Petition for Writ of Certiorari — Water Power Co. v. PacifiCorp

Supreme Court brief1990

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APR 25 1990

No. _ = F. SPANIOL, JR.

- RK

IN THE

Suprene Court of the United States

OctToBER TERM, 1989

WaTER POWER CompPaANy, INc., ET AL.

Petitioners,

PaciriCorpe, Et At.

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO

THE OREGON COURT OF APPEALS

ARDEN E. SHENKER

Counsel of Record

Rospert E. L. BONAPARTE

ToozE SHENKER HoLtLtoway & DUDEN

333 SW Taylor

Portland, OR 97204

Telephone No.: (503) 223-5181

Counsel for Petitioners

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831

QUESTION PRESENTED

Under the Public Utility Regulatory Policies Act of

1978 (“PURPA”), and contrary to this Court’s decision in

American Paper Institute, Inc. v. American Electric Power

Service Corp., 461 U.S. 402 (1983), and other cases, may an

electric utility do no more than offer to purchase power

from a qualifying facility, utilizing a dispute with an

interconnecting utility to avoid the PURPA purchase

obligation? :

PARTIES TO THE PROCEEDINGS

Petitioners before this Court, formerly petitioners be-

fore the Oregon Supreme Court, appellants before the

Oregon Court of Appeals, and plaintiffs before the Circuit

Court for Multnomah County are Water Power Company,

Inc. and L.M. Baker, developers of small power resources.

Bonneville Pacific Corporation has been a corporate par-

ent of Water Power Company, Inc. through the ownership

of Pacific Hydro, Inc., the interest in which now has

passed in part to Hydro Energy Development Corpora-

tion, a wholly owned subsidiary of the Puget Sound

Power & Light Company.

Respondent before this Court, formerly respondent

before the Oregon Supreme Court and the Oregon Court

of Appeals, and defendant before the Circuit Court for

Multnomah County is PacifiCorp, the parent corporation

of Pacific Power & Light Company, a public utility (“re-

spondent”). Also a respondent before this Court, form-

erly respondent before the Oregon Supreme Court and

the Oregon Court of Appeals, and third-party defendant

before the Circuit Court for Multnomah County, is Dou-

glas Electric Cooperative, an interconnecting utility.

iil

TABLE OF CONTENTS

Page

Og eg se i

PARI I£Eo TX) THE PROCEEDINGS ................. ii

PETITION FOR A WRIT OF CERTIORARI TO THE

OREN COURT OF APPEALS................. 1

oie cece vases dees seseesecvees 1

ey yin Wk bw Mink ys pe ees ney ac eenees 2

PERTINENT STATUTORY PROVISIONS............ 2

eveeeneee SPP 2000 CAGE... ... 16... 22. e cee ees 5

REASONS FOR GRANTING THE WRIT ........... 8

I. The Court Below Misapplied This Court’s Pre-

cedent And Sanctioned The Utility’s Evasion

Of Its Statutory Purchase Obligation......... 8

Il. The Question Presented Is Important and Re-

at Merah + as te ek sees bees sseeesee 14

A re 17

APPENDICES

Appendix A: Order of the Supreme Court of Ore-

gon Denying Petition for Rehearing. . la

Appendix B: Opinion of the Oregon Court of Ap-

Meee hee sans as ae os si eyes 2a

Appendix C: Memorandum Order of the Circuit

Court for Multnomah County...... l6a

Appendix D: Excerpt from Transcript of Oral

Ruling in Boyd v. PacifiCorp, No. CV

87-414 (Umatilla County, Oregon,

A er eee ree 23a

TABLE OF CONTENTS —- Continued

Appendix E:

Appendix F:

Appendix G:

Appendix H:

Appendix I:

Page

Excerpt from The Economist 25

ee | | eer err rire 24a

Excerpt from The New Republic 13 <

i Se a eee error 29a

Excerpt from Energy Policy 370

CI IE ss dine ce tadacan se eeaweks 32a

Excerpt from Hydro Review 8 (Feb.

1990)

Excerpt from Public Utilities Fort-

nightly 56 (Sept. 14, 1989).......... 36a

TABLE OF AUTHORITIES

Page

Cases

Afton Energy, Inc. v. Idaho Power Co., 107 Idaho

FON y GPe Ce BAe QO ox os hose a vaenevass ee cies 12

American Paper Institute, Inc. v. American Electric

Power Service Corp., 461 U.S. 402 (1983)..... passim

Bates Fabrics, Inc. v. Public Utilities Commission,

eee a rer ere 13

Boyd v. PacifiCorp, No. CV 87-414 (Umatilla

County, Oregon, Circuit Court) .........-06005: 14

Clark v. Uebersee Finanz-Korporation, A.G., 332

Aa WS goers o 4s UT eee nS se cuatro ORT hae 11

FERC v. Mississippi, 456 U.S. 742 (1982) ....14, 15, 16

Lehigh Valley Power Committee v. Pennsylvania

Public Utility Commission, 563 A.2d 548 (Pa

| eee Per erry ete reas 13

Long Island Lighting Co. v. Public Service Commis-

sion, 137 A.D.2d 205, 529 N.Y.S.2d 209 (1988) .... 13

Snow Mountain Pine Co. v. Maudiin, 84 Or. App.

590, 734 P.2d 1366, rev. den., 303 Or. 591, 739

eB et: eT mei Ny Ate 12, 13

Statutes

Oy SIR. ee oo vs hes aes reese eene eee 3

ae Sa a RE vos ko cee ecue oueh ieee eae 2

Be GR. BB 5 on seb ccc ce ewceesecesteeee 10

BS rE 55 oe bi cape ccnucesesseeee ny i

18 CB Be 6s ova cescsecaveres a, & 1 TS, 4

10 G0 ees ee obo oS cota oo Kee were 4, 8, 10

SD FOG. MOR, Taro s Cee obi 6% ch aeeetanmwaraeers 10

SS Peg. HR. PEL Ree 6 os ctv ceieeasneewnes 7%, Be

TABLE OF AUTHORITIES —- Continued

Page

Other Sources

Cole, Reviving the Federal Power Act’s Com-

prehensive Plan Requirement: A History of

Neglect and Prospects for the Future, 16 Env.

BE WO CIs cccccececeeesensnceoeseseesenees 8

Hydro Review 8 (Feb. 1990) .............-----+5: 16

Pound, Sources and Forms of Law, 22 Notre

-Dame Lawyer 1 (1946) ..........--. cece eee eee 15

Public Utilities Fortnightly 56 (Sept. 14, 1989)...... 9

Radin, Solving Problems by Statute, 14 Oregon

Law Review 90 (1934)............- ee eeeeeeeeeee 15

The Economist 25 (Oct. 28, 1989)................-- 16

The New Republic 13 (Nov. 27, 1989) ............. 16

White and Zack, Avoided Cost Pricing of Elec-

tricity From Waste-to-Energy Plants, Energy

Poticy 370 (Aug. 1909) ... 2... ccevecesecesscesss 9

No.

IN THE

Supreme Court of the United States

OctToserR TERM, 1989

4a—

WaTER Power Company, INc., Et AL.

Petitioners,

PaciriCorp, Et At.

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO

THE OREGON COURT OF APPEALS

Petitioners Water Power Company, Inc. and L.M.

Baker respectfully pray that a writ of certiorari issue to

review the judgment and opinion of the Oregon Court of

Appeals entered in the above-entitled proceeding on Oc-

tober 25, 1989.

OPINIONS BELOW

The opinion of the Oregon Court of Appeals is re-

ported at 99 Or. App. 125, 781 P.2d 860, and is reprinted

in the appendix hereto (“App.”) at 2a. The memorandum

order of the Circuit Court for Multnomah County (John-

son, J.) is unreported, and is reprinted at App. 16a.

—_>

JURISDICTION

Petitioners filed an action in the Circuit Court of the

State of Oregon for Multnomah County seeking injunc-

tive relief and damages for respondent’s breach of its

agreement and statutory obligation under PURPA to pur-

chase power from petitioners. On December 3, 1987, the

circuit court entered judgment in favor of respondent.

Petitioners appealed to the Oregon Court of Appeais on

the ground, inter alia, that federal] law (PURPA and regu-

lations thereunder) imposes an obligation on respondent

to purchase petitioners’ electric power. On October 25,

1989, that court entered its opinion denying petitioners

any relief. App. 2a. The Oregon Court of Appeals con-

strued and applied PURPA, holding that respondent was

not required to purchase power from petitioners. App. 9a.

On November 29, 1989, petitioners petitioned tor review

by the Oregon Supreme Court. The Oregon Supreme

Court denied the petition for review on January 25, 1990.

App. la. The jurisdiction of this Court to review the

judgment of the Oregon Court of Appeals is invoked

under 28 U.S.C. § 1257(a).

PERTINENT STATUTORY PROVISIONS

Section 210(a) of PURPA provides in pertinent part:

(a) Cogeneration and Small Power Production

Rules. [The Federal Energy Regulatory

Commission (“FERC”)] shall prescribe

... such rules as it determines necessary to

encourage cogeneration and small power

production which rules require electric util-

ities to offer to -

(1) sell electric energy to qualifying cogenera-

tion facilities and qualifying small power

production facilities and

(2) purchase electric energy from such facili-

ties. [16 U.S.C. § 824a-3.]

