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Whitehall Wind, LLC v. Montana Public Service Commission

Supreme Court of Montana

May 5, 2015

WHITEHALL WIND, LLC, a Montana Limited Liability Corporation, Plaintiff and Appellee,
v.
THE MONTANA PUBLIC SERVICE COMMISSION, an Agency of the State of Montana, Defendant and Appellant, and NORTHWESTERN ENERGY, Intervenor and Appellant

Submitted on Briefs: February 18, 2015.

Released for Publication May 22, 2015.

APPEAL FROM: District Court of the Fifth Judicial District,In and For the County of Jefferson, Cause No. DV 03-10080. Honorable Loren Tucker, Presiding Judge.

For Appellant: Justin W. Kraske, Montana Public Service Commission, Helena, Montana; Sarah N. Norcott, NorthWestern Energy, Helena, Montana.

For Appellee: Michael J. Uda, Brown, Uda, Dinwiddie & Mazurek, PLLC, Bozeman, Montana.

BETH BAKER. We concur: PATRICIA COTTER, JAMES JEREMIAH SHEA, LAURIE McKINNON, JIM RICE. Justice Beth Baker delivered the Opinion of the Court.

OPINION

Page 1274

Beth Baker, Justice.

[379 Mont. 120] [¶1] The Montana Public Service Commission (the Commission) and NorthWestern Energy appeal a Fifth Judicial District Court decision reversing the Commission's determination that Whitehall Wind, LLC (Whitehall) did not incur a legally enforceable obligation during contract negotiations with NorthWestern for the sale and purchase of electric energy generated by a proposed wind facility. On appeal, we address whether the District Court erred in reversing the Commission's determination that Whitehall had not established a legally enforceable obligation to deliver energy to NorthWestern. We reverse.

PROCEDURAL AND FACTUAL BACKGROUND

[¶2] In 1978, Congress enacted Section 210 of the Public Utility Regulatory Policies Act (PURPA) to encourage cogeneration and small power production. 16 U.S.C. § 824a-3(a). PURPA requires large electric utilities to purchase available energy from " qualifying cogeneration facilities and qualifying small power facilities." 16 U.S.C. § 824a-3(a). Under Federal Energy Regulatory Commission (FERC) regulations, a " qualifying facility" may provide energy, capacity, or both to a utility pursuant to a contract or a " legally enforceable obligation." 18 C.F.R. § 292.304(d). In 1981, the Montana Legislature enacted § § 69-3-601 through-604, MCA, to facilitate the Commission's implementation of PURPA. Section 69-3-603, MCA, requires the Commission to set rates and conditions " if a qualifying small power production facility and a utility are unable to mutually agree to a contract for the sale of electricity."

[¶3] Whitehall is a qualifying facility. NorthWestern is a public utility operating in Montana and subject to the Commission's jurisdiction. In the summer of 2002, Whitehall contacted NorthWestern and attempted to negotiate a contract to sell energy from a proposed fifty-megawatt wind-generating facility near Whitehall, Montana. In August 2002, after Whitehall and NorthWestern were unable to reach an agreement, Whitehall petitioned the Commission to set a long-term avoided cost rate[1] for electricity that Whitehall proposed to generate and sell to [379 Mont. 121] NorthWestern. On January 2, 2003, after the parties conducted discovery and the Commission held a public hearing, the Commission issued an order setting a short-term rate of $0.010639 per kilowatt hour. On January 31, Whitehall petitioned the District Court for judicial review of that order, seeking an order for the Commission to set a long-term contract rate.

[¶4] On December 22, 2008, the District Court issued an order reversing and remanding the Commission's decision. The court held that the Commission's rate unreasonably relied on stale data and directed the Commission to determine whether Whitehall had established a legally enforceable obligation. The Commission and NorthWestern appealed the District Court's decision to this Court, and we affirmed. Whitehall Wind, LLC v. Mont. PSC, 2010 MT 2, 355 Mont. 15, 223 P.3d 907.

[¶5] On June 4, 2010, the Commission issued an Order on Remand, concluding that Whitehall had not incurred a legally enforceable obligation. The Commission determined that " the touchstone of a legally enforceable obligation . . . is an absolute, unconditional commitment to deliver energy, capacity, or energy and capacity." Examining the totality of the circumstances, the Commission found that Whitehall failed to demonstrate an unconditional commitment. The Commission further concluded that Whitehall's attempted negotiations ...


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