Connecticut Light and Power Co. v. Department of Public Utility Control, 13480

• Citation: 210 Conn. 349,554 A.2d 1089
• Decision Date: 14 March 1989
• Docket Number: No. 13480,13480
• Court: Supreme Court of Connecticut
• Parties: CONNECTICUT LIGHT AND POWER COMPANY v. DEPARTMENT OF PUBLIC UTILITY CONTROL et al.

Page 1089

554 A.2d 1089

210 Conn. 349

CONNECTICUT LIGHT AND POWER COMPANY v. DEPARTMENT OF PUBLIC UTILITY CONTROL et al.

No. 13480.

Supreme Court of Connecticut.

Argued Dec. 7, 1988.

Decided March 14, 1989.

Allan B. Taylor, with whom was Philip M. Small, Senior Counsel, Hartford, for appellant (plaintiff).

Phyllis E. Lemell, Asst. Atty. Gen., with whom, on the brief, was Joseph I. Lieberman, Former Atty. Gen., for appellee (named defendant).

Bill Kowalski, with whom, on the brief, was James F. Meehan, Boston, Mass., for appellee (defendant of division consumer counsel).

Robert E. Wright, with whom, on the brief, was Lawrence J. Golden, Hartford, for appellee (defendant Southeastern Connecticut Regional Resources Recovery Authority).

Peter A. Gutermann, with whom, on the brief, was George C. Hastings, Hartford, for appellees (intervening defendant town of East Lyme et al.).

Kathleen Eldergill, Manchester, for appellee (intervening defendant town of Preston).

Before PETERS, C.J., and CALLAHAN, GLASS, COVELLO and HULL, JJ.

COVELLO, Associate Justice.

This is an appeal from a declaratory ruling of the department of public utility control (DPUC). It comes to us by way of reservation from the Superior Court. The dispositive issue is whether DPUC correctly concluded that General Statutes § 16-243e required the plaintiff, Connecticut Light and Power Company (CL & P), to purchase all of the electrical output of the defendant Southeastern Connecticut Regional Resources Recovery Authority (SCRRRA) at the so-called "municipal rate." We conclude that General Statutes § 16-243e does not require this and therefore order a remand for further proceedings.

Examination of the record discloses that on June 8, 1987, SCRRRA filed a petition with DPUC pursuant to General Statutes §§ 4-176, ¹ 16-243a(c), ² and 16-243e. ³ The petition sought a declaratory ruling determining the amounts and the prices that CL & P would be required to pay for the electrical output generated by the SCRRRA municipal solid waste disposal facility.

In accordance with General Statutes § 16-2(c), ⁴ the matter was assigned to a panel of three of DPUC's five commissioners for a hearing and decision. Pursuant to General Statutes § 16-8(a), ⁵ a member of DPUC's staff, who was also a member of the Connecticut bar, was designated as a hearing examiner to conduct the hearing, ascertain the facts, and make a report thereon to the commissioners. Following six public hearings on the matter, the three commissioners issued their unanimous ruling on October 9, 1987. The gravamen of their decision was that General Statutes § 16-243e mandated that (1) the plaintiff CL & P was to purchase all of SCRRRA's electrical output, and (2) CL & P was to pay SCRRRA for the electricity at the "municipal rate."

On November 5, 1987, CL & P filed an administrative appeal in the Superior Court pursuant to General Statutes § 16-35 ⁶ and General Statutes § 4-183(a), ⁷ naming as defendants, DPUC, consumer counsel and SCRRRA. Thereafter, on December 14, 1987, the trial court, Shaughnessy, J., granted motions to intervene filed by the defendant towns of Groton, Guilford, East Lyme, Griswold, Ledyard, New London, North Stonington, Stonington and Preston. On April 11, 1988, pursuant to their stipulation and at the request of all the parties, the court, Allen, J., reserved the matter for the consideration and advice of the Appellate Court in accordance with Practice Book §§ 4147 ⁸ and 4148. ⁹ On August 4, 1988, we transferred the matter to ourselves pursuant to Practice Book § 4023.

The defendant SCRRRA is a municipal resource recovery authority established by the joint resolution of its eleven member towns, ¹⁰ in accordance with the provisions of General Statutes § 7-273aa. ¹¹ SCRRRA proposes to build in the town of Preston a $72,000,000 private power production facility ¹² that is designed to dispose of municipal solid waste. The waste will be burned through the use of a mass-burning grate system and boiler combination to produce steam that will in turn energize turbines and thereby generate electricity. The Preston facility will not only serve the salutary function of producing electricity, but will also provide the member towns with a means of disposing of their solid waste at a time when their available landfill space is dwindling rapidly.

