NewSun Energy, LLC v. PUC

No. 22 January 22, 2026 545

IN THE COURT OF APPEALS OF THE

STATE OF OREGON

NEWSUN ENERGY LLC,

a Delaware limited liability company,

Petitioner,

v.

PUBLIC UTILITY COMMISSION OF OREGON,

an agency of the State of Oregon,

Respondent,

and

IDAHO POWER COMPANY,

PacifiCorp dba Pacific Power,

and Portland General Electric Company,

Intervenor-Respondents.

Public Utility Commission of Oregon

A181991

Argued and submitted January 6, 2025.

Jonathan Harlan argued the cause for petitioner. On the

briefs were Casey M. Nokes, Richard G. Lorenz, Tyler R.

Whitney and Cable Huston LLP.

Jordan Silk, Assistant Attorney General, argued the

cause for respondent. Also on the brief were Ellen F.

Rosenblum, Attorney General, and Benjamin Gutman,

Solicitor General.

Jordan R. Schoonover argued the cause for intervenor-re-

spondents Idaho Power Company, Pacific Power and Portland

General Electric Company. Also on the brief was Adam

Lowney, Lynne Dzubow and McDowell Rackner Gibson PC.

Before Ortega, Presiding Judge, Hellman, Judge, and

O’Connor, Judge.*

HELLMAN, J.

Rules held valid.

_______________

* O’Connor, Judge vice Mooney, Senior Judge.

546 NewSun Energy, LLC v. PUC

Cite as 346 Or App 545 (2026) 547

HELLMAN, J.

In this proceeding under ORS 183.400, petitioner

NewSun Energy, LLC challenges rules amended and pro-

mulgated by the Public Utility Commission of Oregon (PUC)

in 2023, which are part of OAR chapter 860, division 029.

Specifically, PUC’s 2023 rulemaking amended or added the

following rules: OAR 860-029-0005, 860-029-0010, 860-

029-0044, 860-029-0045, 860-029-0046, 860-029-0047,

860-029-0120, 860-029-0121, 860-029-0123, and 860-029-

0124 (collectively, the 2023 rules). NewSun asserts that the

2023 rules are invalid in their entirety because PUC failed

to provide the notice required by ORS 183.335. NewSun

also asserts that PUC exceeded its authority in adopting

two specific rules—OAR 860-029-0120(2) and OAR 860-

029-0121(5)—because those rules conflict with ORS 758.525

and do not conform to legislative policy expressed in ORS

758.515. PUC, along with intervenors Idaho Power Company,

PacifiCorp, and Portland General Electric Company, defend

the validity of the rules.

We conclude that PUC substantially complied with

the notice requirement in ORS 183.335, and that PUC did

not exceed its statutory authority in adopting OAR 860-029-

0120(2) and OAR 860-029-0121(5), as argued by NewSun.

Therefore, we hold the 2023 rules valid.

I. LEGAL AND PROCEDURAL BACKGROUND

At the outset, we provide a brief description of the

legal backdrop for this rule challenge, which is grounded in

federal law. The federal Public Utility Regulatory Policies

Act of 1978 (PURPA), 16 USC section 824a-3, requires the

Federal Energy Regulatory Commission (FERC) to prescribe

rules “to encourage cogeneration and small power produc-

tion,” and “which rules require electric utilities to offer to

(1) sell electric energy to qualifying cogeneration facilities

and qualifying small power production facilities and (2) pur-

chase electric energy from such facilities.” 16 USC § 824a-

3(a). Qualifying cogeneration facilities and qualifying small

power production facilities are called “qualifying facilities”

or QFs and are defined by rule. See 18 CFR § 292.101(b)(1)

(defining qualifying facility); see also OAR 860-029-0010(50)

548 NewSun Energy, LLC v. PUC

(defining qualifying facility). PURPA also directs state agen-

cies, like PUC, to implement the FERC rules with respect

to electric utilities for which it has ratemaking authority.

16 USC § 824a-3(f)(1). Oregon implements PURPA and

its enacting rules through ORS 758.505 to 758.555, and

through PUC’s implementing rules in OAR chapter 860,

division 029, which apply to the “interconnection, purchase,

and sale arrangements between a public utility and facili-

ties that are qualifying facilities.” OAR 860-029-0005(1); see

also OAR 860-029-0001.

