Title: In re Twenty Four Electric Utilities

State: vermont

Issuer: Vermont Supreme Court

Document:

IN_RE_TWENTY_FOUR_ELECTRIC_UTILITIES.92-325; 160 Vt. 227; 627 A.2d 355


 NOTICE:  This opinion is subject to motions for reargument under V.R.A.P.
 40 as well as formal revision before publication in the Vermont Reports.
 Readers are requested to notify the Reporter of Decisions, Vermont Supreme
 Court, 109 State Street, Montpelier, Vermont 05609-0801 of any errors in
 order that corrections may be made before this opinion goes to press.


                                 No. 92-325


 In re Twenty Four Electric                   Supreme Court
 Utilities
                                              On Appeal from
                                              Public Service Board

                                              February Term, 1993


 Richard H. Cowart, Chair

 John H. Marshall and Holly Ernst Groschner of Downs Rachlin & Martin,
   St. Johnsbury, for petitioners-appellees

 James A. Dumont and Bonnie Barnes of Sessions Keiner Dumont Barnes &
   Everitt, P.C., for intervenors-appellants

 Christopher L. Dutton, Burlington, for appellee Green Mountain Power
   Corporation

 Robert V. Simpson, Jr., Special Counsel, Montpelier, for appellee
   Department of Public Service


 PRESENT:  Allen, C.J., Gibson, Dooley and Morse, JJ., and Peck, J. (Ret.),
           Specially Assigned


      DOOLEY, J.   This is the third appeal involving the contract to import
 electricity from Hydro-Quebec (HQ), a Canadian producer of electricity.  In
 the first appeal, we affirmed the decision of the Vermont Public Service
 Board approving the contract with HQ.  In re Twenty-Four Vermont Utilities,
 ___ Vt. ___, ___, 618 A.2d 1295, 1309 (1992) [Hydro-Quebec I].  In the
 second, we affirmed a Board decision approving a waiver and release that
 effectively extended the time for HQ to terminate the purchase requirement.
 In re Twenty-Four Vermont Utilities, ___ Vt. ___, ___, 618 A.2d 1309, 1314
 (1992) [Hydro-Quebec II].  The present appeal concerns the Board's approval
 of the participation agreement that distributed the shares of the HQ
 purchase to the participating Vermont utilities.  The Board's decision is
 challenged by the New England Coalition for Energy Efficiency and the
 Environment (NECEE).  We affirm.
      In the original proceeding, the Vermont utilities sought approval for
 both the purchase contract with HQ and for the participation agreement that
 determined how much electricity each utility would receive.  The Board
 concluded that the requirements for approval specified in 30 V.S.A. { 248
 were shown for the state as a whole.  See Hydro-Quebec I, ___ Vt. at ___,
 618 A.2d  at 1307.  It also concluded that the showings in support of each
 utility's share were inadequate, except as to Central Vermont Public Service
 and Burlington Electric Department.  Id.  It made the certificate of public
 good conditional on the approval of the individual allocations to each
 utility and required filings in support of the allocations within sixty days
 after its decision.  The Board opened this docket, (FN1) specifying that each
 utility file a statement of position, including "prefiled testimony and
 exhibits demonstrating that the preferred allocations promote the general
 good of Vermont in accordance with . . . section 248."  It stated further
 that:
         In such proceedings, each participant (except Burlington
         Electric Department and Central Vermont Public Service
         Corporation) shall submit additional justification on
         how their respective allocations of Contract power under
         the Participation Agreement meet the present and future
         need for service that could not otherwise be met more
         cost-effectively through energy conservation, energy
         efficiency and load management measures.  If the Board
         determines that any such Participant is entitled under
         the Participation Agreement to power that exceeds such
         demand for service such Participant shall offer to sell
         to Hydro-Quebec or other parties an amount of power
         (and associated energy) equal to such excess.

 Pursuant to this order, each utility filed evidence supporting its
 allocation.  The Department of Public Service analyzed this evidence, and
 in almost all cases supported the proposed allocations.
      The Board held three days of evidentiary hearings and on February 12,
 1992, approved the allocations for nineteen utilities.(FN2) The allocations for
 three utilities -- Swanton Village, Inc. Electric Department; Village of
 Jacksonville Electric Company; Town of Readsboro Electric Light Department
 -- were not approved. (FN3) Post-judgment motions of NECEE were denied on May
 21, 1992, and this appeal followed.
      In the original appeal, NECEE first attacked the Board's decision to
 bifurcate the proceedings, characterizing it as unlawfully segmenting the {
 248 approval process and thereby avoiding a utility-by-utility analysis
 under each of the factors bearing on the public good.  That position was
 largely addressed in Hydro-Quebec I, ___ Vt. at ___, 618 A.2d  at 1307.
 There, we approved the certificate of public good, subject to later approval
 of the allocations, reasoning that:
         The Board determined that the energy supplied in the HQ
         contract was needed in the state; the only question was
         the allocation among the participating utilities.  There
         was no reason to delay the contract with HQ while the
         allocation was being determined.  The Board's power to
         order reallocation or resale meant that there could be
         no prejudice to any ratepayer or to the intervenors.