Section 292.301(b)(1) of FERC’s responsive regula-

tions provides in pertinent part:

(b) Negotiated rates or terms. Nothing in this

subpart:

(1) Limits the authority of any electric

utility or any qualifying facility to

agree to a rate for any purchase, or

terms or conditions relating to any

purchase, which differ from the rate or

terms or conditions which would oth-

erwise be required by this subpart. [18

C.F.R. § 292.301(b)(1).]

Section 292.303(a) of FERC’s regulations provides in

pertinent part:

(a) Obligation to purchase from qualifying facili-

ties. Each electric utility shall purchase, in

accordance with § 292.304, any energy and

capacity which is made available from a

qualifying facility:

(1) Directly to the electric utility; or

(2) Indirectly to the electric utility in ac-

cordance with paragraph (d) of this

section. [18 C.F.R. § 292.303(a); empha-

sis supplied].

Section 292.304(b)(2) of FERC’s regulations provides

in pertinent part:

(2)

Section 292.304(d) of FERC’s regulations provides in

Subject to paragraph (b)(3) of this section, a

rate for purchases satisfies the require-

ments of paragraph (a) of this section if the

rate equals the avoided costs determined

after consideration of the factors set forth

in paragraph (e) of this section. [18 C.FR.

§ 292.304(b)(2).]

pertinent part:

(d)

Purchases “as available” or pursuant to a legal-

ly enforceable obligation. Each qualifying fa -

cility shall have the option either:

(1)

To provide energy as the qualifying

facility determines such energy to be

available for such purchases, in which

case the rates for such purchases shall

be based on the purchasing utility’s

avoided costs calculated at the time of

delivery; or

To provide energy or capacity pur-

suant to a legally enforceable obliga-

tion for the delivery of energy or

capacity over a specified term, in

which case the rates for such pur-

chases shall, at the option of the quali-

fying facility exercised prior to the

beginning of the specified term, be

based on either: (i) The avoided costs

calculated at the time of delivery; or

(ii) The avoided costs calculated at the

time the obligation is incurred. [18

C.F.R. § 292.304(d).]

STATEMENT OF THE CASE

Petitioners, Water Power Company, Inc. and L.M.

Baker, are experienced developers of small power re-

sources that have developed between 40 and 50 mega-

watts of small resource generation under the Public

Utility Regulatory Policies Act of 1978 (“PURPA”). Tr. II,

369. Respondent PacifiCorp is a major public utility. Tr. V,

825. In reliance on federal and state regulations promul-

gated under PURPA, petitioners initiated efforts in

1982-83 to obtain a power purchase agreement from re-

spondent at 1982 avoided cost prices, for a hydroelectric

power project at Loon Lake, on Mill Creek, in Central

Oregon. Tr. II, 370-71; IV, 623-24.

Although respondent initially had been aggressive in

pursuing PURPA contracts, respondent knew by 1984 that

the Pacific Northwest lad a surplus of power. Tr. VI,

1072; VI, 1101. Respondent accordingly considered vari-

ous avenues of escape from its purchase obligations un-

der PURPA. For example, at a project review meeting in

late 1983, respondent’s staff outlined three alternatives in

dealing witk. a deadline in a power purchase agreement

for completion of a transmission agreement (which de-

tails how the small power producer will send power from

its project to respondent's electric power grid): (1) to sit

on the contract with the qualifying facility; (2) to make

the purchase agreement conditional on another agree-

ment; or (3) “refuse to sign and therefore kill the project.”

Tr. VIII, 1186-87; Ex 139.

To overcome respondent’s resistance, petitioners en-

listed the assistance of the Oregon Public Utility Commis-

sion (“PUC”). Tr. IV, 631-32. On August 31, 1984,

pursuant to the directive of the PUC over respondent's

objections, the power purchase agreement was finalized

without the execution of a transmission agreement. Tr. IV,

660. Petitioners accepted the PUC’s proposal, reflected in

Article II of the power purchase agreement, that the

“Agreement shall be null and void” if a transmission

agreement “has not been executed by all four parties

prior to November 1, 1985.” App. 6a.

On October 10, 1984, more than one year before the

November 1, 1985, due date, Bonneville Power Adminis-

tration (“Bonneville”), an interconnecting utility, distrib-

uted its draft transmission agreement, which was largely

boilerplate, to petitioners, to respondent and to Douglas

Electric Cooperative (“Douglas”). Tr. III, 500; IV, 667-69.

Both Bonneville and Douglas were necessary to wheel

(transmit) the power from petitioners’ source to respon-

dent’s system. Petitioners and Douglas promptly found

the draft transmission agreement acceptable. Tr. VITA, 50;

IV, 668. Respondent first responded eight months later in

June 1985, and proposed numerous changes, including a

change in the point of delivery from Cottage Grove (the

point of delivery in the power purchase agreement) to

Fairview. Tr. VI, 964-65. Petitioners immediately re-

quested a meeting to resolve all of the proposed changes

in the transmission agreement. Tr. IV, 692. Despite peti-

tioners’ accommodation of all of the proposed changes,

respondent still refused to enter into the transmission

agreement because of a dispute with Bonneville over

arcane accounting issues. Tr. IV, 710-13. On October 7,

1985, the PUC directed final terms for the transmission

agreement. Tr. IV, 723-24. Bonneville then rewrote it to

accommodate alternative delivery points. Tr. IX, 1336.

Se oe

eT OO LT ee) SEE ee

By November 1, 1985, respondent had failed to sign

the transmission agreement. Tr. VIIA, 88. Respondent

thereupon repudiated the power purchase agreement,

and petitioners filed this action in July, 1986. Petitioners’

complaint alleged several theories of recovery, including

breach of contract, violations of PURPA obligations, will-

ful misconduct and gross negligence. The case was tried

to a jury, which returned a verdict in favor of respondent.

Judge Johnson, who prepared a written opinion, ex-

plained during the course of the trial that he was “not a

federal judge” and was “not very interested in the federal

law.” Tr. I, 26.

On December 28, 1987, petitioners appealed the deci-

sion of the trial court to the Oregon Court of Appeals.

The three-judge panel, in a unanimous opinion, held that

PURPA “regulations and rules require a utility to offer to

purchase power from a qualifying facility.” App. 8a.

(Original emphasis). The court accordingly found that

respondent could insist on certain contractual provisions,

such as a transmission agreement deadline and a particu-

lar point of delivery, even if enforcement of such provi-

sions resulted in avoidance of respondent’s purchase

obligation. The court cited as authority 18 C.F.R.

§ 292.301(b), which permits the parties to a power pur-

chase agreement to vary “terms and conditions relating to

any purchase.” In direct conflict with its holding, how-

ever, the court conceded in a footnote that “[a]n electric

utility must purchase power from a small power pro-

ducer.” App. 4a. (Emphasis supplied). The Oregon Su-

preme Court denied the petition for review on January

25, 1990.

REASONS FOR GRANTING THE WRIT

PURPA encourages small power developers of re-

newable resources like petitioners by guaranteeing a mar-

ket for their electric power. The practical effect of the

decision below is to destroy the market for such power

and thereby to blunt small power development. This

Court should avoid such chilling consequences by requir-

ing the court below to yield to this Court’s precedent and

the mandate of Congress.

I. The Court Below Misapplied This Court’s Precedent

And Sanctioned The Utility’s Evasion Of Its Statu-

tory Purchase Obligation.

Rejecting petitioners’ argument that respondent had

a statutory obligation to purchase electric power, the

court below concluded that PURPA “statutes, regulations,

and rules require a utility [merely] to offer to purchase

power from a qualifying facility, which includes a small

power producer.” App. 8a. (Original emphasis). The Ore-

gon Court of Appeals misconstrued and misapplied PUR-

PA regulations, including 18 C.F.R. § 292.303(a), which

plainly require a utility to do more than offer to purchase

power: “Each electric utility shall purchase, in accordance

with § 292.304, any energy and capacity which is made

available from a qualifying facility.” Id. (Emphasis sup-

plied). This Court confirmed in American Paper Institute,

Inc. v. American Electric Power Service Corp., 461 U.S. 402,

407 (1983), that 18 C.FR. § 292.303(a) “provides that

electric utilities shall purchase electricity made available

by qualifying facilities.” (Emphasis added).'

(

1 Commentators in the energy field uniformly have recog-

nized a utility’s purchase obligation. See, e.g., Cole, Reviving

(Continued on following page)

cnn POY, OR

— Ue

The decision below, based on a patent misunder-

standing of what PURPA regulations require, permits any

utility to avoid its obligation to purchase power under

PURPA by insisting on contractual devices that repudiate

the contract. App. 7a, 8a, 11a. That is precisely what

respondent did here. Respondent used protracted and

dilatory disputes with an interconnecting utility, Bon-

neville Power Administration, to avoid signing the trans-

mission agreement within the November 1, 1985,

deadline. The decision of the court below encourages a

utility to avoid its legally mandated obligation to pur-

chase energy by squabbling with third parties long

enough to trigger the expiry of a contractual deadline.

The Oregon Court of Appeals cited as authority for this

statutory dodge a single FERC regulation, 18 C.F.R.

§ 292.301,2 but simultaneously misunderstood FERC

(Continued from previous page)

the Federal Power Act’s Comprehensive Plan Requirement: A

History of Neglect and Prospects for the Future, 16 Env. Law

639, 647 (1986) (“PURPA provided for . . . guaranteed purchase

of power”). Cf. Public Utilities Fortnightly 56 (Sept. 14, 1989)

(“The law . . . also requires the local utility to buy cogeneration

electricity. This is a requirement.”) (Original emphasis). App.

