps necessary to constitute full negotiation, as outlined above, can only be taken by the complainant and not by us. Order No. 20693, p. 283.
The key word found above, so I truly believe, is “frustration.” ' A frustrated commission may be expected to act out of frustration. Only in these co-generation cases does it appear that frustration with the parties and their attitudes surfaces. District judges face it much of the time, and have penalized parties for their failure to negotiate settlements when obviously a settlement is in order. But, is frustration with the parties, apparently both of them in this case, a sufficient reason to close the file? Perhaps it is sufficient, but I question its validity, and especially in this case where the very purpose of PURPA is frustrated, and the Kamiah — Weippe—St. Maries area continues to be denied the economic stimulation which would flow from getting this project on line.
My view is simply that frustration, and very likely justified and long-stifled frustration is not sufficient reason for dismissing the complaint. A dismissal is without question a victory for Water Power. Has it prevailed on the merits? No, it has prevailed by thwarting the efforts of Empire to join 85 other Idaho co-generators. A dismissal of an action out of sheer frustration, whether by district court, or by a regulatory body, and maybe more so with the latter, delays, but does not solve. On other occasions the commission has been *198more forceful and has the power and the right to be so. In these cases the National Congress and the Idaho Legislature have left regulating to the commission. That necessarily includes giving outright directives to the parties who come under its jurisdiction.
II
Moreover, it is difficult to accept the commission’s view that the parties must first present it with an executed contract, and this is a good example of the problems inherent in a system so regarding. The commission, by its Order No. 15746, in case numbered P-300-12, set out to promulgate a set of rules to be applicable to the development of co-generation and small power production facilities, and engaged itself in a rather extensive, but highly productive, enterprise. It first observed:
Facilities that qualify under the Act are to be exempt from federal regulation under the Public Utility Holding Company Act of 1935 and from regulation as a “public utility” under state law as well. State regulatory commissions are required to implement the Act by specifying data to be submitted by electric utilities. Commissions are authorized to set rates for utility purchases of power from cogenerators and small power producers and for utility sales of back-up or supplemental power to these same facilities. The commissions are also required to publish standardized rates for facilities under 100KW and to establish procedures for- interconnection and wheeling arrangements.
It also asked itself the question:
If the benefits of cogeneration and small power production are so great— both to the individual utilities and to the nation as a whole — why has their development languished?
And answered it a few lines later:
When potential cogenerators or small power producers — potential competitors seeking entry into the field of electric generation — have approached the electric utility that alone can serve as a market for purchase of electricity, the response has frequently not been encouraging.
Following which it observed the intervention of Congress.
Faced with this situation, the U.S. Congress enacted Title II of PURPA in order to foster competition in electric generation. No longer is this phase of production to be the exclusive domain of public utilities. Their natural monopoly has always been and will continue to be the distribution of electricity. Henceforth, however, electric generation is to be a competitive enterprise with regulation intervening only to the extent necessary to simulate a free market. (Emphasis added.)
The commission also stated this, relative to the utilities paying the co-generator or small producer rates which are the equivalent of avoided costs:
This Commission endorses the policy of having each utility pay its full avoided cost when purchasing power from cogenerators and small power producers. Such a price will bring about the equilibrium solution typical of a competitive market where the marginal cost of all firms producing a like product is equal. Anything less will fail to bring about the condition of a free, competitive market and will leave the utility, as sole buyer, in a position to dictate price as it sees fit.
The notion of avoided costs is complemented by the notion of a “simultaneous purchase and sale.” Simply put, it means that a utility must purchase the entire output of a cogenerator or small power producer at the utility’s own avoided costs and, at the same time, must supply the cogenerator or small power producer its entire electric requirement under non-discriminatory rate schedules. In short, the utility must buy at the margin and sell at retail.
It follows that a utility cannot refuse to offer its standard contract rates to *199qualifying facilities that do not also happen to be “customers” taking power from the company.