Under those rules, PUC requires public utilities

to “offer standard non-renewable avoided cost rates to eli-

gible qualifying facilities,” OAR 860-029-0043, and “offer

standard power purchase agreements to eligible qualifying

facilities,” OAR 860-029-0120(1). Eligibility for a standard

avoided cost rate and purchase agreement (standard con-

tract) is provided by rule, OAR 869-020-0045, and many of

the rules in OAR chapter 860, division 029, including the

2023 rules, govern those standard contracts, including by

supplying standard terms and conditions. For qualifying

facilities that are not eligible for a standard contract, pub-

lic utilities are required to offer “nonstandard avoided cost

rates and nonstandard power purchase agreements” (non-

standard contracts), as provided in OAR 860-029-0130, a

rule that was not amended in 2023.

The rulemaking at issue here began in July 2019,

when PUC opened Docket No. AR 631 for a rulemaking

to address “Procedures, Terms, and Conditions Associated

with Qualifying Facilities (QF) Standard Contracts.”

In 2021, PUC staff informally proposed rule changes to

obtain input from stakeholders, and obtained that input

through workshops, public meetings, and receipt of com-

ments. PUC filed the official notice of proposed rulemak-

ing on November 23, 2022, and following comment and a

public hearing, PUC adopted the proposed rules by order

(except one), and also adopted a subsequent order contain-

ing corrections to the adopted rules. In July 2023, PUC

filed the final adopted rules with the Secretary of State,

and NewSun brought this judicial review challenging the

validity of those rules.

Cite as 346 Or App 545 (2026) 549

II. ANALYSIS

Under ORS 183.400(4), we may declare a rule

invalid only if the rule “[v]iolates constitutional provisions,”

“[e]xceeds the statutory authority of the agency,” or “[w]as

adopted without compliance with applicable rulemaking pro-

cedures.” NewSun challenges the 2023 rules on two of those

bases: (1) The 2023 rules are invalid because PUC failed to

comply with the notice requirement in ORS 183.335, and

(2) PUC exceeded its statutory authority in adopting OAR

860-029-0120(2) and OAR 860-029-0121(5). In addressing

NewSun’s challenges, we are limited to examining “[t]he

rule under review,” “[t]he statutory provisions authorizing

the rule,” and “[c]opies of all documents necessary to demon-

strate compliance with applicable rulemaking procedures.”

ORS 183.400(3).

A. Challenge to the Adequacy of the Rulemaking Notice

We first address NewSun’s challenge to PUC’s

rulemaking notice under ORS 183.335. Planned Parenthood

Assn. v. Dept. of Human Res., 297 Or 562, 565, 687 P2d

785 (1984) (stating that procedural challenges should be

addressed before challenges to the agency’s scope of authority

for the rule). “When a party challenges a rule on the ground

of failure to comply with ORS 183.335 notice procedures,

we review for whether the rule was adopted in ‘substan-

tial compliance’ with the notice provisions of ORS 183.335.”

Columbia Riverkeeper v. ODFW, 345 Or App 213, 220, ___

P3d ___ (2025) (citing ORS 183.335(11)). To “substantially

comply” with the notice requirements in ORS 183.335, “the

rule revisions must fall within the general subject matter

described in the notice, and the notice must fulfill the essen-

tial matters necessary to assure every reasonable objective

of the statute, which will depend on the facts of each case.”1

1

With regard to notice, the “reasonable objectives” or purposes of ORS

183.335 include:

“(1) to inform the interested public about intended agency action that might

affect them, (2) to trigger an agency’s opportunity to receive the benefit of

public feedback on the proposed action, and, regarding the statement of need,

(3) to ensure that interested persons can meaningfully participate in the

public comment period by submitting data and arguments that are respon-

sive to the agency’s concerns in proposing the rule or rule change.”

Columbia Riverkeeper, 345 Or App at 225-26 (internal quotation marks, citations,

and brackets omitted).