37a. See White and Zack, Avoided Cost Pricing of Electricity

From Waste-to-Energy Plants, Energy Policy 370 (Aug. 1989)

(“PURPA marked a watershed in US energy policy by mandat-

ing private utilities to purchase electricity produced by small

generators.”). App. 32a.

2 Section 292.301(b) permits negotiation by a “utility or

any qualifying facility to agree to a rate for any purchase, or

terms or conditions relating to any purchase.” (Emphasis add-

ed). Ironically, FERC recognized that a qualifying facility’s

ability “to negotiate with an electric utility is buttressed by the

(Continued on following page)

regulations to require a utility only to offer to purchase

energy. The Oregon Court of Appeals’ invitation to util-

ities to insist on contractual provisions that eviscerate

their purchase obligations under PURPA is a sharp rebuff

to this Court’s decision in American Paper Institute.

In American Paper Institute, several electric utilities

challenged two FERC rules, requiring electric utilities (1)

to purchase electric energy from qualifying facilities at

full avoided cost, 18 C.F.R. § 292.304(b)(2), and (2) to

make such interconnections with qualifying facilities as

are necessary to accomplish purchases or sales of electric-

ity authorized by PURPA. 18 C.F.R. § 292.303(c)(1). The

United States Court of Appeals for the District of Colum-

bia Circuit invalidated the challenged FERC rules. 675

F.2d at 1226. This Court unanimously reversed. In ad-

dressing both issues, the Court repeatedly underscored

that FERC regulations impose an obligation to purchase.

The Court held that 18 C.FR. § 292.304(b)(2) “requires a

utility to purchase electricity from a qualifying facility at

a rate equal to the utility’s full avoided cost,” 461 U.S. at

406, and that 18 C.F.R. § 292.303 “provides that electric

utilities shall purchase electricity made available by qual-

ifying facilities.” Id. at 407.

(Continued from previous page)

existence of the rights and protections of these rules.” 45 Fed.

Reg. 12,217 (1980) (emphasis added). Section 292.101(b)(2) de-

fines “purchase” to mean “the purchase of electric energy or

capacity or both from a qualifying facility by an electric util-

ity.” The regulations do not permit a utility to negotiate its way

out of a purchase obligation, contrary to the legislative goals of

PURPA.

Justice Marshall, writing for the Court, noted that it

was “most unlikely that Congress could have intended

that an evidentiary hearing be held for every interconnec-

tion necessary to consummate a purchase or sale of elec-

tricity” in that “these purchases and sales are in the

public interest,” and that development of small power

production will pron.ote energy conservation and effi-

cient use of resources. 461 U.S. at 419-20. So too here,

Congress did not intend to permit utilities to avoid pur-

chases by insisting on contractual provisions that repudi-

ate the contract. Yet the state court’s sanctioning of

contractual evasions illogically imputes to Congress “ ‘a

purpose to paralyze with one hand what it sought to

promote with the other.’ ” 461 U.S. at 421, quoting Clark v.

Uebersee Finanz-Korporation, A.G., 332 U.S. 480, 489 (1947).

The Court’s upholding in American Paper Institute of

“such rules as are necessary to require purchases and

sales” unmistakably conflicts with the holding of the

court below. 461 U.S at 418. No purchase or sale can be

consummated if the utility is permitted to employ con-

tractual devices to prevent completion of a purchase or

sale. The state court violated “the mandate of PURPA to

encourage cogeneration and small power production

[which] requires that obligations to purchase under this

provision supersede contractual restrictions on a utility’s

ability to obtain energy or capacity from a qualifying

facility.” 45 Fed. Reg. 12,219 (1980). FERC has cautioned

“that, in general, if it permitted such contractual provi-

sions to override the obligation to purchase from qualify-

ing facilities, these contractual devices might be used to

hinder the development of cogeneration and small power

production.” Id.%

The same reservations expressed by the Court in

American Paper Institute with respect to affording an evi-

dentiary hearing prior to interconnection apply with

equal force here. Permitting a utility to use contractual

ploys “would seriously impede the very development of

cogeneration and small power production that Congress

sought to facilitate.” 461 U.S. at 420. Owners of qualifying

facilities such as petitioners would have little incentive to

purchase or sell electric energy if the utility could pull the

rug from under their feet with impunity. Id.

Other state courts of last resort have held that the

contractual device used by respondent in this case to

avoid its purchase obligation is a violation of PURPA

regulations. In Afton Energy, Inc. v. Idaho Power Co., 107

Idaho 781, 693 P.2d 427 (1984), a small power producer

3 Respondent may argue that petitioners are not prevented

from selling power to respondent at 1990 prices. Congress

intended PURPA to provide incentives to developers, however,

so that their energy projects would be financially attractive.

The project at issue in this case was viable to petitioners only

at 1982 prices, which reached an historic high. Without the

Court's intervention here, a prospective developer of alterna-

tive energy in 1992 will likely be discouraged, knowing that

utilities later may avoid higher avoided costs by contractual

devices when prices turn downward. The Oregon Court of

Appeals earlier held that the PURPA obligation is to purchase

at present avoided costs. Snow Mountain Pine Co. v. Maudlin, 84

Or. App. 590, 734 P.2d 1366, 1371, rev. den., 303 Or. 591, 739 P.2d

571 (1987).

filed a complaint with the Idaho Public Utilities Commis-

sion (“IPUC”) alleging that Idaho Power, an electric util-

ity, intentionally and deliberately had protracted the

negotiations for the purchase of power and had continu-

ously employed tactics designed to discourage the pro-

ject. 693 P.2d at 428. The complaint requested the IPUC to

order Idaho Power to consummate its purchase of power.

Id. Citing 18 C.F.R. § 292.303(a), the court found that the

IPUC properly required the utility to purchase the small

power producer’s power. Id. at 431-32. See also Bates Fab-

rics, Inc. v. Public Utilities Commission, 447 A.2d 1211, 1213

(Me. 1982) (“utility shall purchase electricity at a price

equal to the utility’s ‘avoided costs’ ”).

Three years prior to its decision for which certiorari

is now sought, the Oregon Court of Appeals held that a

utility’s “obligation to purchase power is imposed by law

on a utility; it is not voluntarily assumed.” Snow Moun-

tain Pine Co. v. Maudlin, 84 Or. App. 590, 734 P.2d 1366,

1370, rev. den., 303 Or. 591, 739 P.2d 571 (1987). The court

rejected the utility’s argument that it was not obliged to

purchase power until it had an executed power purchase

agreement: “[The utility’s] obligation is not governed by

common law concepts of contract law; it is created by

statutes, regulations, and administrative rules.” Id.4

4 All lower state courts addressing the issue of a utility’s

purchase obligation under PURPA properly have followed

American Paper Institute. See, e.g., Lehigh Valley Power Committee

v. Pennsylvania Public Utility Commission, 563 A.2d 548, 552 (Pa.

Cmwlth. 1989) (“utilities are required to purchase power from

[qualifying facilities]”); Long Island Lighting Co. v. Public Service

Commission, 137 A.D.2d 205, 529 N.Y.S.2d 209, 210, n.1 (1988)

(Continued on following page)

In spite of the precedent set by this Court, the court

below refused to follow the law. As a result, petitioners

were deprived of their federal statutory right to sell pow-

er to respondent at 1982 avoided cost prices. Under the

circumstances, review by this Court is appropriate to

reaffirm the principles ignored by the court below.

II. The Question Presented Is Important And Recur-

ring.

Before PURPA, entities such as petitioners faced sig-

nificant deterrents to engaging in small power produc-

tion. Traditional electric utilities, customarily regarded

and regulated by the states as natural monopolies, either

refused to buy power from these nontraditional facilities,

or offered unfairly low rates for such purchases. FERC v.

Mississippi, 456 U.S. 742, 750 (1982). PURPA and regula-

tions promulgated thereunder by FERC removed these

stumbling blocks by guaranteeing a market for small

power producers’ power. 18 C.F.R. § 292.303(a). Shortly

after PURPA’s enactment, electric utilities unsuccessfully

challenged the power of the federal government to re-

quire utilities to purchase power from small power pro-

ducers. See FERC v. Mississippi, 456 U.S. 742 (1982);

American Paper Institute, Inc. v. American Electric Power

(Continued from previous page)

(“PURPA required electric utilities to sell and purchase electric

energy to and from [qualifying facilities]”). See also Boyd v.

PacifiCorp, No. CV 87-414 (Umatilla County, Oregon, Circuit

Court) (“if there is an obligation to furnish power there is an

obligation not only to offer to buy it, but to buy it”) (transcript

excerpt reprinted at App. 23a).

Service Corp., 461 U.S. 402 (1983). The Oregon Court of

Appeals now purports to replace those stumbling blocks.

The decision below, if permitted to stand, will mean

that a regulated utility may flout with impunity the rules

by which our society is governed, and thwart short-

sightedly the development of alternative energy despite a

looming electricity shortage. The primary sources of

American law are those recorded rules of human behav-

ior by which our society is governed. Cf. Pound, Sources

and Forms of Law, 22 Notre Dame Lawyer 1, 47-48 (1946).

These rules include a federal statute, PURPA, passed in

1978 by an optimistic Congress striving for a solution to

America’s energy problems. FERC v. Mississippi, 456 U.S.

