25 A.3d 482 (R.I. 2011), 2010-273, In re Review of Proposed Town of New Shoreham Project

Docket Nº:2010-273-M.P.
Citation:25 A.3d 482
Opinion Judge:INDEGLIA, Justice.
Attorney:Michael R. McElroy, Esq., Providence, for Petitioners, Toray Plastics (America), Inc. and Polytop Corporation. Gerald J. Petros, Esq., Providence, for Respondents, The Narragansett Electric Company d/b/a National Grid and Deepwater Wind Block Island, LLC. John A. MacFadyen, Esq., Providence, for ...
Case Date:July 01, 2011
Court:Supreme Court of Rhode Island

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25 A.3d 482 (R.I. 2011)


No. 2010-273-M.P.

Supreme Court of Rhode Island.

July 1, 2011

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Michael R. McElroy, Esq., Providence, for Petitioners, Toray Plastics (America), Inc. and Polytop Corporation.

Gerald J. Petros, Esq., Providence, for Respondents, The Narragansett Electric Company d/b/a National Grid and Deepwater Wind Block Island, LLC.

John A. MacFadyen, Esq., Providence, for Respondents, Governor Lincoln D. Chafee, Rhode Island Senate President M. Teresa Paiva-Weed and Rhode Island Speaker of the House of Representatives Gordon D. Fox.



INDEGLIA, Justice.

Before this Court, pursuant to a statutory petition for a writ of certiorari, G.L.1956 § 39-5-1, are Toray Plastics (America), Inc. (Toray) and Polytop Corporation (Polytop), collectively the petitioners. The petitioners seek our review of a decision by the Rhode Island Public Utilities Commission (the commission) approving an amended power-purchase agreement (PPA) between Narragansett Electric

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Company d/b/a National Grid (National Grid) and Deepwater Wind Block Island, LLC (Deepwater Wind), collectively the respondents. Per this amended PPA (2010 PPA), Deepwater Wind agreed to construct a small-scale, offshore wind farm in state waters near Block Island and then sell the electricity generated by the wind farm to National Grid, a statewide power distributor. National Grid, in turn, pledged to purchase the generated electricity and apportion the entire cost of building the multimillion-dollar wind farm to in-state ratepayers over the course of the twenty-year contract. Motivated by dissatisfaction with National Grid's above-market cost-distribution plan, the petitioners challenge the commission's assessment that the 2010 PPA met all statutory preconditions for approval.

Toray and Polytop first make the overarching argument that the commission's decision is flawed inherently because, rather than conducting an independent review of the 2010 PPA, the commission allegedly applied a deferential review standard excessively weighted in favor of approval. Their particular quarrels include the commission's indifference to the 2010 PPA's lack of mandatory provisions for constructing and allocating the costs of a transmission cable between Block Island and the mainland of the state; and the commission's findings that the 2010 PPA is commercially reasonable, provides economic-development benefits and environmental benefits, and establishes a proper mechanism to distribute savings realized in the cost of construction, if any, to ratepayers.

After thoroughly examining the record and carefully considering the parties' written submissions 1 and oral arguments, we affirm the commission's decision to approve the 2010 PPA.


Facts and Procedural History

Before immersing ourselves in the controversy involving National Grid, Deepwater Wind, Toray, and Polytop, this Court first will provide some background information outlining the responsibilities of the commission and introducing Rhode Island's renewable energy legislation. Then, we will recount the rising action that led to petitioners' instant legal challenges. Comprising the first act, this Court will describe the 2009 PPA negotiated between Deepwater Wind and National Grid, National Grid's request for the commission's approval of the 2009 PPA, and the commission's subsequent rejection based on its assessment that the 2009 PPA was not " commercially reasonable." Continuing on to the second act, we next will present the General Assembly's response to the commission's rejection, the resulting amendment to the controlling statute, National Grid and Deepwater Wind's subsequent modifications to the 2009 PPA that produced the 2010 PPA, and National Grid's attempt at winning the commission's approval of the 2010 PPA.

Lastly, we will describe the courtroom drama that ensued after the commission, applying the controlling statute's newly adopted four-factor test and revision to the definition of " commercially reasonable," approved the 2010 PPA. We shall introduce the actors initially petitioning this Court for a writ of certiorari to challenge the commission's decision: Toray, Polytop, Conservation Law Foundation (CLF), and

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the former Rhode Island Attorney General, Patrick C. Lynch. Then, we will revisit the jurisdictional vignette on standing that was precipitated by the renunciation of suit by the current Attorney General, Peter F. Kilmartin. After briefly reviewing the reasons why this Court saw fit to usher CLF from the stage based on a lack of standing, we shall proceed to the legal questions presented by petitioners, the only parties deemed to have standing to be heard in this forum.


