2021 VT 28
Vt.2021Background
- Vermont’s standard-offer program (30 V.S.A. § 8005a) allocates small (≤2.2 MW) renewable capacity by annual RFPs and fills slots via a market-based procurement (reverse auction) subject to technology-specific avoided-cost price caps.
- The PUC has used the market-based mechanism since 2013 and retained technology allocations and price caps for the 2020 RFP after an investigation limited to reviewing avoided-cost caps.
- Allco Renewable Energy Limited and PLH, LLC (Allco) challenged the PUC’s 2020 decisions, arguing the PUC failed to make the annual §8005a(f)(3) determination that the market-based pricing complies with federal law (PURPA) and that the reverse-auction mechanism violates PURPA by effectively compelling wholesale sales below avoided cost.
- The PUC declined to reopen the federal-compliance question in the limited price-cap investigation but, when denying Allco’s stay request, explained on the merits that Rule 4.100 gives QFs a PURPA-compliant alternative (long-term avoided-cost contracts), so the standard-offer market mechanism is an auxiliary voluntary program.
- The Vermont Supreme Court affirmed: any remand to require an explicit annual §8005a(f)(3) finding would be pointless because the PUC had effectively addressed federal-compliance in denying the stay; on the merits the market-based standard-offer program is permissible so long as Rule 4.100 satisfies PURPA and deference to FERC’s interpretation supports auxiliary programs.
Issues
| Issue | Plaintiff's Argument (Allco) | Defendant's Argument (PUC/DPS) | Held |
|---|---|---|---|
| Whether PUC was required, before proceeding with the 2020 RFP, to make a fresh annual §8005a(f)(3) determination that its market-based pricing complies with federal law | PUC must annually evaluate and affirmatively find federal compliance; absent that, PUC must use administratively determined avoided-cost pricing | PUC already conclusively found market-based pricing consistent with federal law in prior orders; annual review need not be a contested hearing each year | Remand for a new determination would be pointless because PUC addressed the federal-compliance question in denying the stay; the PUC ultimately satisfied any §8005a(f)(3) obligation |
| Whether the market-based reverse-auction standard-offer mechanism violates PURPA (i.e., unlawfully regulates wholesale sales) | Market-based pricing that produces prices below PURPA avoided cost unlawfully regulates wholesale sales in contravention of FPA/PURPA (relying on Winding Creek II) | Standard-offer is voluntary/auxiliary; Rule 4.100 provides a PURPA-compliant must-take alternative, so the market-based program does not supplant PURPA obligations | Court upheld PUC: market-based standard-offer is permissible as an auxiliary program if Rule 4.100 satisfies PURPA; deference to FERC’s interpretation supports this view |
| Whether Rule 4.100 itself fails PURPA (seven-year contract term and existence of multiple avoided-cost rates) | Rule 4.100’s seven-year term caps and differing avoided-cost computations are inconsistent with PURPA | FERC precedent does not mandate a specific contract length and allows multiple avoided-cost structures where justified; PUC did not abuse discretion | Court rejected Allco’s challenge on this record: seven-year term and multi-tiered avoided-cost structure did not violate PURPA |
Key Cases Cited
- Federal Power Comm’n v. Southern California Edison Co., 376 U.S. 205 (establishes federal preemption over wholesale electricity sales)
- FERC v. Mississippi, 456 U.S. 742 (describing FERC/state roles under PURPA)
- Winding Creek Solar LLC v. Peterman (Winding Creek Solar II), 932 F.3d 861 (9th Cir.) (held California program violated PURPA where avoided-cost requirements were not met)
- Allco Financial Ltd. v. Klee, 805 F.3d 89 (2d Cir.) (limits on state actions re wholesale sale regulation under FPA/PURPA)
- In re Verizon New England, Inc., 795 A.2d 1196 (Vt. 2002) (deference to PUC expertise)
- In re Programmatic Changes to Standard-Offer Program, 95 A.3d 999 (Vt. 2014) (state-court treatment of PUC standard-offer program matters)
- Levine v. Wyeth, 944 A.2d 179 (Vt. 2006) (discussing deference to federal agency interpretations)