742, 750 (1982). PURPA rules mandate (as this Court has

confirmed) that “electric utilities shall purchase electricity

made available by qualifying facilities.” American Paper

Institute, Inc. v. American Electric Power Service Corp., 461

U.S. 402, 407 (1983). (Emphasis added). Our society en-

forces rules, or “commands,” through our social institu-

tions, including the executive branch, courts, and

agencies. Cf. Radin, Solving Problems by Statute, 14 Oregon

Law Review 90, 94 (1934). By insulating respondent from

liability for its violation of these rules, the Oregon Court

of Appeals’ decision condones respondent’s rending of

the social fabric. Moreover, by implication, the Oregon

Court of Appeals holds that a utility such as respondent,

which receives a service monopoly in exchange for being

subject to extensive state and federal controls, may em-

ploy contractual devices freely to avoid compliance with

national energy policy.

Congress enacted PURPA in 1978 to decrease Ameri-

ca’s dependence on fossil fuels and to increase the

development of renewable resources, including hydro-

electric power. FERC v. Mississippi, 456 U.S. 742, 750

(1982). This is a paradoxical time for the energy industry

because oil is cheap, gas is plentiful, and electricity is in

surplus. The Economist 25 (Oct. 28, 1989). App. 24a. Amer-

ica is becoming increasingly dependent, however, on for-

eign oil. In 1988, for the first time, the United States got

more than half of its oil from foreign sources (in 1973,

during the Arab oil embargo, the United States was 33

percent dependent). The New Republic 13 (Nov. 27, 1989).

App. 29a. FERC Commissioner Charles Trabandt recently

wrote that because electrical demand projections are out-

stripping existing and planned capacity, the United States

“is going to need every possible [megawatt] from respon-

sible hydroelectric generation in the decades ahead” and

should avoid “creating any further regulatory disincen-

tive to future hydroelectric development.” Hydro Review 8

(Feb. 1990) (excerpt from opinion in connection with li-

cense grant). App. 34a. There is a “looming shortage” of

electricity, App. 26a, and unless alternative energy

sources are properly encouraged, the problem will be

back. App. 29a. Although utilities dislike the idea of

being forced to accept electricity from others at a time of

surplus, development of alternative energy sources is

crucial to mitigate the coming “energy crunch of the

1990s.” App. 27a.

By insulating respondent from liability for its viola-

tion of its obligation to purchase under PURPA, the Ore-

gon Court of Appeals’ decision undermines federal

policies encouraging the development of decentralized

sources of renewable energy. Moreover, by implication,

the Oregon Court of Appeals’ decision places all consum-

ers of energy (a category that includes all Americans) at

the whim of large private utilities shortsightedly exercis-

ing their monopoly power.

CONCLUSION

For the reasons stated herein, the decision below is

not simply an isolated rebuke of a federal statutory right.

It is a dark harbinger of widespread refusal by utilities to

buy power from qualifying facilities as required by PUR-

PA. This Court accordingly should grant this petition for

certiorari.

Respectfully submitted,

ARDEN E. SHENKER

Counsel of Record

Ropert E. L. BONAPARTE

Tooze SHENKER HoLtioway &

DuDEN

333 SW Taylor Street

Portland, OR 97204

Telephone No.: (503) 223-5181

Counsel for Petitioners

APPENDIX A

IN THE SUPREME COURT OF THE

STATE OF OREGON

WATER POWER CO INC

Dba C-B HYDRO, INC

)

BAKER, L M )

Dba SMALL SCALE )

HYDROPOWER ) ORDER

Petitioners ) DENYING

) REVIEW

¥. | CA A46977

PACIFICORP SC $36710

Dba PACIFIC POWER & )

LIGHT CO

Respondent

DOUGLAS ELECTRIC

COOPERATIVE

The Court has considered the petition for review and

ORDERS that it be denied.

DATE: JANUARY 25, 1990.

/s/ Edwin J. Peterson

EDWIN J. PETERSON

CHIEF JUSTICE

Van Hoomissen, J., not participating

COPIES TO:

SHENKER, ARDEN E Attorney for: Petitioner

WALTERS, STEPHEN S Attorney for: Respon-

dent

MARTIN, GERALD A

APPENDIX B

IN THE COURT OF APPEALS OF THE

STATE OF OREGON

WATER POWER COMPANY, INC., a

Utah corporation, dba C-B

HYDRO, INC. and L. M. BAKER,

dba SMALL SCALE HYDROPOWER,

Appellants,

PACIFICORP, a Maine

corporation, dba PACIFIC

POWER & LIGHT CO.,

Respondent,

DOUGLAS ELECTRIC COOPERATIVE,

an Oregon corporation,

Respondent.

(8607-04185; CA A46977)

FILED OCT 25 1989

Appeal from Circuit Court, Multnomah County.

Lee Johnson, Judge.

Argued and submitted March 13, 1989.

Arden E. Shenker, Portland, argued the cause

for appellants. With him on the briefs were Rob-

ert E. L. Bonaparte and Tooze Marshall Shenker

Holloway & Duden, Portland.

Stephen S. Walters, Portland, argued the cause

for respondent PacifiCorp. With him on the brief

were Charles F. Adams and Stoel Rives Boley

Jones & Grey, Portland.

No appearance for respondent Douglas Electric Co-

operative.

Before Richardson, Presiding Judge, and Newman

and Deits, Judges.

NEWMAN, J.

Affirmed.

4476N FILED: October 25, 1989

NEWMAN, J.

Plaintiffs (Water Power) appeal a judgment for defen-

dant (Pacific) in an action for damages for breach of an

electric power purchase agreement.! The jury returned a

general verdict for Pacific. Water Power makes ten as-

signments of error challenging the court’s giving or refus-

ing to give instructions, its ruling that the Public Utility

Commission (PUC) had primary jurisdiction and certain

rulings on evidence and damages. We affirm.

The jury could have found that Water Power, a small

power producer, wished to build a project on Mill Creek

in Douglas County and generate, sell and deliver power

to Pacific, a regulated utility. Water Power commenced

negotiations with Pacific in late 1982. Pacific notified

Water Power, whose production facilities were not

1 Water Power asked, in the alternative, for injunctive

relief. The court dismissed that claim, and that action is not

included in this appeal.

connected to Pacific’s electric power grid,? that, before it

would execute a power purchase agreement, it would

require a “wheeling” or transmission agreement that

would detail how Water Power would send power from

Mill Creek to Pacific’s grid.

Pacific buys power according to an avoided cost

schedule that is subject to approval by PUC.? In August,

1983, PUC approved a new schedule with lower rates

than the 1982 schedule. Pacific notified Water Power that

a power purchase agreement executed after September

30, 1983, would use the lower rates.

Water Power could deliver its power to Pacific at

several locations, including Cottage Grove, in Lane Coun-

ty, and Fairview, in Coos County. In either case, Water

Power would have to send its power over lines of the

Bonneville Power Administration (BPA) and the Douglas

Electric Cooperative, Inc. (Douglas).4 Douglas’s lines run

2 An electric power grid is a network of conductors for the

distribution of electric power.

3 An electric utility must purchase power from a small

power producer at a rate no lower than its avoided cost, that is,

“the incremental costs to an electric utility of electric energy or

capacity or both which, but for the purchase from the qualify-

ing facility or qualifying facilities, such utility would generate

itself or purchase from another source.” 18 CFR § 292.101(6);

see ORS 758.505(1). The utility is 1-quired to forecast its

avoided costs every two years, and the avoided cost schedules

then serve to determine purchase rates from qualifying facili-

ties. 18 CFR § 292.302(b); ORS 758.525(1) and (2).

4 Pacific named Douglas as a third-party defendant but

later withdrew that complaint. The judgment dismissed the

complaint against Douglas.

from Mill Creek to BPA’s system, BPA lines connect with

Pacific’s grid at several points. Accordingly, it was neces-

sary that Douglas, BPA, Water Power and Pacific all be

parties to a transmission agreement. Both BPA and Dou-

glas had expressed their willingness to do so.

To take advantage of Pacific’s higher 1982 purchase

rates, Water Power proposed a power purchase agree-

ment at the 1982 rates with a provision that, unless a

transmission agreement were executed by a certain date,

Pacific could terminate the agreement. Pacific rejected the.

proposal. In October, 1983, Water Power asked PUC, as

an arbitrator, former OAR 860-29-005(3), to decide wheth-

er Pacific was required to sign a power purchase agree-

ment at 1982 rates. PUC ruled that Pacific had to sign a

power purchase agreement at 1982 rates, if Water Power

would submit a written plan for transmitting power to

Pacific’s grid. In December, 1983, Water Power submitted

a plan to use the systems of BPA and Douglas to deliver

its power to Pacific at Cottage Grove.

On June 5, 1984, Pacific expressed a willingness to

execute a power purchase agreement under which Water

Power would have until December 31, 1984, to obtain a

transmission agreement executed by Water Power, Pacif-

ic, Douglas and BPA. Pacific and Water Power disagreed,

however, about the point of delivery. Pacific wanted Cot-

tage Grove; Water Power wanted to leave the point of

delivery open. On August 17, 1984, the parties asked PUC

to decide that dispute. It ruled that Pacific could require

that Cottage Grove be the point of delivery, but that the

deadline for completion of the transmission agreement

would be November 1, 1985.

Water Power and Pacific executed the power pur-

chase agreement on November 28, 1984, and PUC ap-

proved it. Article Il of the agreement provides:

“This Agreement shall not become effective un-

til Sellers, Utility, BPA, and Pacific have entered

into the Transmission Agreement providing for

firm transmission of electric power from the

Facility to Pacific’s system pursuant to, and un-

der the constraints contained in, Article IX; pro-

vided, that if the Transmission Agreement has

not been executed by al! four parties prior to

November 1, 1985, or if the Transmission Agree-

ment has not been approved by the Rural Elec-

trification Administration prior to November 1,

1986, this Agreement shall be null and void.”