The plaintiff CL & P is a public service company that sells gas and electricity to its various customers throughout Connecticut. It either purchases the electricity at a wholesale price or generates the electricity at a cost that is generally lower than the price for which it sells it to others. In regulatory parlance, this is called the "avoided cost" of the electricity. See General Statutes § 16-243a(a). ¹³ This must be contrasted with the higher "municipal rate" which is the amount that CL & P charges it municipal customers. See General Statutes § 16-243e, footnote 3, supra.

CL & P's customers include residents in eight of the eleven communities belonging to SCRRRA. Its service area, however, does not include the town of Norwich, the Jewett City borough of Griswold or the entire city of Groton and a portion of the town of Groton. Approximately 30 percent of the total tonnage to be consumed at the SCRRRA solid waste facility will come from these three communities whose residents are not CL & P customers.

As owner of the proposed private power production facility, SCRRRA will be a private power producer within the meaning of General Statutes § 16-243b(a)(3). ¹⁴ CL & P, as a public service company, is required under the provisions of § 16-243a(b) to "[p]urchase any electrical energy and capacity made available, directly by a private power producer [SCRRRA]." The rate to be paid for the electricity generated by the private power producer is to be "based on the full avoided costs of the electric public service company...." General Statutes § 16-243a(c)(2).

SCRRRA's facility, however, in addition to being a private power production facility will also be a resources recovery facility within the meaning of General Statutes § 22a-260(11). ¹⁵ This being the case, a public service company such as CL & P is required to purchase the electrical output of such a facility "at the same rate that the electric company charges the municipality or municipalities for electricity." General Statutes § 16-243e. ¹⁶ Thus, by paying the higher "municipal rate," the stockholders and customers of public service companies subsidize the resources recovery facility by purchasing its electrical output at a price higher than the public service company could purchase it or generate it elsewhere.

The DPUC ruling concluded that § 16-243e required CL & P to purchase all of SCRRRA's electrical output for twenty-five years and to pay for the same at the "municipal rate" for the first twenty years of the contract. Over the term of the contract, the resulting CL & P subsidy is estimated to be $105,000,000.

CL & P appealed this ruling contending that § 16-243e as construed by DPUC: (1) preempts the letter and purposes of the federal Public Utility Regulatory Policies Act of 1978 in violation of the supremacy clause of the United States constitution; (2) violates the commerce clause of the United States constitution; (3) unconstitutionally takes CL & P's property for public use without just compensation; and (4) unconstitutionally deprives CL & P of the equal protection of the laws. CL & P further argues that DPUC misconstrued § 16-243e in entering its order. We agree with CL & P that the statute was misapplied to the factual circumstances evident here and do not, therefore, reach the constitutional issues raised. We, therefore, remand the matter for further proceedings.

CL & P argued to DPUC that only 70 percent of the municipal solid waste that would fuel the resources recovery facility came from municipalities served by CL & P. CL & P argued that it should therefore have to pay for only 70 percent of the electrical output at the higher municipal rate required by § 16-243e and that it should be able to purchase the remaining 30 percent of the output at the avoided cost rate prescribed by § 16-243a. DPUC rejected this argument stating in its declaratory ruling that "[t]he statute [§ 16-243e] states simply that an electric company 'purchasing electricity' shall enter into contracts at the statutory rate. It makes no mention, by way of limitation on this obligation, in regard to where the waste for the electricity originates from." We disagree.

Generally, this court accords "considerable deference to the construction given a statute by the administrative agency charged with its enforcement." Sutton v. Lopes, 201 Conn. 115, 120, 513 A.2d 139, cert. denied sub nom. McCarthy v. Lopes, 479 U.S. 964, 107 S.Ct. 466, 93 L.Ed.2d 410 (1986). However, "the construction of a statute on an issue that has not previously been subjected to judicial scrutiny is a question of law on which an administrative ruling is not entitled to special deference." Schlumberger Technology Corporation v. Dubno, 202 Conn. 412, 423, 521 A.2d 569 (1987).

General Statutes § 16-243e establishes a special rate to be paid by electric companies for the purchase of "electricity generated by a resources recovery facility ... owned by or operated by or for the benefit of a municipality...." This rate is "the same rate that the electric company charges the municipality or municipalities for electricity." General Statutes § 16-243e. The special rate to be paid by the electric company under § 16-243e, therefore, is the same rate that it charges the municipality for electricity. We emphasize that these rates are to be equivalent. If the electric company is not charging the municipality anything for its electricity, it follows that the municipality may not charge the electric company under § 16-243e for the electricity it may produce. Since CL & P was charging Groton, Norwich and Jewett City nothing for...