The commission also commented on the treatment which Qualified Facilities (QFs) were to receive from the public utilities:
As to “procedures for obtaining qualifying statutes,” the regulations state simply that “a small power production facility or cogeneration facility which meets the criteria [outlined above] is a qualifying facility.” The facility is simply to furnish FERC with certain information specified in section 292.297 of the rules. No further procedure is required. Thus, there is no question of awaiting “an award” of status as a qualifying facility, most especially not from this Commission since we have no jurisdiction over this area at all. Alternatively, a small power producer or cogenerator has the option of filing with FERC an application for certification that the facility is a qualifying facility. If no order issues within 90 days of filing, the application is to be deemed granted. It thus appears that the criteria for “qualifying facility” status are to be interpreted liberally. This Commission intends that they be so interpreted and we expect our utilities to do so as well. (Emphasis added.)
Such were the well-considered and well-stated views of the commission in August of 1980. But, this is the year 1987, almost seven years, and over 85 or more cogeneration small power producers cases later.
I (B)
Empire’s efforts should be compared to those of Afton Energy. The state of Afton’s preparations in “out-of-pocket expenses” approached $200,000. This included the following: engineering studies; feasibility studies; rough proposals; the permit application process for building a co-generation plant; the interim cost of developing financial packages, including locating and identifying appropriate lenders and identifying and negotiating with appropriate equity people; company time; and travel. What Empire has done in preparation is purchase a small-sized power facility, carried out a feasibility study of locating a plant of this size at Kamiah, procured engineering studies regarding fuel availability, employed a small power producer consultant to negotiate the contract, and insured the usual attorney fees and travel expenses. Measured on a pure dollar-to-dollar scale, Empire exceeded Afton in expenditures at $225,000 in pursuing its contract. The real distinctions between Empire and Afton would seem to be what? Empire in its initial planning stages had not settled the choice of one exclusive facility site and location; and, as the commission noted, supra, was attempting to oblige Water Power’s concerns in site selection. A review of the record in Afton gives no indication that these requirements nor the more complete financing packages, were crucial to a cogenerator receiving a rate contract.
What Empire and Afton share is a willingness to contract with an electric utility company to provide power from a small-sized cogeneration facility. While Empire carried out studies with a smaller capacity facility, what Empire desired to contract for with WWP was a 9.9 megawatt facility. Empire’s previous indecision should be immaterial. It, like Afton Energy, decided what obligations it would incur, namely the delivery of a specified amount of power. Empire’s state of readiness was not what prevented a contract from being formed. The lack of “substantial progress” on the part of Empire should be judged in terms of the contract negotiations as well as with project readiness. The majority notes that during negotiations several objections to certain terms in the contract proposal existed. While true in numbers, these objections are not so true in importance. The record shows that the major points of contention were first WWP’s refusal to contract at a rate which it originally proposed; second, what was known as the 4(c) con*200tract clause, a clause which subjected the contract to actions by future commissions;3 third, the question of whether Empire could be, and should be, required to post security for its performance of the contract.4
These matters, and in even more limited terms the first two, caused a breakdown in the negotiations between Empire and WWP. Testimony from Empire’s negotiator at the hearing illustrates that party’s perspective of the situation.
Q Do you believe that Empire Lumber Company exhausted every reasonable effort to obtain a contract from Water Power?
*201A I believe we did. Lester Bryan said that they absolutely would not sign a contract at the approved rates, and in over a year’s time, Washington Water Power gave little ground on the 4(c) fixed rate, long-term contract language.
Q Mr. Tyrer, I’m going to show you the original, and I believe you have a xerox copy of the original, what is Marked 104; is that correct?
A That is correct.
Q Can you tell me what that exhibit is, please.
A It’s a letter from myself to Steven Anderson.
Q Is it still the attitude of, as expressed in the letter, that there is no reason to negotiate when we don’t agree on the appropriate rates?
A I think there were two issues which I have addressed and, one, the adamant refusal to sign a contract at the approved rates and, two, the 4(c) language.
The rest of the issues, Mr. Strong, could be quickly resolved; ...
If Washington Water Power takes out the 4(c) language and if they would agree to sign a contract at the rates approved by this Commission, we could have a contract before this afternoon is finished. Tr., pp. 249, 268-9
The roadblocks to the “substantial progress” of the proposal and the eventual facility lie not in Empire’s project development but in the contract terms and negotiations themselves. As stated numerous times in the record, Empire did not feel a need to expend additional money and preparation time on a project without a rate contract to verify the project’s viability. This is especially true in the case of financing a project. In Afton’s case, the tentative financing packages Afton set up required a near immediate contract in order to preserve their fragile financing arrangements — without the contract, no financing and no project. Empire knew of these difficulties and merely wanted to secure its position before creating additional liabilities.