(Emphasis in original.)

Article I defines “Point of Delivery” as

“the location where Net Delivered Output is

delivered to Pacific’s system at BPA’s Cottage

Grove Substation, as specified in the Transmis-

sion Agreement, or at such other location as

may reasonably be required by Pacific to allow

Pacific to accept Net Delivered Output from

BPA.”

Article XVII provides, in part:

“As used in this Agreement, ‘Force Majeure’

means unforeseeable causes beyond the reason-

able control of and without the fault or negli-

gence of the party claiming Force Majeure.”

BPA distributed a draft transmission agreement to

Douglas, Pacific, and Water Power on October 10, 1984.

Pacific responded with comments in June, 1985. The par-

ties continued to disagree about the point of delivery.

Water Power wanted Fairview as the primary point of

delivery; Pacific wanted it only as a backup point to

Cottage Grove. They referred the dispute to PUC. On

October 7, 1985, PUC ruled that Pacific’s position was

reasonable in terms of its needs and consistent with the

power purchase agreement.

On October 22, 1985, BPA circulated another draft of

a transmission agreement with new provisions. Pacific

telephoned BPA on October 25, hand-delivered a marked-

up copy of the draft to BPA on October 28, and sent it a

letter, dated October 30, discussing its concerns about the

new provisions. Pacific stated that it wanted Cottage

Grove as the point of delivery. The letter ended with an

assurance that “Pacific is willing to discuss the resolution

of these issues to achieve an acceptable agreement within

the time-frame stated in the Power Purchase Agreement.”

BPA responded to Pacific on February 28, 1986. It rejected

Cottage Grove as the point of delivery and suggested its

Alvey substation instead.

On November 12, 1985, Water Power notified Pacific

that it had been willing to sign the BPA draft transmis-

sion agreement of October 21, 1985, with one change in

the environmental review provision, and that the condi-

tion in the power purchase agreement that required a

transmission agreement by November 1, 1985, should be

excused under the force majeure article, because Water

Power had no control over the other three parties. Pacific

replied on December 13, 1985, that, under Article II, the

power purchase agreement was null and void, because

the transmission agreement had not been executed by the

four parties by November 1, 1985. On July 14, 1986, Water

Power brought this action.

Water Power assigns as errors that the court in-

structed the jury, in substance, that Pacific (1) was not

required to enter into a transmission agreement that it

reasonably believed was not in its best interests; and (2)

had a right to insist that the transmission agreement

designate Cottage Grove as the point of delivery. Water

Power argues that the federal Public Utilities [sic] Regula-

tory Policy [sic] Act (PURPA), 16 USC § 824a-3, imposes

on Pacific a statutory obligation to purchase electric pow-

er from it and that Pacific’s best interests, or preference as

to a delivery point, are irreievant.

Water Power relies on Snow Mt. Pine Company v.

Maudlin, 84 Or App 590, 734 P2d 1366, rev den 303 Or 591

(1987), and asserts that “the obligation to purchase power

is imposed by law on a utility; it is not voluntarily as-

sumed.” 84 Or App at 599. In Snow Mt. Pine, we also said

that a utility’s obligation “is created by statutes, regula-

tions and administrative rules.” 84 Or App at 598. Those

statutes, regulations and rules require a utility to offer to

purchase power from a qualifying facility, which includes

a small power pruducer. The utility, however, is not re-

quired to purchase in any and all events and may insist

on provisions that require that a transmission agreement

be signed by a certain date and designate a particular

point of delivery.

Congress enacted PURPA in 1978, in part to encour-

age qualifying facilities to produce electric energy. The

legislation directs the Federal Energy Regulatory Com-

mission (FERC) to promulgate regulations to require elec-

tric utilities “to offer to * * * purchase electric energy”

from qualifying facilities, 16 USC § 824a-3(a), and to

ensure that the rates that the qualifying facility charges

the electric utility are fair both to the qualifying facility

and to the ultimate consumer. 16 USC § 824a-3(b). Other

provisions of PURPA cover rates for the sale of electric

energy to and from qualifying facilities, the implementa-

tion and enforcement of the regulations and several ex-

emptions therefrom.

FERC has promulgated rules that implement PURPA.

18 CFR Part 292. 18 CFR § 292.301 provides:

“(a) Applicability. This subpart applies to the

regulation of sales and purchases between quali-

fying facilities and electric utilities.

“(b) Negotiated rates or terms. Nothing in this

subpart:

“(1) Limits the authority of any electric util-

ity or any qualifying facility to agree to a rate

for any purchase, or terms or conditions relating to

any purchase, which differ from the rate or terms or

conditions which would otherwise be required by this

subpart; or

“(2) Affects the validity of any contract en-

tered into between a qualifying facility and an

electric utility for any purchase.” (Emphasis

supplied.)

PURPA also requires state regulatory agencies to enforce

its provisions. 16 USC § 824a-3(f)(1). Oregon has enacted

legislation governing small power producers and has ad-

ministrative rules that parallel PURPA and its regula-

tions. ORS 758.505 et seq; OAR 860-29-001 et seq.° Under

> ORS 758.515(2) states that its goal, like the goal of PUR-

PA, is to:

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

permanently sustainable energy resources using the

(Continued on following page)

10a

the federal statute and regulations and the state statute

and rules, therefore, the parties may agree on terms or

conditions in a power purchase agreement that vary from

what is set forth in the regulations and rules.® It follows

that the parties may also make contractual provisions on

matters that the regulations and rules do not cover.

Nothing in Snow Mt. Pine is to the contrary. There the

issues were when a utility’s obligation to purchase power

(Continued from previous page)

public and private sectors to the highest degree pos-

sible; and

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

utility from, and rates for sales to, a qualifying facili-

ty 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 inter-

est.”

PUC’s rules provide:

“Nothing in these rules limits the authority of a

public utility or qualifying facility to agree to a rate

for any purchase, or terms or conditions relating to any

purchase, which differ from the rate or terms or condi-

tions which would otherwise be provided by these rules,

provided such rates or terms do not burden rate-

payers of the «stility.” OAR 860-29-005(2). (Emphasis

supplied.)

Water Power does not assert that it has any greater rights

under the state statute and rules than under PURPA and its

regulations.

6 FERC’s comments confirm that the regulation conforms

to PURPA. “Agreements between an electric utility and a * * *

small power producer for purchases * * * under terms or

conditions different from those set forth in these rules, do not

violate the Commission’s rules under section 210 of PURPA.”

45 Fed Reg 12217.

lla

arises and what purchase rates apply, matters that the

regulations and rules covered. The statutes, regulations

and rules, on the other hand, do not cover the location of

points of delivery or deadlines for transmission agree-

ments. Accordingly, the power purchase agreement could

provide for Cottage Grove as the point of delivery and a

November 1, 1985, deadline for execution of the transmis-

sion agreement. The challenged jury instructions are con-

sistent with our conclusion and giving them was not

erroneous.

Water Power also assigns as errors that the court

instructed the jury that (1) it must find for Pacific if,

irrespective of its motives and actions, no transmission

agreement would have been executed by November 1,

1985, and (2) Water Power had the burden of proving that

Pacific deliberately refused to enter into a transmission

agreement for the sole purpose of voiding the power

purchase agreement. From the evidence, the jury could

have found that, independently of any actions, motives or

purposes of Pacific, BPA refused to sign a transmission

agreement that designated Cottage Grove as the delivery

point either by November 1, 1985, or after that date.

Pacific’s motives, actions, purposes or sole purpose in not

signing the transmission agreement by November 1, 1985,

are, therefore, irrelevant in view of BPA’s refusal to sign.

The instruction respecting Pacific’s motives and actions

was not erroneous. The instruction respecting Water Pow-

er’s burden of proof as to Pacific’s purpose, if it was error

as to any party, was harmless as to Water Power.

Water Power assigns as error that the court refused to

give plaintiffs’ requested force majeure instruction.

Article II of the power purchase agreement, however,

12a

contemplates the possibility that the transmission agree-

ment would not be executed by the four parties by No-

vember 1, 1985, and provides that, in that event, the

agreement is null and void. Failure to sign a transmission

agreement before that date was not “unforeseeable” with-

in the meaning of Article XVII. The court did not err in

refusing that instruction.

The court also did not err when it refused to give

Water Power’s requested instructions relating to statutory

treble damages. See former ORS 756.185.” Water Power

was not eniitled to treble damages unless the jury had

awarded Water Power general damages. The jury

awarded no damages. The court’s failure to give the

requested instruction, even assuming that was error, was

harmless.

7 Former ORS 756.185 (since amended to include telecom-

munications utilities but otherwise identical) provides:

“(1) Any public utility, railroad, air carrier or motor

carrier which does, or causes or permits to be done,

any matter, act or thing prohibited by ORS chapter

756, 757, 758, 760, 761, 763, 764, 767 or 773 or omits

to do any act, matter or thing required to be done by

such statutes, is liable to the person injured thereby

in the amount of damages sustained in consequence

of such violation. If the party seeking damages al-

leges and proves that the wrong or omission was the

result of gross negligence or wilful misconduct, the

public utility, railroad, air carrier or motor carrier is

liable to the person injured thereby in treble the

amount of damages sustained in consequence of the

violation. If damages are awarded, the court may

also fix and award reasonable attorney fees at trial

and on appeal.”