550 NewSun Energy, LLC v. PUC

Id. at 221 (internal quotation marks omitted). “We evaluate

the ‘context of the notice as a whole’ to determine whether

the purposes of ORS 183.335 have been served.” Id. at

220 (quoting Fremont Lumber Co. v. Energy Facility Siting

Council, 325 Or 256, 262-63, 936 P2d 968 (1997)).

In challenging PUC’s notice, NewSun makes a nar-

row argument in its opening brief. PUC’s caption for its notice

reads, “Rulemaking Addressing Procedures, Terms, and

Conditions Associated with Qualifying Facility Standard

Contracts.” NewSun asserts, however, that the rule amend-

ments also affect nonstandard contracts because rules of

general applicability, and a rule regarding standard rates,

were also amended. Because many qualifying facilities are

not eligible for standard contracts, NewSun asserts that

those qualifying facilities did not receive adequate notice

such that the purposes of the notice were fulfilled.

We reject NewSun’s argument because it does not

provide a basis for us to invalidate any of the challenged

rules. Under ORS 183.335(2)(a)(A), an agency’s notice must

include “[a] caption of not more than 15 words that reason-

ably identifies the subject matter of the agency’s intended

action.” However, under ORS 183.335(11)(c), “[a] rule is not

subject to judicial review or other challenge by reason of

failing to comply with subsection (2)(a)(A) of this section.” In

the opening brief, NewSun does not point to any deficiency

in PUC’s notice other than the caption, which cannot pro-

vide a basis for judicial review.

In its reply brief and at oral argument, NewSun

recast its notice argument more broadly, citing ORS

183.335(2)(a)(B), and arguing that nothing in the notice ful-

filled the purpose of notifying parties interested in nonstan-

dard contracts that the rules could affect those contracts.

As noted above, when we determine whether an agency has

substantially complied with the notice requirement in ORS

183.335, we look at the “context of the notice as a whole.”

Fremont Lumber Co., 325 Or at 262. Here, PUC’s notice

included the proposed amendments, including the amend-

ments that NewSun asserts affected nonstandard contracts.

The amendments potentially affecting nonstandard con-

tracts were obvious because they were the first three rules

Cite as 346 Or App 545 (2026) 551

listed on the front page of the notice and included in the

proposed changes: OAR 860-029-005, 860-029-0010, and

860-029-0043. The proposed amendments to those rules

were obvious and easy to understand their scope, in that for

two of the rules the rule is short and the amendments were

not complex, and for the third rule it addresses definitions

of general applicability. Further, OAR 860-029-045, a new

rule, included a short summary that clearly stated that it

pertained to eligibility for both standard avoided costs and

standard power purchase agreements. Despite recasting

their argument in the reply brief as relying on a failure to

comply with ORS 183.335(2)(a)(B) and not (2)(a)(A), NewSun

has not explained in what manner PUC’s notice was inade-

quate in the context of the whole of PUC’s notice.

We also are not persuaded by NewSun’s argument

that the notice contained no summary of the subject mat-

ter of the rulemaking as required by ORS 183.335(2)(a)(B).

Again, we must look at the whole notice and the notice did

contain a brief summary of the rulemaking in the section

labeled “Need for the Rule(s),” and, immediately preceding

all but one of the individual proposed rules, PUC provided a

short subject matter summary of each proposed amendment

or new rule.

Based on the context of PUC’s notice as a whole,

we conclude that PUC substantially complied with ORS

183.335, because interested parties, even those only inter-

ested in nonstandard contracts, would have been informed

that PUC’s action might affect them such that they could

meaningfully participate in the public comment period.

We thus reject NewSun’s first assignment of error.

B. Challenge to PUC’s Statutory Authority

We turn to NewSun’s second assignment of error

which challenges PUC’s statutory authority to adopt OAR

860-029-0120(2) and OAR 860-029-0121(5). In addressing

a challenge to statutory authority, “[t]he record on review

* * * consists of two things only: the wording of the rule itself

(read in context) and the statutory provisions authorizing

the rule.” Wolf v. Oregon Lottery Commission, 344 Or 345,

355, 182 P3d 180 (2008) (citing ORS 183.400(3)). An agency

552 NewSun Energy, LLC v. PUC

“[e]xceeds the statutory authority of the agency,” ORS

183.400(4)(b), if the rule “depart[s] from a legal standard

expressed or implied in the particular law being admin-

istered, or contravene[s] some other applicable statute.”

