Idaho Power V New Energy Two Ipuc

Key Facts

Transaction Type

Issues

Holdings

Remedies

• The Supreme Court of Idaho affirmed the order of the Public Utilities Commission of the State of Idaho, which held that the Commission had jurisdiction to decide whether force majeure clauses in the Appellants' contracts with Idaho Power Company excused them from their contractual obligations to have their power generation facilities constructed and in operation by specified dates.
• The Supreme Court awarded costs on appeal to the Respondents, which include Idaho Power Company and the Idaho Public Utilities Commission, following their successful defense against the appeal by New Energy Two, LLC and New Energy Three, LLC.

Legal Principles

Precedent Name

• Afton I/III
• McNeal v. Idaho Public Utilities Comm'n
• Grever v. Idaho Telephone Company
• Afton Energy, Inc. v. Idaho Power Co.
• Rawlings v. Layne & Bowler Pump Co.
• Empire Lumber Co. v. Washington Water Power Co.
• Bunker Hill Co. v. Washington Water Power Co.
• FERC v. Mississippi

Key Disputed Contract Clauses

• Section 19.1 of the agreements stated that all disputes related to or arising under the Agreement, including but not limited to the interpretation of the terms and conditions of the Agreement, would be submitted to the Commission for resolution. The court held that by this provision, the parties had agreed to have the Commission resolve disputes regarding the interpretation of their agreements, including the meaning of the force majeure clause. This contractual provision was a primary basis for the Commission's jurisdiction.
• The Firm Energy Sales Agreements between Idaho Power Company and New Energy Two, LLC and New Energy Three, LLC contained force majeure clauses. New Energy claimed a force majeure event was occurring due to ongoing proceedings before the Public Utilities Commission that affected renewable energy project viability in Idaho. The court analyzed whether these force majeure clauses excused New Energy from their contractual obligations to have their power generation facilities constructed and in operation by specified dates (October 1, 2012 and December 1, 2012, respectively).

Cited Statute

• Public Utility Regulatory Policies Act of 1978 (PURPA)
• Telecommunications Act of 1996
• Idaho Code § 61-502
• Idaho Code § 61-621
• Idaho Code § 61-612
• Idaho Code § 61-503

Judge Name

• Chief Justice Burdick
• Justice Eismann
• Justice J. Jones
• Justice Pro Tem Kidwell
• Justice W. Jones

Passage Text

• We hold that the Commission did not err in holding that it had jurisdiction to determine whether or not an event of force majeure occurred that excused New Energy's performance under the two Firm Energy Sales Agreements at issue in this case.
• Each of the agreements in this case included as section 19.1 a provision stating, 'All disputes related to or arising under this Agreement, including, but not limited to, the interpretation of the terms and conditions of this Agreement, will be submitted to the Commission for resolution.' The Commission held that by this provision, the parties had agreed to have the Commission resolve disputes regarding the interpretation of their agreements, including the meaning of the force majeure clause.
• One exception is that the Commission has authority to interpret contracts where the parties have agreed to permit the Commission to do so. Bunker Hill Co. v. Washington Water Power Co., 98 Idaho 249, 252, 561 P.2d 391, 394 (1977); Afton Energy, Inc. v. Idaho Power Co., 111 Idaho 925, 929, 729 P.2d 400, 404 (1986) (recognizing this rule). Although we have not explained the basis of this exception, it is obvious. 'Freedom of contract is a fundamental concept underlying the law of contracts and is an essential element of the free enterprise system.' Rawlings v. Layne & Bowler Pump Co., 93 Idaho 496, 499, 465 P.2d 107, 110 (1970).

Damages / Relief Type