The progress was not a matter of the proposal’s terms being completed but, instead, the negotiations. Further testimony of Empire’s negotiator brings this to issue.
Q Mr. Tyrer, is it your opinion that prior to the September 16, 1985 meeting that empire had made substantial progress toward completion of the project?
A They certainly had.
Q Would you compare the progress Empire Lumber Company made towards its project with the progress Plummer made?
A Empire had done everything that Plummer had in preparation for a contract.
Q Mr. Tyrer, do you believe that Washington Water Power and Empire Lumber Company have a common interest in economic development in Northern Idaho? A I sure do.
Q On Page 4 of the March 4th, 1985 opinion, Mr. Tyrer, the Commission requires that the CSPP must make every effort to negotiate a contract.
Is there any other effort you could have taken to obtain a contract which complied with PURPA prior to September 23rd, 1985?
A I know of no other effort. I have been involved in a number of negotiations with the utilities from Wisconsin to California, Washington, Wyoming, Montana, Idaho, and these negotiations were stopped by their refusal, stated refusal, to sign a contract at the approved rates. Tr., p. 263.
The finding of the PUC that it was Empire Lumber that was not ready, willing or able to sign a contract does not hold up under an examination of the record. WWP’s withdrawal of its original rate or avoided cost was instead the precipitating factor in a breakdown of negotiations. WWP suspended its rates to all applicable cogenerator contracts in an effort as it described to *202create a current estimate of the avoided cost, and not one which was the estimate for a year and a half ago. This unilateral suspension was questioned by the PUC.
Q ... So the bottom line of my question to you and the reason I wanted to ask it before you were cross-examined is, knowing what you know about the price of power, knowing about the surplus in the region, knowing what you know about regulatory lag — and I have a question that goes on beyond this, but I’ll get to it — do you really believe that at the Company’s own discretion it can set the process aside and wait until this Commission acts on a new filing? Does that satisfy you, either the act of Congress or the rulemaking by FERC, and finally, the rules of the jurisdiction of Idaho?
A I don’t look at it as setting the process aside completely. I look at it as we’re faced with what we know is a change of condition, and as a practical matter, I also have to look at will waiting three four months really effect the development of PURPA if we don't know exactly what the rates are during that three or four-month period. I view that that probably wouldn’t happen, that the PURPA sites are there and if they’re economic under the new rates, they will be developed.
We have never refused to offer a contract. What we did was change the pricing terms, and it was a term from a known fixed tariff to one which we have said, we’ll pay whatever the Commission says is our avoided cost currently, but it is whatever our avoided cost is currently rather than what our avoided cost was a year and-a-half ago in which we know at this point doesn’t represent our avoided costs any more. So we are, as someone said—
Q You know that as of 1985, on the cusp of ’86, that is the case; you don’t know that for 1990.
A Oh, no, and of course, the avoided cost is an estimate just like the 1984 run was an estimate. But in our best estimate, we are now estimating this big change.
Someone told me that that puts us between a rock and a hard spot, knowing we have these rates on file that are now not our avoided costs any more. Do we still have the requirement to offer those rates because they aren’t our avoided costs?
Q Don't you have the obligation to offer those rates until there is a due process change in those rates given your monopoly as purchaser?
A I think we’re trying to define here what our obligation is and that certainly can be one of our obligations. Tr., pp. 162-3.
The PUC went on to hold that WWP improperly withdrew its rate.
Rates are the first ‘given’ in the negotiating process. They are the one factor beyond negotiation. Water Power cannot withdraw them anymore than it can sell the Brooklyn Bridge. It doesn’t have the right. As we indicated in Coile v. Idaho Power Company, Case No. U=1006-206, Order No. 17796:
A utility that refuses to honor the rates that are approved and on file at the Commission as even the basis for commencing negotiations with cogenerators or small power producers acts in defiance of final ratemaking Orders. This is true even though the utility has filed for new rates and believes its old rates are inadequate or even confiscatory. To unilaterally change rates that are charged for sales or rates that are paid for purchases is to wage a collateral attack on final Commission Orders in the manner prohibited by Idaho Code § 61-625.