Planned Parenthood Assn., 297 Or at 565.

On review, NewSun challenges OAR 860-029-

0120(2) and OAR 860-029-0121(5) on the basis that they

contravene ORS 758.525 and do not conform to legislative

policy expressed in ORS 758.515. We first set the policy back-

drop against which NewSun makes its arguments, and then

address the arguments specific to the two rules challenged.

1. Policy backdrop

As set out above, PURPA requires FERC to pre-

scribe rules “to encourage cogeneration and small power

production” and “which rules require electric utilities to

offer to (1) sell electric energy to qualifying cogeneration

facilities and qualifying small power production facilities

and (2) purchase electric energy from such facilities.” 16

USC § 824a-3(a). The Oregon legislature has set out goals

and polices that go further than PURPA’s statement:

“The Legislative Assembly finds and declares that:

“(1) The State of Oregon has abundant renewable

resources.

“(2) It is the goal of Oregon to:

“(a) Promote the development of a diverse array of per-

manently sustainable energy resources using the public

and private sectors to the highest degree possible; and

“(b) Insure that rates for purchases by an electric util-

ity from, and rates for sales to, a qualifying facility shall

over the term of a contract be just and reasonable to the

electric consumers of the electric utility, the qualifying

facility and in the public interest.

“(3) It is, therefore, the policy of the State of Oregon to:

“(a) Increase the marketability of electric energy pro-

duced by qualifying facilities located throughout the state

for the benefit of Oregon’s citizens; and

Cite as 346 Or App 545 (2026) 553

“(b) Create a settled and uniform institutional climate

for the qualifying facilities in Oregon.”

ORS 758.515.

The legislature also conferred broad policy-making

authority to PUC to implement ORS 758.505 to 758.555,

providing, as relevant here:

“(2) The terms and conditions for the purchase of

energy or energy and capacity from a qualifying facility

shall:

“(a) Be established by rule by the commission if the

purchase is by a public utility;

“* * * * *

“(3) The rules or policies adopted under subsection (2)

of this section also shall:

“(a) Establish safety and operating requirements nec-

essary to adequately protect all systems, facilities and

equipment of the electric utility and qualifying facility;

“(b) Be consistent with applicable standards required

by [PURPA].”

ORS 758.535.

Under that broad authority, PUC can adopt rules

within that subject matter as long as the rules are consis-

tent with the general legislative policy; that is, the rule

must be within the range of discretion allowed by the more

general statutory policy. Planned Parenthood Assn., 297

Or at 573-74 (“To the extent that the rule departs from the

statutory policy directive, it ‘exceeds the statutory authority

of the agency’ within the meaning of those words in ORS

183.400(4)(b).”).

With that backdrop in mind, we turn to NewSun’s

specific challenges.

2. Challenge to OAR 860-029-0120(2)

NewSun’s first challenges PUC’s adoption of OAR

860-029-0120(2), which provides:

“Qualifying facilities have the unilateral right to select

a purchase period of up to 20 years for a standard power

554 NewSun Energy, LLC v. PUC

purchase agreement. Qualifying facilities electing to sell

firm output at fixed prices have the unilateral right to a

fixed-price term of up to 15 years, subject to the reduc-

tion specified in section (6) for a development period that

exceeds three years. In addition, the fixed-price term con-

tinues to run during the cure period should the qualifying

facility fail to meet the scheduled commercial operation

date. Qualifying facilities may also select a nonfixed-price

term of up to five years to run at the conclusion of the fixed-

price term.”

