Wheelabrator Lisbon, Inc. v. Connecticut Dept. of Public Utility Control, No. CV05-4003405 (CT 3/20/2006)
| Decision Date | 20 March 2006 |
| Docket Number | No. CV05-4003405,CV05-4003405 |
| Court | Connecticut Supreme Court |
| Parties | Wheelabrator Lisbon, Inc. fka Riley Energy Systems of Lisbon Corporation v. Connecticut Dept. of Public Utility Control et al. Opinion No.: 92754 |
This case is an Administrative Appeal brought pursuant to the provisions of the Uniform Administrative Procedure Act (UAPA), Conn. Gen. Stat. §4-166 et seq. The appeal is authorized pursuant to the UAPA §4-183 and also Conn. Gen. Stat. §16-35 relating to appeals from decisions of the Dept of Public Utility Control (DPUC). The plaintiff appellant, Wheelabrator Lisbon, Inc. (WLI),1 appealed from a decision of the DPUC dated December 19, 2004 (WLI 2004 decision) in Docket No. 91-OF12RE01 entitled "Petition of the Riley Energy Corporation for Contract Approval and Declaratory Rulings regarding the Lisbon Resource Recovery Project — Generation Information Systems Certificate." The Connecticut Light & Power Company (CL&P) had also initiated a petition for a Declaratory Ruling in Docket No. 91-01-12; to resolve the dispute over the Generation Information System (GIS) Certificates.
The DPUC decision at issue had granted the ownership of Generation Information System Certificates (GIS Certificates, also known as Renewable Energy Certificates or RECS) to CL&P. The GIS Certificates or RECS were issued for WLI's trash to energy facility located in Lisbon, Connecticut (Facility). The net electrical output2 of the Lisbon facility is delivered by WLI to CL&P under a twenty-five year Energy Purchase Agreement (EPA) that was approved by the DPUC in 1991 (Docket No. 94-01-12). The generation of electricity through the use of solid waste (trash) as fuel is a renewable energy source.
The GIS Certificates or RECS which are an issue in this case, did not exist when the WLI/CL&P EPA was approved by the DPUC in 1991. GIS/RECS were created in 2002 by the New England Power Pool (NEPOOL). The certificates are electronic certificates which track, for each megawatt hour of electricity produced in New England, certain power characteristics including air pollution emissions and types of fuel utilized (renewable). The GIS Certificates can be traded separate and apart from other products such as electrical energy and capacity. Renewable fuel related GIS Certificates (RECS) can be sold to electrical suppliers to meet state mandates for the use of a certain percentage of renewable energy.
In the petition, CL&P argued that under its EPA with WLI, it was entitled to the Lisbon facilities entire electrical output which would include the GIS/RECS Certificates. In its decision, the DPUC agreed with CL&P, and awarded it the certificates and any funds that WLI received from the sale of such certificates.
The appeal raises claims under state and federal law; however, the parties have agreed to reserve the federal claims for federal court determination. Accordingly, the court will not address the federal preemption and constitutional claims. The remaining issues which are decided in this decision relate to the jurisdiction of the DPUC pursuant to state law and the issue of whether there was substantial evidence in the record to support the DPUC determination. The court concludes that the DPUC had jurisdiction and the decision is supported by substantial evidence in the record. The DPUC decision is affirmed and the appeal is dismissed.
The Lisbon project resulted from legislative mandates requiring Connecticut electrical utilities (public services companies) to purchase "any electrical energy and capacity made available, directly by a private power producer . . ." Conn. Gen. Stat. §16-243a(b). In addition to requiring the purchase of energy made available by private power producers, the DPUC was directed, pursuant to Conn. Gen. Stat. §16-243a(c) to set the rate for such purchases based on the "full avoided costs of the electrical utility." Avoided costs under §16-243a(a) meant the incremental costs to the utility of energy or capacity or both, which, but for the purchase of the private power producer, the utility would incur. The Connecticut statutes were in furtherance of federal policy set forth in the Public Utility Regulatory Policies Act, 16 U.S.C. §824a-3 et seq. (PURPA). PURPA and the regulations of the Federal Energy Regulatory Commission (FERC) 18 CFR §292, require electrical utilities to buy electrical energy and capacity from qualifying cogeneration and small power production facilities at avoided cost rates. The WLI's Lisbon Facility is a qualifying facility (QF) pursuant to FERC regulations. The PURPA and FERC regulatory scheme contemplates a continued role by state agencies such as the DPUC with respect to rate determinations and approval of EPA contracts. (See FERC American REF-fuel decision, Docket No. EL03-133-000, October 1, 2003; Freehold Cogeneration Assoc., L.P. v. Board of Regulatory Commissioners of the State of New Jersey, 44 F.3rd 1178 (3rd Cir. 1995); Crossroads Cogeneration v. Orange and Rockland, 159 F.3rd 129 (3rd Cir. 1998); Panda-Kathleen, L.P. v. Clark, 701 So.2d 322 (FLA. 1991).