For Water Power to continue to assert or infer that it is not bound to the avoided costs published in its tariff schedule, as it did in its brief on rehearing, is indefensible. This Commission will no longer countenance a utility position that asserts that by informing Empire that it *203would not contract on the basis of an obsolete albeit filed avoided cost as opposed to its self-determined but unfiled actual avoided costs it was doing little more than discharging its obligations and exercising its rights pursuant to the Public Utility Regulatory Policies Act (PURPA). Tr., pp. 277-8.
The PUC found, however, that Empire had not perfected its entitlement to the rates, that it had during the negotiations
an unyielding insistence on a signed contract before commitment to project size and location____ At some point the discussion must become other than theoretical or philosophical. It must transcend generalities. It must assume a definite form. The proposed facility or project must mature before the CSPP is entitled to a contract. Tr., pp. 276, 278.
The PUC held certain terms and elements of the contract must be resolved prior to any agreement being reached, these included the previously mentioned site and engineering specifications as well as insurance provisions, terms of operation, terms of delivery, and security.
The PUC went on to state,
Empire cannot support its contention that Water Power knew the size of the project by alleging facts occurring contemporaneous with or subsequent to Complaint filing, as alleged in its brief on rehearing, i.e., that on 9/23/85 Empire filed its complaint clearly showing a 9.9 MW facility; and that on 10/10/85 Empire duly filed a notice of QF showing a project size of 9.9 MW. The facts support a finding that the output of the proposed facility is still unknown. The sizing of the facility is not based upon the capacity or configuration of any known equipment. The Commission agrees with Water Power that the 9.9 MW figure put forward by Empire was chosen merely because of regulatory constraints. Tr., p. 282.
“Chosen” due to regulatory constraints or not, Empire wishes to enter into a contract and obligate itself to deliver power to WWP. The PUC has to some extent lost sight of the intent of the PURPA framework. The pre-eminent feature of a cogeneration agreement is the rate or avoided cost element. See IPUC Case No. P-300-12, 8/8/1980. Without the benefit of this element, Empire’s continued development of the project becomes near futile. Empire’s negotiations do not leave one with the impression there was not a viable co-generation facility in planning. What does exist is the impression that WWP had as its primary concern, the clauses of a form contract.
II
The Oregon Court of Appeals just this very year had a similar set of circumstances before it, and as I read that Court’s opinion, it could be said that expressed therein are those 1980 statements and declarations embodied in the Idaho Commission’s statement of Rules and Procedures, from which the above have been excerpted supra, because of their applicability.
Snow Mountain Pine Company filed a complaint with the Oregon PUC to compel an electric power distributor, CP National Corporation to purchase power from Snow Mountain. The PUC ordered CP to purchase power and approved a contract. On review of the PUC’s order the Oregon Court of Appeals analyzed the PURPA rules and Oregon regulations. The Oregon Legislature enacted regulations closely paralleling the federal statutes. This included the goal and policy of encouraging qualifying facilities.
Key to enforcing these policies was the utility’s requirement of providing as a purchase price the avoided cost. The controversy surrounding the Snow Mountain complaint was over the avoided cost and the issue of when an “enforceable obligation” existed.
If a qualifying facility elects to provide power pursuant to a “legally enforceable obligation,” the facility may choose to have the purchase price based on the utility’s “avoided costs” calculated at the *204time of delivery, or the “avoided costs” projected to apply over the life of the obligation, as calculated “at the time the obligation is incurred.” Snow Mountain Pine Company v. Maudlin, Pacific Utility Commissioner, and CP National Corporation, 84 Or.App. 590, 734 P.2d 1366, 1369 (1987).
When negotiations fell through over the avoided cost rate, Snow Mountain went to the PUC. The PUC held that CP had an obligation to purchase power when Snow Mountain tendered a contract. CP argued that an obligation is incurred only when a written contract is executed between the parties, that an obligation is not incurred by a qualifying facility’s unilateral presentation of a contract, the terms of which have not been agreed upon.
The Oregon Court of Appeals disagreed holding that “CP’s obligation is not governed by common law concepts of contract law; it is created by statutes, regulations and administrative rules____18 CFR 292303(a) ... provides that an electric utility “shall purchase” any energy and capacity “which is made available from a qualifying facility.” Thus, the obligation to purchase power is imposed by law on a utility; it is not voluntarily assumed.” Snow Mountain, supra, 734 P.2d at 1373.