NewSun argues that the rule violates ORS 758.525, because

that statute requires a 20-year fixed-price term, but the rule

only provides for a 15-year fixed-price term for standard

contracts.2

We start our analysis by determining what ORS

758.525 requires, applying our usual statutory methodology

set out in State v. Gaines, 346 Or 160, 171-72, 206 P3d 1042

(2009). That analysis starts with looking at the text of the

statute in context. ORS 758.525 provides, in relevant part:

“(1) At least once every two years each electric util-

ity shall prepare, publish and file with the Public Utility

Commission a schedule of avoided costs equaling the utili-

ty’s forecasted incremental cost of electric resources over at

least the next 20 years. Prices contained in the schedules

filed by public utilities shall be reviewed and approved by

the commission.

“(2) An electric utility shall offer to purchase energy

or energy and capacity whether delivered directly or indi-

rectly from a qualifying facility. Except as provided in sub-

section (3) of this section, the price for such a purchase shall

not be less than the utility’s avoided costs. At the option of

the qualifying facility, exercised before beginning delivery

of the energy or energy and capacity, such prices may be

based on:

2

We note that PUC’s policy choice of unilateral right to a 15-year fixed-

price term in a standard contract precedes the current rulemaking and applies,

unchallenged, to nonstandard contracts. See former OAR 860-029-0120(3) (July

26, 2018) (former standard contract rule provided: “Qualifying facilities electing

to sell firm output at fixed-prices have the unilateral right to a fixed-price term

of up to 15 years.”); OAR 860-029-0130(2) (nonstandard contract rule provides:

“Qualifying facilities electing to sell firm output at fixed prices have the unilat-

eral right to a fixed-price term of up to 15 years.”).

Cite as 346 Or App 545 (2026) 555

“(a) The avoided costs calculated at the time of deliv-

ery; or

“(b) The projected avoided costs calculated at the time

the legal obligation to purchase the energy or energy and

capacity is incurred.”

NewSun argues that the statutory purpose of requir-

ing a utility to forecast avoided costs for at least 20 years,

as set out in subsection (1), is to allow qualifying facilities

to enter into a contract using the “projected” avoided costs,

as set out in subsection (2). NewSun asserts that the legisla-

ture thus intended that qualifying facilities could enter into

a 20-year contract with a 20-year fixed-price term. NewSun

further argues that its interpretation is supported by the

legislature’s goals and policies and the legislative history.

We disagree with NewSun’s statutory analysis.

Nothing in the text of ORS 758.525 expressly requires a

20-year fixed-price term in contracts with qualifying facili-

ties. We also do not read into the statute the implicit require-

ment that NewSun does. Subsection (1) requires a utility to

file, once every two years, a 20-year “forecast” of avoided

costs, while subsection (2)(b) references setting a contract

price at “projected” avoided costs “calculated at the time the

legal obligation to purchase * * * is incurred.”3 The text of

those two subsections do not refer to the same thing because

the words used and the time of calculation differs. Also, nota-

bly, subsection (1) does not link the 20-year forecast filing

requirement to a required 20-year fixed-price contract term,

nor does subsection (2)(b) require a 20-year fixed-price term.

Rather, the legislature left the terms and conditions that

apply to be determined by PUC. ORS 758.535(2) (“The terms

and conditions for the purchase of energy or energy capacity

from a qualifying facility shall: (a) Be established by rule by

the commission if the purchase is by a public utility[.]”). We

3

The phrase “time the obligation to purchase the energy capacity or energy

and capacity is incurred” has been defined by PUC to mean:

“(a) The date on which a binding, written obligation is entered into between

a qualifying facility and a public utility to deliver energy, capacity, or energy

and capacity; or

“(b) The date determined by the Commission.”

OAR 860-029-0010(65). That definition was not changed by the 2023 rules.

556 NewSun Energy, LLC v. PUC

decline to read into the statute a specific, required contract

term that does not exist in the statute’s text.4

The legislative goals and polices outlined in ORS

758.515 do not change our reading of ORS 758.525. Such

legislative policy statements can provide general context for

interpreting statutes, but it does not provide a basis for us

to read a specific, required contract term into ORS 758.525

that is not articulated in that statute. See, e.g., Burke v.