The Commission

Created by G.L.1956 chapter 1 of title 39, the commission is the " quasi-judicial" counterpart to the Division of Public Utilities and Carriers (the division).2 Section 39-1-3(a); see also In re Kent County Water Authority Change Rate Schedules, 996 A.2d 123, 126 (R.I.2010) (explaining that the General Assembly " segregate[d] the judicial and administrative attributes of ratemaking and utilities regulation * * * in the [commission] and the [division]" ) (quoting Narragansett Electric Co. v. Harsch, 117 R.I. 395, 402, 368 A.2d 1194, 1199 (1977)). Together, these two regulatory bodies form a bicameral state agency that endeavors to achieve the public policy goals of § 39-1-1: that public utilities are fairly regulated to ensure that cost-effective energy supplies are available, that the rates charged for energy supplies and services are reasonable, and that evenhanded competition between electric distribution companies is maintained. Section 39-1-1(b). To attain these aims, both entities are given " the exclusive power and authority to supervise, regulate, and make orders governing the conduct of [electric distribution] companies," but are required to " provid[e] full, fair, and adequate administrative procedures and remedies" as a check to their powers. Section 39-1-1(c); see also § 39-1-27.6 (articulating the standards of conduct for electric distribution companies). It is the role of the commission to provide the forum for redress and also to ensure that an avenue for judicial review exists for those aggrieved by its administrative rulings. Section 39-1-3(a); § 39-1-1(c).

As required by statute, the commission is composed of three commissioners or " electors" 3 who are selected based on " their qualifications and experience in law and government, energy matters, economics and finance, engineering and accounting." Section 39-1-4(a). This panel of three " sit[s] as an impartial, independent body, and is charged with the duty of rendering independent decisions affecting the public interest and private rights based upon the law and upon the evidence presented before it." Section 39-1-11. The commission " hold[s] investigations and hearings involving the rates, * * * and the sufficiency and reasonableness of facilities and accommodations of * * * electric distribution." Section 39-1-3(a). Only one commissioner must be present at these hearings to constitute a quorum; however, " the concurrence of a majority of the commission shall be required for the rendering of a decision." Section 39-1-11.

Pertinent to the issues before us, this Court observes that in both 1996 and 2006, the General Assembly expressly augmented the commission and division's stated

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purposes under § 39-1-1 to take into account rising energy costs and their correlative effect on a healthy economy. To that end, the Legislature directed the commission's decision-making to embrace several factual findings including:

" [1] [t]hat lower retail electricity rates would promote the state's economy and the health and general welfare of the citizens of Rhode Island[,]" § 39-1-1(d)(1); and

" [2] [t]hat prices of energy, including especially fossil-fuels and electricity, are rising faster than the cost of living and are subject to sharp fluctuations, which conditions create hardships for many households, institutions, organizations, and businesses in the state," § 39-1-1(e)(1); and

" [3] [t]hat the state's economy and the health and general welfare of the people of Rhode Island benefit when energy supplies are reliable and least-cost," § 39-1-1(e)(3); and

" [4] [t]hat it is a necessary move beyond basic utility restructuring in order to secure for Rhode Island, to the maximum extent reasonably feasible, the benefits of reasonable and stable rates, least-cost procurement, and system reliability that includes energy resource diversification * * *." Section 39-1-1(e)(4).

In tandem with directing the commission to focus on " energy resource diversification," reduced reliance on fossil fuels, and ameliorating the detrimental effect of high electricity rates, the General Assembly also took specific legislative steps to steer electric distribution companies toward renewable sources and away from fossil-fuel energy generation. See, e.g., G.L.1956 chapter 26 of title 39; G.L.1956 chapter 26.1 of title 39. The commission was tasked with supervising the electric distribution companies' compliance with these renewable energy development statutes. See chapter 26 of title 39; chapter 26.1 of title 39.


Rhode Island Renewable Energy Legislation4

The benefits of renewable energy are well documented. One Rhode Island commentator recently summarized that " [this] country's ever-increasing demand for electricity" and " [d]ependence on foreign countries' fossil fuel resources...

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