13a

We interpret two additional assignments of error to

be that the court erred when it refused to allow the jury

to consider as part of Water Power’s damages an item

described in the testimony of Wolverton, one of Water

Power’s witnesses,* and when it refused to submit to the

jury Water Power’s requested instructions respecting

those “damages.” Wolverton testified that Water Power,

as general partner, planned to form a limited partnership

to operate the Mill Creek facility. Wolverton testified that

® Water Power’s assignment of error regarding Mr. Wol-

verton reads:

“The trial court erred in allowing defendant's

motion for a directed verdict on the question of

damages with respect to Mr. Wolverton’s testimony:

‘At the end of the plaintiffs’ case, I allowed the

defendant’s motion for a directed verdict on the

question of damages with respect to the damages

testified by Mr. Wolverton of somewheres between

$8.2 and $14.2 million. The basis of that ruling was

that Mr. Wolverton’s entire testimony - and this

becomes even clearer even though when you exam-

ine Exhibit 472, which is not part of the record but

which was his report, and I assume if asked the right

questions would answer as to the matter in his re-

port that if the damages which he was referring to

were the damages that would be the lost profits that

would be received by the investors in this project as

limited partners are not necessarily the damages of

Water Power Company, Inc. or Mr. Baker.

‘Upon further — as I understand Mr. Wolverton’s |

basic testimony, though, and the intention of the |

party — of the plaintiffs was to create a partnership in

which Water Power Company, Inc., someone was

going to be a general partner and they would scll

limited partnership interest.’ ”

einai eee

14a

the limited partners would lose profits if Pacific suc-

ceeded in voiding the power purchase agreement. Water

Power asked that the jury consider those lost profits as an

item of damages. The persons who would have been

limited partners, however, are not parties to this action,

and any loss of profits that they might have suffered

because Pacific terminated the power purchase agree-

ment could not be damages to Water Power. The assign-

ments of error are without merit.

Finally, Water Power assigns as errors several of the

court’s rulings excluding evidence. It offered the testi-

mony of a former BPA employe about conversations with

other BPA employes concerning Pacific’s motives in re-

fusing to change the point of delivery from Cottage

Grove. The court excluded it. We have already decided

that Pacific had a right to insist on Cottage Grove asa

point of delivery and that its motives are irrelevant.

Although the court admitted in evidence a letter from

Water Power’s attorney to Pacific’s attorney, dated De-

cember 23, 1985, it excluded two affidavits and notes of a

meeting on the transmission agreement that were at-

tached to the letter. Water Power urged the court to admit

the material on the ground that it provided a context for

the letter. The court also refused to admit two letters,

dated September 18 and 19, 1986, one from a Pacific

employe and one from a BPA employe, discussing the

timing of separating certain Pacific and Emerald People’s

Utility District systems. In each instance, the court did

not abuse its discretion.

The court also refused to admit testimony of Water

Power’s employe about negotiations that he had with a

15a

vice-president of Pacific in March, 1986. The employe

would have testified that Pacific’s officer proposed that

the parties transmit power to Fairview by an aiternate

transmission line. Even assuming that the testimony

would not have been inadmissible under OEC 408,° the

court did not abuse its discretion in excluding it.!°

Affirmed.

, OEC 408 provides:

“(1)(a) Evidence of furnishing or offering or promising to

furnish, or accepting or offering or promising to accept, a

valuable consideration in compromising or attempting to com-

promise a claim which was disputed as to either validity or

amount, is not admissible to prove liability for or invalidity of

the claim or its amount.

“(b) Evidence of conduct or statements made in compro-

mise negotiations is likewise not admissible.

“(2)(a) Subsection (1) of this section does not require the

exclusion of any evidence otherwise discoverable merely be-

cause it is presented in the course of compromise negotia-

tions.”

10 Water Power also assigns error to the court’s statement

that PUC had primary jurisdiction, but it acknowledges that its

assignment asserts no reversible error and should be consid-

ered only in the event of a retrial. It is unnecessary, therefore,

to consider it.

l6a

APPENDIX C

Water Power Co., Inc.,

Multnomah

County

Circuit Court

)

Plaintiff,

)

) No. 8607-04185

)

PacificCorp,

Defendant.

MEMORANDUM

OF THE COURT

INTRODUCTION

Plaintiff’s claims were for breach of contract and

damages under ORS 758.185. The Court dismissed the

statutory claim.

Il.

DISMISSAL OF STATUTORY CLAIM -

PRIMARY JURISDICTION

Defendant moved to dismiss Plaintiff’s statutory

claims under ORS 756.185, which in pertinent part pro-

vides:

“Any public utility . . . which does, or

causes or permits to be done, any matter, act or

thing prohibited by ORS chapter 756, 757, 758,

760, 761, 763, 764, 767 or 773 or omits to do any

act, matter or thing required to be done by such

statutes, is liable to the person injured thereby

in the amount of damages sustained in conse-

quence of such violation. If the party seeking

damages alleges and proves that the wrong or

omission was the result of gross negligence or

17a

wilful misconduct, the public utility, railroad,

air carrier or motor carrier is liable to the person

injured thereby in treble the amount of damages

sustained in consequence of the violation.”

Plaintiffs allege Defendant violated ORS 758.525(2) which

requires an electric utility “shall offer to purchase ener-

gy ... Whether delivered directly or indirectly from a

qualifying facility” at a price not less than the utility’s

“avoided costs” at the time the legal obligation to pur-

chase was incurred.

Related statutes provide that the Public Utility Com-

missioner (PUC) must review and approve “avoided

costs” schedules, establish criteria for qualifying facilities

and the terms and conditions for the purchase of energy

from a qualifying facility. ORS 758.505, 758.525(1),

758.535, 758.545.

Plaintiffs, developers of a hydroelectric project in

Douglas County, and the Defendant, a public utility, exe-

cuted in November 1984 a Power Purchase Agreement

(Exhibit 19) to sell Plaintiff’s electric power to Defendant.

The Agreement provided, among other things, that it was

null and void unless an agreement for transmitting the

power from the facility to Plaintiff was executed by No-

vember 1, 1985, between Plaintiffs, Defendant, Douglas

Electric Cooperative, Inc., and Bonneville Power Admin-

istration (BPA). ;

Plaintiffs assert that Detendant deliberately and in

bad faith failed to enter the transmission agreement in

order to frustrate performance of the Power Purchase

Agreement. Plaintiffs claim defendant’s conduct consti-

tutes a breach of contract and a violation of ORS

758.525(2).

18a

This Court from the outset is troubled whether this is

the appropriate forum for any of Plaintiff’s claims. It is

apparent from the correspondence between Plaintiff, De-

fendant and the PUC that the Commissioner directed

Defendant against its will to enter into the agreement and

mandated the critical terms including price and the dead-

line for executing a transmission agreement. When that

deadline passed, it clearly was in the Commissioner’s

power to require Defendant to extend the deadline or

impose conditions on Defendant which would have en-

sured execution of a transmission agreement. Indeed, the

Public Utility Commissioner offered to intervene and ex-

ercise that power by letter to Plaintiff’s counsel on March

28, 1986. (Exhibit 256) Plaintiff declined, electing to take

its claim to this Court.

The Power Purchase Agreement is hardly a common

law contract. The transaction has none of the earmarks of

consensuality, but was mandated as part of a pervasive

regulatory scheme to promote the utilization of small-

scale power projects by public utilities. Questions of in-

terpretation are better answered by looking to the Com-

missioner’s intent rather than the parties. Whether

Defendant violated this “agreement” or the statute is a

question which initially should be determined by the

Commissioner. If the Commissioner finds a violation and

is unable to remedy same, then Plaintiff would be entitled

to seek relief under ORS 756.185.

This conclusion is buttressed by the role played by

the PUC in the subsequent negotiations over a transmis-

sion agreement. It is undisputed that the PUC made a

continuing offer to resolve any conflicts between Plaintiff

19a

and Defendant regarding the negotiation of the transmis-

sion agreement. Plaintiff requested such assistance to re-

solve a conflict between Plaintiff and Defendant

concerning the point of delivery and cost responsibility.

By letter dated October 7, 1985 (Exhibit 244) the PUC

decided both issues in Defendant’s favor. The clear im-

port of the PUC’s letter is that he would, if necessary,

order Defendant to execute a transmission agreement

provided it incorporated the terms he was therein direct-

ing. The PUC reasoned that Defendant’s position was

reasonable and consistent with the express language of

the Power Purchase Agreement. The decision constitutes

a finding by the PUC that Defendant's position in the

transmission agreement negotiations was neither in viola-

tion of ORS 758.525 nor in bad faith. The PUC’s conclu-

sions are inconsistent with Plaintiff’s contention at trial

that Defendant was acting in bad faith at all times before

and after the PUC’s decision on October 7, 1985.

It may be appropriate for this Court to not accept the

PUC findings with respect to a common law claim for

breach of contract. But such finding precludes this Court

from second-guessing the Commissioner in an action un-

der ORS 756.185. If Plaintiff desired to contest the PUC’s

decision, the appropriate means was through the admin-

istrative process and judicial review under ORS Chapter

756.