In the controversy over which choice the qualified facility makes in the purchase price calculation with avoided costs, the court commented on the choice based at the time “the obligation is incurred.”
The “obligation” referred to for this purpose is the qualifying facility’s obligation to provide energy. That conclusion is supported by the fact that OAR 860-29-010 defines the “time the obligation is incurred” as the date on which a binding obligation first exists to deliver energy. Thus, the regulations and administrative rules contemplate that a qualifying facility’s self-imposed obligation to delivery energy triggers a utility’s obligation to purchase energy. The date on which the qualifying facility obligates itself to deliver energy fixes the date on which the “avoided costs” are determined.
To permit a utility to delay the date to be used to calculate the purchase price simply by refusing to purchase energy would expose qualifying facilities to risks that we believe Congress and the Oregon Legislature intended to prevent. The FERC commentary to 18 CFR § 292.304(d)(2) suggests that a utility cannot “merely by refusing to enter into a contract,” deprive a qualifying facility of its right to commit to sell power in the future at prices which are determined at the time the qualifying facility makes its decision to provide power:
‘[18 CFR § 292.304(d)(2)] permits a qualifying facility to enter into a contract or other legally enforceable obligation to provide energy or capacity over a specified term. Use of the term “legally enforceable obligation” is intended to prevent a utility from circumventing the requirement that proves capacity credit for an eligible qualifying facility merely by refusing to enter into a contract with the qualifying facility.’ 45 Fed.Reg. 12224 (1980). Snow Mountain, supra, 734 P.2d at 1371.
The obligation then is concerned with becoming a qualifying facility. As with Empire, the Idaho PUC and WWP are instead concentrating on the lack of a signed obligation, or, in the words of the PUC, an “entitlement” to the avoided costs. Empire’s situation is that portrayed in the FERC commentary. WWP is attempting to hold over Empire the lack of a contract due in part to its own refusals in the negotiations. What Empire needs is what Snow Mountain lacked, a set purchase price or avoided cost rate. The Oregon Court of Appeals saw through CP’s attempts to thwart PURPA;
We conclude that a qualifying facility has the power to determine the date for which “avoided costs” are to be calculated by tendering an agreement that ob*205ligates it to provide power. Snow Mountain obligated itself to provide power on July 6,1983, and that is when CP became obligated to purchase power. Snow Mountain, supra, 734 P.2d at 1371.
The Idaho PUC, however, although it criticized WWP’s efforts, did not see through or past them. When Empire chose to obligate itself to provide power, there should not have been a question of Empire’s obligation, but rather, the question should have been, what is the purchase price or avoided cost of the power? — and go from there.
In conclusion, it makes no sense for this Court to uphold the commission’s dismissal which arose out of frustration. There is still lying in the woods and around the mills in the area along the Clearwater River an abundance of forest waste products which can and should be put to work producing electricity. The commission has let it be known its displeasure at the attitudes of Water Power and Empire, and no harm done. But, awarding a dismissal to Water Power serves no purpose except to reward it and punish Empire — which cannot be said to be a result worthy of an excellent commission, one of the best in the west.
The Court this day should vacate the dismissal, and remand to the commission with directions to bring the parties back to the bargaining table and thereafter monitor the negotiations with a regard for the intent of the Congress in enacting PURPA, with a regard for its own power to impose sanctions such as costs and attorney fees against either party’s recalcitrance and all the time keeping in perspective the excellent tenor of its own 1980 rules, and the guidance of the decision by the Oregon Court in Snow Mountain.
To borrow a word newly learned from the commission’s order, this may seem to be on the didactic side, but it is well-intended. Doubting that these views will sway the three members of the Court who with Justice Shepard issued the opinion for the Court, the commission is reminded that it also has the power on its own to re-open. It is a responsibility which it should not turn away too readily.

. In Afton, a newly formed corporation, Afton Energy, Inc., wanted to construct a cogeneration plant in Afton, Wyoming. This plant was to consume waste wood by products and would produce 4.5 MKW of power. After a preliminary feasibility study, Afton started negotiations with first Lower Valley Power & Light, a local utility, then later Idaho Power. A copy of the contract was sent to Afton Energy, but before Idaho Power would sign, it requested letters indicating self-certification from the Federal Energy Commission, waiver of jurisdiction of Wyoming, and power delivery arrangements from local utilities. Several months later Afton returned with the requested documents and a summary of the financing plans. Idaho Power decided not to purchase the power. In an effort to force Idaho Power to contract under PURPA, Afton Energy took its case to the PUC which ultimately ordered Idaho Power to contract with Afton.
