Petition of Ball Mountain Dam Hydroelectric Project, 88-158

• Decision Date: 13 April 1990
• Docket Number: No. 88-158,88-158
• Citation: 154 Vt. 189,576 A.2d 124
• Court: Vermont Supreme Court
• Parties: , 119 P.U.R.4th 575 In re Petition of BALL MOUNTAIN DAM HYDROELECTRIC PROJECT.

Page 124

576 A.2d 124

154 Vt. 189, 119 P.U.R.4th 575

In re Petition of BALL MOUNTAIN DAM HYDROELECTRIC PROJECT.

No. 88-158.

Supreme Court of Vermont.

April 13, 1990.

Jon S. Readnour of Carroll, George & Pratt, Rutland, for plaintiffs-appellants.

Donald L. Rushford and Morris L. Silver, Rutland, for defendant-appellee CVPS.

James Volz, Montpelier, for defendant-appellee Dept. of Public Service.

Before ALLEN, C.J., PECK, DOOLEY and MORSE, JJ., and SPRINGER, District Judge (Ret.), Specially Assigned.

MORSE, Justice.

Appellants are the towns of Londonderry, Windham, Wardsboro, Newfane and Dummerston. They appeal a decision by the Public Service Board that, as a union municipal district, they do not possess the requisite authority to finance, construct, own and operate a qualifying small power production facility. We affirm the Board's decision.

Appellants propose to establish themselves as a union municipal district under 24 V.S.A. chapter 121 to create the Ball Mountain Hydroelectric Project. The proposed power generation project would be located at the site of the existing Ball Mountain Dam on the West River in Jamaica, Vermont. The existing dam is currently managed by the United States Army Corps of Engineers but has no present energy generation capacity. Appellants wish to sell the electrical power generated by the Dam through the Vermont Power Exchange, Inc. (VPX) to retail electric utility companies under Vermont Public Service Board Rule 4.100.

The project would be a "qualifying small power production facility" under the Public Utility Regulatory Policies Act of 1978 (PURPA), 16 U.S.C. §§ 791a-825r (1976 & Supp. V 1981), and would generally be exempt from state regulation. It must, nonetheless, receive approval from the Board for the power purchase agreement to be executed with VPX. Pursuant to Board Rule 4.100, appellants signed a letter of intent with VPX and submitted the proper applications for Board approval. See Rule 4.104(A).

The Board withheld approval of the project and concluded that "the Applicant Towns are without authority to act as small power producers ... and that development of Ball Mountain Dam by the Towns under any scheme other than as part of a regulated municipal utility is ultra vires."

The sole issue before us is whether appellants may, as a union municipal district, finance, construct, own and operate a qualifying small power production facility and sell power through the VPX to Vermont retail electric utility companies. The governing law is the General Municipal Plant Enabling Act, 30 V.S.A. § 2902, which states in relevant part:

[A] municipality [or union municipal district, see 24 V.S.A. § 4866(7) ] may buy and sell electric current for domestic use and for commercial purposes and construct purchase or lease, and maintain and operate one or more plants for the manufacture, distribution, purchase and sale of ... electricity for the use of such municipality and for the use of the residents of such municipality and for such other customers outside such municipality as the [public service] board may approve....

Appellants, reading the "and's" as disjunctive rather than conjunctive, argue that the plain meaning of § 2902 provides them with the requisite authority because "an entity need not exercise all of its powers before it can exercise any one."

The law was intended to allow municipalities "to fulfill a public need for electric service at economic rates." Hastings v. Village of Stowe, 125 Vt. 227, 233, 214 A.2d 56, 61 (1965). "The profit motive was not the underlying purpose ... of the General Municipal Plant Enabling Act." Id. at 233, 214 A.2d at 61 (emphasis added). A necessary subordinate purpose is to allow municipalities to sell surplus power to nonresidents at a profit. See Valcour v. Village of Morrisville, 104 Vt. 119, 131-32, 158 A. 83, 86 (1932); Hastings, 125 Vt. at 235, 214 A.2d at 62. Thus, the Act specifically authorizes municipalities to dispose of surplus power, if any, to "other customers outside" the municipality. 30 V.S.A. § 2902(a) (emphasis added). The Act, therefore, does not provide for the exclusive sale of electricity to customers outside the municipality.

We have consistently adhered to the so-called Dillon's rule that "a municipality has only those powers and functions specifically authorized by the legislature, and such additional functions as may be incident, subordinate or necessary to the exercise thereof." Hinesburg Sand & Gravel Co. v. Town of Hinesburg, 135 Vt. 484, 486...