In its petition to DPUC which resulted in the 1991 WLI decision, WLI sought 1) a "declaratory ruling that the Lisbon Trash-to-Energy Facility (Facility) is exempt from the requirements of Conn. Agency's Regs. §16-243a-5 because it qualifies for exemption under §16-243a-7(4) of such regulations as 'resources recovery project which seeks pricing in the provisions of §16-243a of the Conn. Gen. Stat.' "; 2)"approval of the agreement under Conn. Gen. Stat. §16-243a and Conn. Agency's Regs. §16-243a-7"; 3)"a ruling that CL&P is required by the orders and Docket Nos. 85-04-16, [DPUC Investigation into Cogeneration and Small Power Production) and 86-04-02 [DPUC Investigation into CL&P and UI First Annual Filing of the Status of Cogeneration and Small Power Production Projects, Projected Avoided Costs and Related Matters] and by Conn. Gen. Stat. §16-243 and Conn. Agency's Regs. §16-243a-1, to enter into the agreement to purchase electricity generated by the facility at the rates set forth in the agreement." (DPUC's WLI 1991 decision, March 13, 1991, page 2). In the 1991 WLI decision, DPUC found that the Lisbon facility would be a resource recovery facility under Conn. Gen. Stat. §§22-207 and 22a-260. Pursuant to Conn. Agency Regs. §16-243a-7(a)(4), resources recovery projects that seek pricing under the avoided cost rate provisions of §16-243a, qualifying it as an exempt project that may contract to sell electricity to a utility notwithstanding the fact that the utility currently does not have the need for additional capacity." The DPUC'S WLI 1991 decision based on the classification of the project as a resource recovery (renewable) energy project exempted the Lisbon facility from the bidding requirements of §16-243a-5. CL&P was ordered to enter into the contract to purchase the entire net electrical output of the facility based on the plaintiff's status as a source of renewable energy.
In implementing the requirements of PURPA and Conn. Gen. Stat. §16-243a, the DPUC initiated several generic decisions and regulations. In Docket No. 85-04-16, DPUC Investigation Into Cogeneration and Small Power Production, "Going Back To The Future" (December 18, 1985). (The 1985 Cogen decision), the DPUC first issued generic guidelines for electricity purchase agreements between QF's and electric companies. In the 1985 Cogen decision, it is noted that "the federal and state requirements will be blended together by this decision to create a unique body of law to meet Connecticut's energy needs." 1985 Cogen decision at page 11. The ranking selection review process for private power producers was created in Docket No. 86-04-02, DPUC'S Investigation Into CL&P and UI (United Illuminating) First Annual Filing of the Status of Cogeneration and Small Power Production Projects, Projected Avoided Costs and Related Matters, (July 22, 1986) (1986 Cogen decision). The agency regulations were established by the DPUC and are found in Coin Agency Regs., Section 16-243a-1 et seq. In essence, the regulations established a competitive bidding process initiated when an electric utility had a demonstrated need for additional electric generating capacity. The regulations exempted certain renewable projects from the competitive bidding process and allowed them to obtain long-term contacts with favorable terms, regardless of whether the electric company needed additional generating capacity. Conn. Agency Regulations §16-243a-7.
The Connecticut energy regulation scheme includes a renewable energy portfolio standard to increase the use of renewable energy. See Conn. Gen. Stat. §16-245a Public Act 03-135 §7. Electrical suppliers are required to include in their portfolio certain minimum amounts of energy generated by renewable energy sources.
The GIS program at issue here was initiated in 2002 by NEPOOL. The GIS Certificates are a mechanism for electricity suppliers to comply with state regulations regarding renewable energy portfolio requirements. GIS Certificates from renewable energy sources can be used as renewable energy credits or certificates (RECS) to meet state renewable portfolio standards.
In essence, GIS Certificates "unbundles" the renewable energy attribute from the underlying energy component allowing certificates to be traded separately from the energy. NEPOOL, on a quarterly basis, issues GIS Certificates to the entity producing the energy. The NEPOOL issuance of the GIS Certificates to the entity producing the energy is without prejudice as to contractual entitlement to such certificates. The GIS Certificates are tradable and a valuable commodity which can be sold to companies needing RECS to meet renewable portfolio requirements.
WLI, upon receipt of the GIS Certificates in 2002, determined to keep such...
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