Empire Lumber encountered a markedly different response from the PUC when it tried to force WWP to contract in a way similar to Afton and Idaho Power. The PUC in rejecting Empire's claim held it required a QF status, a location for the plant, and a showing of adequate fuel for the facility. Also required was the "implicit” size and design specifications of the plant.

. As surfaces infra, the Idaho Legislature having not passed a PURPA implementing legislation, such as occurred in Oregon, the Idaho Public Utilities Commission has promulgated a complete set of implementing rules, which are not challenged, and will have the force of law when filed in the State Law Library. All of the major electrical utilities doing business in Idaho took part in that proceeding.

. The 4(c) contract clause states:
(c) If any regulatory commission having jurisdiction issues a final order which does not allow for recovery by Water Power of all expenses associated with its purchases under this Agreement in Water Power’s rates for sale of power, Water Power and Seller shall jointly take appropriate and reasonable actions before such commission to maintain the rates set forth in Exhibit A. In the event such actions do not result in maintaining the rates set forth in Exhibit A, Seller shall have the right to terminate this Agreement, by written notification to Water Power within ninety (90) days of such actions, without further obligation of performance by either party, and without payment of liquidated damages. If Seller does not terminate this Agreement as provided in this section, Seller shall continue to make deliveries under the terms and conditions of this Agreement in accordance with the rates set forth in such final commission order. In the period from the time of effect of such final commission order to the time of the result of any such joint actions, Water Power shall not make payments in excess of such final order.
Tr. p. 119.
Empire’s view of § 4(c) was expressed by the contract negotiator:
Q ... What is wrong with continuing commission action, as you refer to it?
A We’re seeking a power sales agreement which we can rely on for a long period of time to justify the investment of large sums of money to build this facility and a portion of that money will have to be borrowed. And with that condition in there, it’s my belief, and backed by attempts to have lenders interested in contracts, with that type of language, you don’t have a contract. You have a contract until the first commission, either one of them changes it, and therefore, you don’t have a contract of any duration or any strength.
A Yes. I have a serious problem with that and that’s the problem we’ve related a lot of discussion to. It’s — it just isn’t — it isn’t a contract because they’re talking about future actions. Our relief is a termination of the contract, and what do you do with a $12 million facility that is generating 9 megawatts of power if you’re not selling it to the purchaser that you contracted to sell. We certainly can’t sell it to Clear Water.
Q Mr. Tyrer, under this Section 4(c), what do you believe would happen if the Washington Water Power Commission were to disapprove five years into the term of the contract the rates that were in this contract?
A Well, if they disapproved them and raised them substantially, I think we would be very pleased. But if they changed the rates below a rate which we could economically operate the facility for, we would be hung out to dry.
Q By "hung out to dry,” you mean—
A We would have nothing but a facility with obligations and no use for it.
Tr., pp. 52, 56.

. The security provision provided for Empire to give security to WWP. The scenario of a buyer demanding security of a seller is a rather unique case. Empire questioned whether it could operate at a profit with this requirement. WWP’s view of security was for that of a prepayment.
The security runs in the same form as a loan and to cover the loan amounts.
Q How does that relate to the purchase of the output of a qualifying facility under a levelized avoided cost?
A Under a levelized avoided cost, we prepay for power. We prepay for power that is delivered in the latter part of a 35-year agreement. So that — and we expect to get the return of that effective loan in the latter part of that 35-year agreement. So for that, we request some form of security.
Q Can you — let me put this way: When you are comparing a company like the Washington Water Power Company, or some other publicly-traded company with a company like Empire Lumber Company, can you think of any logical differences in terms of the types of security that they ought to be required to provide in transactions?
A Oh, yes. We don’t know the financial aspects of Empire Lumber, financial strength and deficits. The difficulties of the Washington Water power are well known through their published financial statements. So those are significant differences. Our equity is traded on a national market so that people can measure the market value of our equity. In fact, the Potlatch, we used the market value of their equity as a measure of security.
Tr., p. 155.