DLCD, 352 Or 428, 441, 290 P3d 790 (2012) (“[A] state-

ment of legislative findings, without more, is a slim reed on

which to rest an argument that the operative provisions of

a statute should be taken to mean something other than

what they appear to suggest.”); Sundermier v. PERS, 269

Or App 586, 595, 344 P3d 1142, rev den, 357 Or 415 (2015)

(“Statements of statutory policy are also considered useful

context for interpreting a statute. Such statements, however,

should not provide an excuse for delineating specific policies

not articulated in the statutes.” (Internal quotations marks

and citations omitted.)) Further, nothing in ORS 758.515

itself requires a 20-year fixed-price contract for qualifying

facilities. The policy adopted by PUC—providing qualifying

facilities the unilateral right to a fixed-price term of up to 15

years—does not, on its face, contravene the goals and poli-

cies expressed by the legislature in ORS 758.515.

Finally, we have reviewed the legislative history

offered by NewSun and it does not change our view of the

text and context of ORS 758.525.5 Only one of the offered

statements, made in writing by the Oregon Department of

Energy, suggests what NewSun advocates—that the statute

4

Our reading comports with Snow Mountain Pine Co. v. Maudlin, 84 Or App

590, 600-01, 734 P2d 1366, rev den, 303 Or 591 (1987), which, taking into account

the regulatory scheme, construed ORS 758.525(2)(b) to refer to the actual avoided

costs at the time the obligation is incurred, projected over the life of the obliga-

tion, and not the 20-year forecasted avoided costs filed under subsection (1). See

also OAR 860-029-0040(3)(b)(B) (“At the election of the qualifying facility, exer-

cised at the time the obligation is incurred, the avoided costs, or the index rate

then in effect if subsection (2)(b) of this rule is applicable, projected over the life

of the obligation and calculated at the time the obligation is incurred.”).

5

NewSun offers two statements from the legislative history. The first states:

“The other thing the bill requires that the federal law does not require is that

utilities, all utilities, must forecast their avoided cost over a 20-year period

looking out into the future. And they have to be willing to enter into contract

with power producers based on those forecasted avoided costs.”

Cite as 346 Or App 545 (2026) 557

obligates a utility to enter into a 20-year contract based on

the forecasted avoided costs That isolated statement, how-

ever, taken in the context of the entire written testimony

is not so clear, and tends to suggest only that the contracts

would be based on the forecasted avoided costs, which fore-

casts are provided for at least 20 years. See Testimony,

Senate Committee on Energy and Environment, June 15,

1983, Ex. B at 3 (Statement of David Philbrick, ODOE).

Regardless, even if the statement suggests what NewSun

advocates for, it would be contrary to our role as a court

to insert a required contract term into ORS 758.525 that

does not appear there. We thus give that legislative history

little weight. See Gaines, 346 Or at 172-73 (“We emphasize

again that ORS 174.020 obligates the court to consider prof-

fered legislative history only for whatever it is worth * * *.

When the text of a statute is truly capable of having only

one meaning, no weight can be given to a legislative history

that suggests—or even confirms—that legislators intended

something different.”).

We conclude that PUC did not exceed its statutory

authority in adopting ORS 860-029-0120(2) in any of the

ways asserted by NewSun.

3. Challenge to OAR 860-029-0121(5)

NewSun next challenges PUC’s adoption of OAR

860-029-0121(5), which provides:

“A qualifying facility may not commence commercial

operation any sooner than 180 days before the scheduled

commercial operation date of the standard power purchase

agreement unless the purchasing public utility consents to

early operation. The purchasing public utility may require

Audio Recording, Senate Committee on Energy and Environment, HB 2320,

June 15, 1983, Tape 168, Side A (comments of Representative William Bradbury)

available at http://records.sos.state.or.us/ORSOSWebDrawer/Record/7372560.

The second statement was written testimony submitted to the same hearing,

and provides:

“The provisions in the Bill are generally consistent with federal law. In two

areas, HB 2320 goes beyond federal law: it requires avoided costs to be fore-

casted and, if desired by the facility owner, obligated under contract for at

least the next twenty years, and it encourages reasonable wheeling policies.”

Testimony, Senate Committee on Energy and Environment, June 15, 1983, Ex. B

at 3 (Statement of David Philbrick, ODOE).

