By Robert Mullin
A federal judge in Southern California declined to dismiss a lawsuit alleging that CAISO unjustly deprived the Imperial Irrigation District (IID) of its full export rights on a transmission line linking the utility’s balancing authority area (BAA) with the ISO.
U.S. District Court Judge Anthony Battaglia on Monday ruled that IID’s suit had “sufficiently alleged monopolistic conduct that threatens competition” and directed the utility to file an amended claim addressing deficiencies within three weeks.
“Specifically, by depriving IID of its expanded [maximum import capability], generators of renewable energy located within IID’s BAA who cannot interconnect directly with the CAISO grid cannot compete with other generators for the business of load-serving entities located in or through the CAISO grid,” Battaglia wrote.
IID’s suit contends that — through a series of memos and public statements from 2011 to 2014 — CAISO “induced” the publicly owned utility to perform $30 million in upgrades to Path 42, one of two transmission lines connecting IID with the ISO. CAISO estimated that the improvements would increase IID’s maximum import capability (MIC) into the ISO from 462 MW to 1,400 MW. The upgrades were put in service in January 2015.
In July 2014, CAISO downgraded IID’s future “expanded MIC” to its previous level, citing the closure of the San Onofre nuclear generating station as the reason for the decision. That move came after IID had already begun work on the upgrades. At the same time, the ISO said that other network additions — although not IID’s upgrades — would restore future flows out of the IID area by up to 1,000 MW, extra capacity that CAISO reserved for itself.
Skeptical of the claim that San Onofre’s closure was the basis for downgrading IID’s MIC, the utility initiated an investigation revealing that CAISO had miscalculated the flows on one of its own transmission lines — a misstep that IID alleges stemmed from the ISO violating its own operating procedures. A correct calculation would have restored the utility’s expanded MIC to 1,400 MW, IID argued.
IID contends that elimination of the expanded MIC prompted renewable energy developers to bypass the utility’s system to directly connect with the ISO, denying IID “significant revenue” from transmission services. IID further alleged that CAISO’s action was part of broader strategy to “further its monopolistic position” by forcing the utility to join the ISO.
While the court dismissed IID’s breach of tariff and federal antitrust claims, it let stand claims against CAISO for breach of contract, conversion, unjust enrichment and restitution.
“The court finds CAISO’s multiple public statements from 2011 through 2013 acknowledging the Path 42 project and the expected increase to IID’s MIC are sufficient to support, at this stage of the litigation, an inference that CAISO implicitly assented to the alleged contract, namely, that CAISO would increase IID’s MIC in exchange for IID’s upgrades to its side of Path 42,” Battaglia wrote.
The court also affirmed its jurisdiction over the proceeding.
“While it is true that transmission of electric energy in interstate commerce is generally a matter of federal concern, FERC simply has no jurisdiction over the transmission facilities at issue here, namely, IID’s facilities, because FERC’s jurisdiction extends only to ‘public utilities,’” Battaglia wrote — noting that, as a municipal utility, IID did not fit the definition of the term.
“IID is pleased that the case against CAISO can now move forward,” IID General Manager Kevin Kelley said. “There is no doubt that the district, its renewable energy generators and ultimately its ratepayers have been harmed by the state’s grid operator in denying transmission access to IID’s balancing area.”
CAISO said it disagreed with the court’s ruling that it has jurisdiction over IID’s remaining claims. “We believe these claims are likewise completely without merit, and we expect that they will be dismissed by the court as further proceedings unfold,” CAISO said in a statement.