 Id.  We also noted that the alternative of twenty-four separate proceedings
 "would be oppressive and could lead to inconsistent results," and the Board
 had the power to make the proceedings "manageable while protecting fully the
 rights of the parties."   Id.
      In its reply brief, NECEE acknowledges that Hydro-Quebec I answered
 many of the issues raised in this appeal.  Certain of its remaining conten-
 tions are also foreclosed by Hydro-Quebec I.  Specifically, NECEE argues
 that the Board erred in failing to consider the economic benefits in
 increased jobs and tax revenues from demand-side management (DSM)
 investments, as well as the conflict between the HQ purchase and in-state
 generation sources.  These arguments were made in Hydro-Quebec I and
 rejected.  Id.  We found no error in the failure to consider the job
 creation and tax revenue consequences of DSM because there was no conflict
 between intensified demand-side management (IDSM) and the HQ purchase.  Id.
 We refused to consider conflicts between in-state generation sources and the
 HQ purchase because NECEE failed to raise the issue before the Board.  Id.
 NECEE cannot raise these issues anew in this follow-up proceeding. (FN4) See In
 re Vermont Power Exch., ___ Vt. ___, ___, 617 A.2d 418, 425 (1992).
      We also believe that the resolution of Hydro-Quebec I precludes
 revisiting the Board's treatment of DSM.  In this case, NECEE argues that
 the extent to which DSM will reduce the need for other sources of
 electricity varies from utility to utility, depending in part on the extent
 to which the utility has already implemented DSM.  It claims that the Board
 was required to determine the DSM potential of each utility as part of its
 consideration of the proposed allocation.  Instead, based on expert
 testimony, the Board assumed the average DSM effect.  See Hydro-Quebec I,
 ___ Vt. at ___, 618 A.2d  at 1299 (IDSM will reduce peak load by 27% and
 energy demand by 20% in the year 2000). (FN5) Because the overall purchase
 decision was based on IDSM, it was reasonable to base the allocation on the
 same demand-reduction assumptions.  Without applying similar methodology, it
 is likely that the allocation decision would be inconsistent with the
 purchase decision.
      A part of NECEE's appeal challenges the manner in which the Board
 conducted the follow-up proceeding, and we agree that this issue is not
 foreclosed by Hydro-Quebec I.  Specifically, NECEE argues that the Board
 restricted the proceeding to an analysis of utility-by-utility need, and
 then improperly relied upon non-need factors when it discovered that some
 utilities did not need all the electricity allocated to them.  NECEE bases
 this argument on showings by Green Mountain Power Corporation (GMP) and
 Citizens Utilities Company (Citizens) as to the optimum electricity
 purchase from HQ.
      Most of the utilities showed that their HQ allocations would reduce
 supply costs in the future and not interfere with the need to pursue IDSM.
 Most of them did not show, however, whether their allocations were optimum,
 in the sense that the allocations maximized the cost savings over other
 available sources of supply.  The evidence provided by GMP and Citizens
 showed that savings for these utilities would be maximized by a smaller
 allocation than that provided in the participation agreement.  For GMP, the
 Board found that a five megawatt reduction under one of the purchase
 schedules would optimize savings, but the savings did not "differ
 significantly" between the allocated amount and the optimum amount.  For
 Citizens, the Board found that a 10% decrease in its allocation would
 increase savings by 7%.  In both cases, the Board approved the allocation in
 the participation agreement because of uncertainty associated with other
 sources of supply.  For example, the main alternative for GMP, a
 cogeneration plant, was not permitted at the time of the analysis.  NECEE
 characterizes the consideration of risk as a "non-need" factor, and argues
 that it was improper for the Board to rely on such factors.
      We emphasize that "[i]n a { 248 proceeding, the Board 'is engaged in a
 legislative, policy-making process.'"  Hydro-Quebec I, ___ Vt. at ___, 618 A.2d  at 1306 (quoting Auclair v. Vermont Elec. Power Co., 133 Vt. 22, 26,