For the reasons stated, this Court is of the view that

primary jurisdiction over this entire dispute is with the

PUC. It is interesting to note that Plaintiff has sought

specific performance of Power Purchase Agreement as

alternative relief. Plaintiff has candidly advised the Court

that the purpose of this claim was a concern that its

20a

evidence of damages was insufficient. It is apparent that

under ORS 758.505 et seq., the Commissioner could order

Defendant to take delivery and purchase of the power on

the terms sought by Plaintiff. As stated, the Power Pur-

chase Agreement was not a consensual transaction, but

was mandated as part of a pervasive regulatory scheme

entirely within the jurisdiction of the PUC.

Ill.

LIABILITY

A detailed discussion of the evidence in this case is

unnecessary. Defendant’s motions for a directed verdict

at conclusion of Plaintiff's case were denied, but the

Court suggested to Defendant’s counsel that it would

reconsider this issue if a motion for Judgment N.O.V.

became appropriate. The jury returned a verdict for De-

fendant.

This memo is submitted in the event of an appeal.

The Court is of the view that Defendant would have been

entitled to a Judgment N.O.V. if the jury had returned a

verdict in favor of the Plaintiff on two grounds. First, the

Court is of the opinion that both the statutory and breach

of contract claims should have been dismissed on

grounds of primary jurisdiction. Secondly, viewing the

evidence most tavorably to the Plaintiff, the Court is

convinced that a finder of fact could not as a matter of

law conclude there was liability.

The Power Purchase Agreement, Exhibit 19, provided

that in the event there was not a transmission agreement

between Plaintiff, Defendant, Douglas Electric Coop. Inc.

21a

and BPA by November 1, 1985, the contract was null and

void. Plaintiff contends that Defendant breached the cov-

enant of good faith in performance on the theory that

throughout the negotiations from August 31, 1984, the

date of the Power Purchase Agreement, until November

1, 1985, Defendant had no intention of ever entering into

a transmission agreement, and deliberately negotiated in

a manner which ensured that a transmission agreement

would not be consummated. There is evidence to support

Plaintiff’s contentions that for economic reasons Pacifi-

Corp did not desire to have the power purchase agree-

ment go into effect. There is also evidence that prior to

September 5, 1985, in the proposed Transmission Agree-

ment negotiations, Defendant waivered between Cottage

Grove and Fairview as the point of delivery. However,

subsequent to that date, there is no dispute Defendant

consistently insisted on Cottage Grove as the point of

delivery with excess load delivery to Fairview. Defendant

also insisted on contract language to protect it in the

event its service territory in Cottage Grove was con-

demned. This position was incorporated into Inserts 1

and 2 submitted to the parties and specifically approved

by the PUC. See Exhibits 35 and 4. Defendant had a legal

right to insist on the Inserts 1 and 2 designations of point

of delivery, and as a matter of law it was not bad faith to

insist on such designations. BPA rejected these inserts

and instead proposed delivery to be divided equally be-

tween Cottage Grove and Fairview. There is no evidence

that Bonneville thereafter communicated that it would

accept Defendant’s proposal. To the contrary, the only

evidence of a subsequent communication was a BPA let-

ter sent in February 1986 proposing a wholly different

22a

point of delivery. The only conclusion that can be drawn

from this evidence is that BPA would not accept the

delivery points which Defendant as a matter of law had a

right to insist upon.

The failure of the parties to execute a transmission

agreement was due to lack of agreement, not bad faith by

Defendant.

[Johnson, J.]

23a

APPENDIX D

IN THE CIRCUIT COURT OF THE STATE OF OREGON

FOR THE COUNTY OF UMATILLA

JAMES and JANET BOYD,

husband and wife;

and DENNIS LOGAN,

Plaintiffs,

No. CV 87-414

PACIFICORP, a Maine

corporation, dba PACIFIC

POWER & LIGHT COMPANY,

Defendants.

Excerpt From

LEGAL MATTERS TRANSCRIPT

Cassette No. CV89-543, Side 2

* * *

i am of the opinion the plaintiff does have a private

right of action if they can prove the necessary elements to

entitle them to damages. I think the policy of the statute

would be totally frustrated if it could be avoided simply

by entering into the power purchase agreement. It seems

to me if there is an obligation to furnish power there is an

obligation not only to offer to buy it, but to buy it. So |

think they are entitled to it, if they can prove the ele-

ments. First motion is denied. Second motion is to dis-

miss the claim for punitive damages.

24a

APPENDIX E

Excerpt From The Economist 25

(Oct. 28, 1989)

WASHINGTON DC

THE secretary of energy in the Bush cabinet is doing

something rather unusual for a politician. Admiral James

Watkins is going around the country, listening. Just listen-

ing. In city after city he holds hearings to which experts

and members of the public come to testify. After a year

and a half of this, he will deliver to his boss an “energy

strategy”; something America has never had before.

A cabinet secretary with an open mind has the same

effect on lobbyists as a fleshy postman on a pack of dogs.

From all sides interested parties are marshalling their

arguments to get a piece of the strategy. It is a paradoxi-

cal time for the energy industry. Oil is cheap, gas is

plentiful, electricity is in surplus. This is no time to cry

“scarcity” and be believed. But try opening a new power

station in California or persuading investors to let you

drill an oil well in Texas.

The alarmists, who have been predicting a new ener-

gy crisis for years, have to make a subtler argument,

starting from one of two correct premises. The first is that

America is becoming increasingly dependent on impor-

ted oil which, as other reserves empty, comes increasingly

from four OPEC countries in the Gulf. Oil imports ex-

ceeded domestic production this year for the first time

since 1977. Last year oil companies pumped up twice as

much oil from the ground as they found in new fields.

The strategic petroleum reserve, a series of oil-filled

salt caverns in Texas and Louisiana, is filling at the rate of

25a

22m barrels a year, but shrinking when measured in the

days of imports it could replace. An oil-price increase,

which could boost domestic oil exploration, is not immi-

nent. America is running out of oil; the world is not.

The other correct premise is that nobody is clear

where the next generation’s extra electricity is coming

from. The electricity industry is riding an elongated wave

of boom and bust. Having predicted limitless growth in

demand in the 1970s, it ordered too many new power

stations. When demand flattened out in the 1980s, it

cancelled them. Now demand is picking up again, but

supply is not.

According to the North American Electric Reliability

Council, utility companies have been underestimating de-

mand for several years. In the hot summer of 1988, peak

demand was nearly 6% above forecasts. Voltage was re-

duced in the north-east on several occasions. Yet, even if

their present forecasts prove reliable, peak demand will

regularly exceed capacity after 1996. The north-east will

need new capacity by 1993. The east-central region will

lose 9,000 megawatts of existing capacity in the 1990s if

the Clean Air Act is passed by Congress.

The utility industry foresees the coming shortage of

electricity, but cannot easily see what to do about it.

* * *

To make up the coming shortfall, California and New

England will rely on imports from Canada and the north-

west, especially of cheap natural gas and hydroelectric

power. But sources of imports are shrinking. Hydro-

Quebec, under pressure from Canadians who do not see

EEE

26a

why their rivers should be dammed to send power to

Americans, has given notice that further sales will cease

by the end of the 1990s. BC Hydro in British Columbia

sees no hope of building more dams. The north-west,

whose spare capacity once reached 2,800 megawatts, is

now temporarily in deficit thanks to the thriving alumi-

nium industry. Vigorous drives for energy conservation

may postpone the looming shortages, but only if aided by

price rises.

* * *

Ten years ago, when the Energy Department was

young, many people were predicting that alternative en-

ergy would be competitive by the 1990s. America now

gets a little more than 5,000 megawatts (0.7%) from alter-

native sources and most of that comes from geothermal

(hot springs), a relatively mature technology, and biomass

— waste of various kinds. The reason for the failure of

alternative energy lies partly with physics — the capital

costs of solar power have failed to fall —- and partly with

policy. Federal money for alternative energy research

shrank from more than $600m a year to less than $200m

during the Reagan years, when the Energy Department

became no more than a maker of nuclear weapons and

star-wars devices. Meanwhile, tax incentives for wind

power blew away.

More important, a law that had encouraged entrepre-

neurs to explore alternative energy has lost its teeth. This

was the Public Utility Regulatory Policies Act (PURPA),

which forced utilities to buy power from independent

producers at the “avoided cost”; the cost the utility com-

pany would incur to generate the same amount of power.

27a

The California Energy company provides an example of

how PURPA was supposed to work. Neither utilities nor

oil companies had the expertise or interest to develop

geothermal power. Mr Charles Condy, the founder of

California Energy, put together a company of geothermal

experts with the money that PURPA’s guaranteed con-

tracts could attract and bought the right to explore

400,000 acres of land.

California Energy is now a thriving $400m public

company making fat profits. Its 240-megawatt geothermal

power plant at Coso in California (soon to be almost

trebled in capacity) generates electricity at a competitive

six cents a kilowatt-hour; and its fuel, hot water tapped

from beneath the ground and reinjected nearby, does not

fluctuate in price. The federal government says 40,000

megawatts of geothermal power lie beneath the western

states waiting to be tapped, enough to supply double

those states’ annual consumption. California’s state ener-

gv commission agrees that geothermal power may prove

the cheapest and most abundant in the state. But the

entry barriers are high — Coso cost $615m before it yield-

ed power — and the advantages are no longer in place. In

1985 California’s government placed a moratorium on the

issue of PURPA contracts of the kind used at Coso.

More than half of America’s alternative generating

capacity is in California. But other states have similarly

weakened the law’s application, under pressure from

utilities that disliked the idea of being forced to accept

electricity from others at a time of surplus. The order

book for new alternative-energy plants is drying up. The

energy crunch of the 1990s - and the renewed impetus it

may give to alternatives — will not be brought on by the

28a

scarcity or costs of fossil fuel but by its dirtiness and its

local unpopularity.