558 NewSun Energy, LLC v. PUC

a qualifying facility to wait to commence commercial opera-

tion until no sooner than 90 days prior to the scheduled com-

mercial operation if the purchasing public utility is unable to

accept delivery from the qualifying facility but is obligated

to undertake reasonable efforts to obtain transmission ser-

vice up to 180 days ahead of the scheduled commercial oper-

ation date. The qualifying facility must agree to compensate

the purchasing public utility for any additional transmission

costs associated with commencing operation sooner than 90

days prior to the scheduled commercial operation date.”

NewSun argues that the rule violates ORS 758.525(2) and

PURPA, because, in contravention of the statutory obliga-

tion on public utilities to purchase all energy made available

by a qualifying facility, the rule gives public utilities the

unilateral right to reject deliveries from a qualifying facil-

ity if it is more than 180 days before the scheduled operation

date and can limit the purchase if it is more than 90 days

early. NewSun also asserts that rule contravenes the goals

and policies in ORS 758.515.

We reject NewSun’s argument because the rule does

not have the effect that NewSun asserts it has. Again, ORS

758.525(2) provides:

“(2) An electric utility shall offer to purchase energy

or energy and capacity whether delivered directly or indi-

rectly from a qualifying facility. Except as provided in sub-

section (3) of this section, the price for such a purchase shall

not be less than the utility’s avoided costs. At the option of

the qualifying facility, exercised before beginning delivery

of the energy or energy and capacity, such prices may be

based on:

“(a) The avoided costs calculated at the time of deliv-

ery; or

“(b) The projected avoided costs calculated at the time

the legal obligation to purchase the energy or energy and

capacity is incurred.”

Under that statute, a qualifying facility can sell energy to

a utility either based on pricing at the time of delivery or

based on a fixed price at the time of entering into the legal

obligation to purchase. In either case, the qualifying facility

must choose the option before beginning delivery.

Cite as 346 Or App 545 (2026) 559

If a qualifying facility chooses a fixed-price contract

under subsection (2)(b), and an eligible qualifying facility

enters into a standard contract with a public utility, that

standard contract is subject to terms and conditions set out

in PUC’s rules, including the one provided in OAR 860-029-

0121(5). Those terms and conditions provide that a key date

in standard contracts is the earlier of the commercial opera-

tion date or scheduled commercial operation date, because it

sets the start of the delivery and purchase obligations under

the standard contract. See, e.g., OAR 860-029-0120(4) (“The

purchase period of a standard power purchase agreement

begins on the earlier of the commercial operation date or the

scheduled operation date.”); OAR 860-029-0120(5) (“A qual-

ifying facility may specify a scheduled commercial opera-

tion date for a standard power purchase agreement subject

to the following requirements: * * *.”); OAR 860-029-0121(1)

(starting on the earlier of the commercial operation date or

the scheduled operation date the qualifying facility is obli-

gated to deliver and the utility is obligated to purchase the

net output delivered). The rule at issue here, OAR 860-029-

0121(5), is one of the conditions under a standard contract

related to that key date. That is, it governs performance

pursuant to the standard contract and, specifically, provides

that a qualifying facility cannot unilaterally deliver energy

earlier than 180 days before the scheduled commercial oper-

ation date under that standard contract.

However, we read nothing in the text of that rule,

viewed in the context of the regulatory scheme, that relieves

a public utility of the obligation to offer to purchase the

qualifying facility’s energy, as required under ORS 758.525

and PURPA. If OAR 860-029-0121(5) applies, however, that

offer to purchase would not be under the existing standard

contract, and the qualifying facility would need to choose

a price before delivery, as provided in ORS 758.525(2), and

subject to PUC’s regulations. As a result, we reject NewSun’s

argument that PUC lacked authority to adopt OAR 860-029-

0121(5) based on ORS 758.525 and PURPA. We also sum-

marily reject NewSun’s argument that the rule, on its face,

contravenes the goals and policies provided in ORS 758.515.

560 NewSun Energy, LLC v. PUC

We thus conclude that PUC did not exceed its stat-

utory authority in adopting ORS 860-029-0121(5) in any of

the ways asserted by NewSun.

Rules held valid.