In re Petition of N. States Power Co.

• Decision Date: 31 May 2016
• Docket Number: A15-1831
• Parties: In the Matter of the Petition of Northern States Power Company, d/b/a Xcel Energy, for Approval of Its Proposed Community Solar Garden Program.
• Court: Minnesota Court of Appeals

In the Matter of the Petition of Northern States Power Company, d/b/a Xcel Energy,

for Approval of Its Proposed Community Solar Garden Program.

A15-1831

STATE OF MINNESOTA IN COURT OF APPEALS

May 31, 2016

This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2014).

Affirmed

Halbrooks, Judge

Public Utilities Commission

File No. E-002/M-13-867

Christopher W. Madel, Jennifer M. Robbins, William Bornstein, Cassandra M. Batchelder, Robins Kaplan LLP, Minneapolis, Minnesota (for relator Sunrise Energy Ventures, LLC)

Lori Swanson, Attorney General, Anjali V. Shankar, Assistant Attorney General, St. Paul, Minnesota (for respondent Minnesota Public Utilities Commission)

Vernle C. Durocher, Jr., F. Matthew Ralph, Phil Steger, Brian B. Bell, Dorsey & Whitney LLP, Minneapolis, Minnesota (for respondent Northern States Power Company)

Considered and decided by Halbrooks, Presiding Judge; Bjorkman, Judge; and Toussaint, Judge.^*

UNPUBLISHED OPINION

HALBROOKS, Judge

Relator, a developer of solar-energy facilities, challenges an August 6, 2015 order issued by respondent Minnesota Public Utilities Commission (PUC), arguing that the PUC (1) engaged in unlawful rulemaking, (2) violated relator's due-process rights, and (3) acted in excess of its statutory authority by limiting relator's interconnection rights. We affirm.

FACTS

Minnesota's community solar garden (CSG) statute, Minn. Stat. § 216B.1641 (2014), was enacted in 2013 to promote solar growth in the state by providing individual customers and communities the opportunity to work together to have a community solar resource. Under this model, non-utility-scale customers who typically face economic barriers to participation in a solar program would purchase or lease a subscription at a central solar installation and receive a bill credit for the electricity generated in proportion to the size of their subscription. See Minn. Stat. § 216B.1641(a)-(b).

Under the statute, respondent Northern States Power Company d/b/a Xcel Energy was required to file a plan with the PUC outlining its proposed CSG program. Minn. Stat. § 216B.1641(a). Xcel met the statutorily defined deadline by submitting a proposed plan on September 30, 2013. The PUC received voluminous comments between October 4 and December 3, 2013, from various high-level stakeholders in the solar industry who provided input on Xcel's proposed plan. Based on this feedback, the PUC issued anorder on April 7, 2014, rejecting Xcel's proposal and requiring the company to file a revised CSG plan. Xcel complied by filing a revised plan on May 7, 2014.

After additional stakeholder commentary, the PUC issued an order on September 17, 2014, approving Xcel's modified CSG plan. Both this order and the previous April 7 order permitted co-location of CSGs but were silent on the topic of co-location caps. The program launched on December 12, 2014, and Xcel began accepting applications from individuals and developers hoping to construct and operate CSGs. The overall response to the CSG program was unquestionably more positive than originally anticipated, and Xcel became concerned that utility-scale producers were taking advantage of the lucrative benefits provided by the program. Relator Sunrise Energy Ventures, LLC submitted 100 applications in the first hour of the program.

Xcel first raised the issue of utility-scale developers on January 13, 2015, in supplemental comments submitted to the PUC. Xcel urged the PUC to place limitations on co-located solar gardens in the CSG program for multiple reasons, including (1) possible complications created by interconnecting utility-scale solar projects to the distribution system, (2) the company's belief that permitting large-scale operations to participate in the program would run counter to legislative intent, and (3) potential rate impacts to non-participating customers.

Xcel requested that the PUC affirm its intention to process only those applications proposing CSGs of no more than 1 megawatt (MW) in size, meaning that co-located applications from a single developer would be processed so long as they, in the aggregate, did not exceed 1-MW. On June 22, 2015, Xcel entered into a partialsettlement with several stakeholders in the solar industry. Sunrise was not part of this process. The agreement proposed to limit the aggregate capacity of co-located CSGs to 5-MW for applicants already in the approval queue and 1-MW for applications submitted after September 25, 2015, allowing Xcel to unilaterally scale down any larger CSGs and refund application deposits and fees associated with the scaled-down portions. The PUC held a public hearing in late June 2015 to discuss proposed limitations to the program. By the end of the hearing, the PUC had received, either orally or through written comments, extensive feedback from many stakeholders, including government entities, solar-industry representatives, nonprofit organizations, Xcel, and members of the public.