29a

APPENDIX F

Excerpt From The New Republic 13

(Nov. 27, 1989)

Running On Empty

By Morton Kondracke

You thought that energy was a problem of the ’70s

swept away forever with the breaking of OPEC unity, the

end of gas lines, the arrival of fuel-efficient cars, and the

return of 95-cent-per-gallon gasoline. Sorry. We’ve been

enjoying only a respite, and we haven’t used it very well

to prepare for the next time. Energy experts now widely

agree that unless the country acts fast, in four to six years

“the problem” will be back: the United States will be

excessively dependent on Persian Gulf suppliers, OPEC

once again will control a tight market, and prices will

soar, causing stagflation in industrialized economies and

bringing new misery to the Third World.

The warning signs are evident: in July 1988, for the

first time, the United States got more than half of its oil

from foreign sources. (In 1973, when the Arabs imposed

an oil embargo and the OPEC cartel first quadrupled oil

prices, the United States was 33 percent dependent.) Pro-

duction from the continental United States has been de-

clining since 1971, and the North Sea and most other non-

Gulf sources also are declining as potential providers of

new oil.

Meanwhile, at a time of renewed environmental ac-

tivism and concern about global warming, there will be

resistance — some legitimate, some reflexive — to exploita-

tion of coal, nuclear power, and other alternative energy

sources. A new U.S. Government report indicates that

within ten years only four countries (Saudi Arabia, Iraq,

the United States Arab Emirates, and Kuwait) will have

30a

enough production capacity to satisfy rising world de-

mand -— that is, to set prices. Right now the price of oil is

relatively low, $19.50 per barrel (the 1979 peak was $40),

but except for filling up a 90-day strategic petroleum

reserve, the United States has been doing little to protect

itself against a new price rise or supply cutoff.

The Bush Administration, to its credit, is aware of the

danger, and the Department of Energy is working on a

national strategy that officials claim will make balanced

use of all available energy sources in order to provide the

country with the power it needs, at a price it can afford,

while protecting the environment and U.S. national secu-

rity interests. Administration officials say that the nation

has had energy “policies” before (Jimmy Carter’s was too

government-managed, they say, and Ronald Reagan’s

was too laissez-faire) but has never had a real strategy

based on an agreed data base and a political consensus.

That, they say, is what the President has charged Energy

Secretary James Watkins to come up with.

The problem, as Bush’s critics see it, is that the strate-

gy won’t be delivered to the President until December

1990 or announced until January 1991 (in the State of the

Union address), and therefore probably couldn’t be en-

acted during Bush’s first term. They also fear it will not

be adequately coordinated, with separate (and possibly

conflicting) transportation and environmental strategies

being worked on elsewhere in the Administration, and

will likely be chewed up in Congress’s disorganized poli-

cy grinder. The result, according to Jessica Tuchman

Mathews, a former Carter national security aside now

with the World Resources Institute, will be “a continued

lack of energy policy, another round of OPEC price rises

3la

in the early or mid-1990s - this time, if OPEC is smart,

not so dramatic as to induce strong conservation mea-

sures — and a fiscal hemorrhage.”

* *” *

32a

APPENDIX G

Excerpt From Energy Policy 370

(Aug. 1989)

This paper examines the role of the 1978 federal Public

Utilities [sic] Regulatory Policies Act (PURPA) in shaping

the economic feasibility and regional distribution of

waste-to-energy plants (WEPs) in the USA. PURPA mark-

ed a watershed in US energy policy by mandating private

utilities to purchase electricity produced by small genera-

tors. This mandate, together with widespread exhaustion

of municipal solid waste landfills, enhances the attrac-

tiveness of WEPs as both an energy source and a waste

management option. PURPA rules and rates vary widely

both across and within states according to the allowance

of generating capacity credits, as well as a utility’s fuel

mix, excess capacity, and load growth. In general, envi-

ronmental imperatives and high avoided-costs of alterna-

tive power production options have led developers

principally to Northeast and Southern locations. In the

next decade, county and municipal governments pressed

by landfill exhaustion will likely be forced to settle for

high disposal, or tipping, fees to offset stable or declining

fuel and capacity credits. Developers, in turn, will be

drawn to areas where PURPA rules and rates will most

insulate WEPs from conventional fuel price swings that

have undermined the revenue projections of many recent

projects.

33a

APPENDIX H

Excerpt From Hydro Review 8

(Feb. 1990)

Last fail, the Federal Energy Regulatory Commission

granted a license to the Eugene (Oregon) Water and Elec-

tric Board for the construction of a 14.65 MW hydro-

electric project on the Corps of Engineers’ Blue River

reservoir in Lane County, Oregon. The National Marine

Fisheries Service vigorously intervened in the licensing

process with repeated study demands and fishery recom-

mendations. Had it achieved its demands, the project

likely would have been killed. Apparently, the NMFS

employed tactics based on an “end-justifies-the-means”

philosophy. But, in doing so, it severely failed its respon-

sibilities as a public agency.

FERC Commissioner Charles A. Trabandt felt so

strongly about the NMFS%S’s abuse of its prerogatives that

he wrote a separate opinion supporting the action of the

Commission of which he is a member. Commissioner

Trabandt’s opinion is important for several reasons. First

he establishes the broad rationale as to why hydroelectric

development is important to the U.S. as a whole. Second

he censures the NMFS for its repugnant behavior in the

Blue River project proceeding. Finally, he calls for — and

commits himself to — continued vigilance in behalf of

beneficial hydro projects. Highlights from Commissioner

Trabandt’s concurring opinion follow.

“Oil imports are rising rapidly again toward the 50%

dependency level. E ectrical demand projections are out-

stripping existing and planned capacity in some regions

of the country. Domestic and international concern about

34a

global warming may lead to further restrictions on the

use Of fossil fuels... .

“In the face of these important factors, hydroelectric

power is a clean, domestic, reliable, renewable and cost-

effective source of electric generation for the nation. It is

becoming increasingly apparent that the United States is

going to need every possible MW from responsible hy-

droelectric generation in the decades ahead. Also, it is

quite conceivable that Congress will once again decide to

support that result with various incentives. But, in the

meantime, it is imperative that the Commission’s licens-

ing process support as much responsible development

today as possible and, at the same time, avoid creating

any further regulatory disincentive to future hydro-

electric development.

* * a

“In conclusion, for this Commissioner, the NMFS

cards on the table in this case are as clear and unam-

biguous as clubs, diamonds, hearts and spades and, when

it is all said and done in this case, the Commission must

not accede to the NMFS efforts to cripple or kill this

project. Consequently, I urge my colleagues and the Com-

mission staff to remain diligent in our efforts to preserve

the significant net benefits of the project in the face of any

further attack by NMFS under the rubric of Section 18. |

also want to assure more generally all those still commit-

ted to a hydroelectric option for this nation that I am

confident of continued vigilance in these efforts in future

cases.”

— <<

35a

36a

APPENDIX I

Excerpt From Public Utilities Fortnightly 56

(Sept. 14, 1989)

Cogeneration is an interesting story about a technolo-

gy from the 1920s, a federal law from the 1970s, and how

in combination they may cost customers of Public Service

Company of Oklahoma (PSO) $300 million in the 1990s.

PSO is not, repeat not, anticogeneration. After all,

cogeneration, which is simply the simultaneous produc-

tion of steam and electricity, makes perfect sense when it

conserves energy and results in lower costs for both in-

dustrial steam users and electric customers.

In some ways, a cogeneration plant is like a car. A car

engine is about 30 to 35 percent efficient in converting

gasoline to motion, but some of the waste heat is used to

warm the car. Similarly, a cogeneration plant converts

come of the unutilized energy from a power plant into

steam, which has value to industry.

Cogeneration is nothing new. The basic technology

has been around since the turn of the century. If you need

both electricity and steam, a well-designed “cogen” plant

can produce both with high efficiency.

One such plant is the Mid-Continent Power Compa-

ny facility at the industrial park in Pryor, Oklahoma. PSO

recently signed an agreement to buy cogenerated electric-

ity from Mid-Continent at less than three cents a kilo-

watt-hour. That’s a fair price, as low or lower than the

cost of electricity at PSO natural gas plants that don’t

cogenerate. Mid-Continent is able to offer this price to

PSO because it will be selling balanced amounts of both

electricity and steam, thereby making the most economic

37a

use of the energy input. As a result the Mid-Continent

contract is expected to save PSO customers $60 million

over the next 20 years, and provide economically priced

steam service to several industries as well.

In other words, “cogen” can make good business

sense if it’s done right and it can save energy too. Back in

1978, during the energy crisis, it seemed like such a good

idea to Washington that Congress passed a law. Operat-

ing under this legislation — the Public Utility Regulatory

Policies Act, or PURPA —- cogeneration developers have

made a lot of money off of electric customers with very

small energy savings.

PURPA offers a range of federal entitlements to en-

courage alternative energy sources: solar, wind, small

hydroelectric plants, and cogen - especially cogen. The

law gives cogeneration developers freedom from regula-

tion that applies to other electricity producers. It also

requires the local utility to buy cogeneration eleciricity.

This is a requirement. As long as a plant fits the definition

of “cogenerator,” the local electric utility is forced by law

to buy its electricity, whether the utility needs it or not, at

the cost the utility avoids by not having to generate the

electricity itself.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.