Allco Renewable Energy Ltd. v. Massachusetts Electric Co.
208 F. Supp. 3d 390
D. Mass.2016Background
- Allco, owner/developer of >1 MW solar QFs in MA, offered National Grid 25-year sales agreements; National Grid refused and offered only its MDPU-approved spot-market P-Rate tariff.
- MDPU regulations (220 Mass. Code Regs. §§ 8.03, 8.05) require QFs ≥1 MW to be paid the ISO New England spot-market rate and provide no option for avoided-cost rates fixed at contract inception.
- Allco petitioned the MDPU; MDPU declined to investigate and denied relief. Allco petitioned FERC, which declined enforcement; Allco then sued in federal court challenging (1) the MDPU rules as inconsistent with PURPA (Count II) and (2) seeking a private federal claim against National Grid to enforce a long-term avoided-cost purchase obligation and damages (Count III).
- District court considered National Grid’s motion to dismiss Count III, Allco’s summary judgment motion on both counts, and state defendants’ motion on Count II.
- Court held PURPA’s statutory enforcement scheme does not authorize a private federal cause of action against a utility to enforce the FERC purchase-obligation (Count III dismissed), but held MDPU’s rule invalid for failing to give QFs the option to lock in avoided-cost rates at the time the obligation is incurred (Allco prevails on Count II).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether PURPA creates a private federal cause of action against an electric utility to enforce FERC’s purchase-obligation (Count III) | Allco: PURPA/FERC regulations impose a direct federal purchase obligation on utilities enforceable by QFs in federal court for damages/declaratory relief | National Grid: PURPA’s enforcement scheme assigns enforcement to FERC/state procedures; offering MDPU-approved spot rate satisfied obligations | Court: No private federal cause of action against utility under PURPA; Count III dismissed |
| Whether MDPU regs (220 Mass. Code Regs. §§ 8.03, 8.05) violate PURPA/FERC rules by denying QFs the option to fix avoided-cost rates at obligation inception (Count II) | Allco: MDPU rule forces spot-market (time-of-delivery) pricing and eliminates QF’s regulatory option to choose avoided-cost calculated at time obligation is incurred | State/NG: MDPU may lawfully implement PURPA; state can define when legally enforceable obligations are available and protect consumers from above-market long-term rates | Court: MDPU rule conflicts with 18 C.F.R. § 292.304(d); QFs must have the option to choose time-of-obligation pricing; MDPU rule invalid |
| Whether National Grid’s P-Rate tariff satisfied the FERC regulation’s “specified term” and time-of-obligation pricing | Allco: P-Rate is spot-based and cannot yield avoided-cost calculated at obligation inception | National Grid: Rolling 30-day termination gives a specified term and spot price is a reasonable proxy for avoided cost at inception | Court: Even if 30-day term is a ‘specified term,’ hourly spot rates cannot provide avoided-cost calculated at time obligation is incurred; P-Rate insufficient |
| Appropriate remedy and forum for setting avoided-cost rates going forward | Allco: Court should determine proper avoided-cost rate and award relief | State defendants/NG: MDPU is the appropriate forum to set rates; federal court should not do rate-making | Court: Declares MDPU rule invalid but declines to set rates; directs MDPU to revisit implementation and rate-setting under its authority |
Key Cases Cited
- FERC v. Mississippi, 456 U.S. 742 (U.S. 1982) (describing FERC/ state roles implementing PURPA)
- Am. Paper Inst., Inc. v. Am. Elec. Power Serv. Corp., 461 U.S. 402 (U.S. 1983) (interpreting FERC regulations under PURPA)
- Alexander v. Sandoval, 532 U.S. 275 (U.S. 2001) (private cause of action must be created by Congress)
- Greenwood ex rel. Estate of Greenwood v. N.H. Pub. Utils. Comm’n, 527 F.3d 8 (1st Cir. 2008) (overview of PURPA enforcement scheme)
- Power Res. Grp., Inc. v. Pub. Util. Comm’n of Tex., 422 F.3d 231 (5th Cir. 2005) (distinguishing implementation claims and as-applied claims under PURPA)
- Exelon Wind 1, LLC v. Nelson, 766 F.3d 380 (5th Cir. 2014) (state discretion in defining when legally enforceable obligations are available)
- Bonano v. E. Caribbean Airline Corp., 365 F.3d 81 (1st Cir. 2004) (statutory enforcement scheme implications on available remedies)