The PUC approved a modified plan adopting portions of the partial settlement agreement, including the CSG co-location caps. Sunrise filed a petition for reconsideration with the PUC on August 26, 2015, that the commission denied on October 15, 2015.¹ The PUC reiterated that its August 6, 2015 order modifying Xcel's plan to include co-limitation caps was based on its determination that "allowing unlimited co-location would render the 1 MW statutory limit superfluous, undermine the legislative intent to foster small, widely distributed solar gardens rather than utility-scale solar developments, and create a risk of significant rate increases to ratepayers." The PUC also denied Sunrise's request to stay the August 6 order pending appeal to this court. This certiorari appeal follows.

DECISION

"On writ of certiorari, we determine whether the Commission violated the constitution, exceeded its authority, engaged in unlawful procedure, erred as a matter of law, issued a decision unsupported by substantial evidence, or acted arbitrarily or capriciously." In re Investigation into Intra-LATA Equal Access & Presubscription, 532 N.W.2d 583, 588 (Minn. App. 1995), review denied (Minn. Aug. 30, 1995). An agency's decision bears a presumption of correctness, and we defer to the agency's expertise in fact finding. Id. "When reviewing questions of law, however, we are not bound by the agency's decision and need not defer to the agency's expertise." Id.

I. RULEMAKING

Sunrise makes several arguments concerning the PUC's actions, including that the PUC (1) violated the Minnesota Administrative Procedure Act (MAPA) by failing to make required findings and failing to follow procedures required by Minn. Stat. § 216B.1641(e), (2) engaged in unlawful retroactive rulemaking, and (3) arbitrarily and capriciously decided to implement limitations on CSG co-location. Because these nuanced arguments depend on whether the PUC engaged in rulemaking, we first address that issue.

Under MAPA, a "'rule' means every agency statement of general applicability and future effect, including amendments, suspensions, and repeals of rules, adopted to implement or make specific the law enforced or administered by that agency or to govern its organization or procedure." Minn. Stat. § 14.02, subd. 4 (2014). Thus, if an agency statement (1) has general applicability; (2) has future effect; and (3) is intended tointerpret or create law, policy, or procedure, it is a rule. 21 William J. Keppel, Minnesota Practice § 5.01 (2d ed. 2007).

Under this "expansive definition," an agency must generally promulgate legislative rules and interpretive rules. In re PERA Salary Determinations Affecting Retired & Active Emps. of the City of Duluth, 820 N.W.2d 563, 570 (Minn. App. 2012). "Legislative rules are those promulgated pursuant to delegated powers to make substantive law." Minn. Transitions Charter Sch. v. Comm'r of Minn. Dep't of Educ., 844 N.W.2d 223, 233 (Minn. App. 2014) (quotation omitted), review denied (Minn. May 28, 2014). "Interpretive rules are those that make specific the law enforced or administered by the agency." Id. (quotation omitted). A properly promulgated rule, whether legislative or interpretive, is a powerful rule that has the full "force and effect of law." Minn. Stat. § 14.38, subd. 1 (2014).

The parties dispute whether the PUC's orders constitute rulemaking or merely clarify or interpret newly enacted statutory law. Sunrise argues that they constitute interpretive rules and that the PUC engaged in improper rulemaking by permitting caps on co-location, maintaining that the statute only restricts each parcel to a "nameplate capacity of no more than one megawatt." Minn. Stat. § 216B.1641(b). Sunrise's argument fails in several respects.

Newly Enacted Statute

An agency need not promulgate administrative rules as soon as a new statute goes into effect. "Not every principle can or should be cast immediately into the mold of a rule because some principles must be adjusted to meet particular situations." Intra-LATAEqual Access & Presubscription, 532 N.W.2d at 590 (emphasis added). After Xcel's CSG program was unveiled, it quickly became apparent that the initial response to the program far outpaced what was anticipated. Xcel's original forecasted program participation ranged from 40- to 100-MWs over the span of five to ten years. By December 2014, Xcel noted that it had received over 400 applications representing more than 400-MW. By June 2015, the aggregate generating capacity had risen to nearly 1,000-MWs (1-GW) worth of applications—still in the program's initial roll-out period. Sunrise alone submitted 100 applications constituting 100-MWs within the first hour of the program's opening. These facts indicate that the PUC was not engaged in rulemaking but was modifying (or approving Xcel's request to modify) the plan to respond to implementation. In light of the overwhelming response to Xcel's CSG program, we conclude that the PUC made lawful and...