Title: In re Central Vermont Public Service Corp.

State: vermont

Issuer: Vermont Supreme Court

Document:

In re Central Vermont Service Corp. (98-214); 172 Vt. 14; 769 A.2d 668

[Filed 09-Feb-2001]

       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.  98-214

In re Tariff Filing of Central                   Supreme Court 
Vermont Public Service Corporation
                                                 On Appeal from
        	                                 Public Service Board

                                                 March Term, 1999

Richard H. Cowart, Chair

Robert A. Mello and John H. Klesch (On the Brief), South Burlington, for 
  Appellant Central Vermont Public Service Corp.

James Volz, Director for Public Advocacy, and Aaron Adler, Special Counsel, 
  Montpelier, for Appellee Department of Public Service.

Trevor R. Lewis of Primmer & Piper, P.C., Montpelier, for Amicus Curiae 
  Vermont Public Power Supply Authority.

PRESENT:  Amestoy, C.J., Dooley, Morse and Skoglund, JJ., and Zimmerman, D.J., 
  Specially Assigned

       DOOLEY, J.   Central Vermont Public Service Corporation (CVPS) brings
  this interlocutory  appeal from a decision of the Public Service Board
  holding that it may consider in a rate case  whether the cost of power CVPS
  purchases from Hydro-Quebec (HQ) may be excluded, in whole or  in part,
  from expenses covered by utility rates.  CVPS argues that the Board was
  precluded under  principles of res judicata, collateral estoppel or
  equitable estoppel from considering whether CVPS  acted prudently by
  entering into, and waiving termination rights with respect to, a
  thirty-year  purchase power contract with HQ in August 1991, and whether
  the power purchased from HQ is  uneconomical and therefore not "used and
  useful."

 

       We hold that the Board (FN1) is collaterally estopped, based on its
  prior determinations in a  1994 rate case, from considering further whether
  CVPS acted imprudently by locking into the HQ  contract in August 1991.  We
  conclude that it is premature to determine whether the Board may take  any
  further action in this rate case based on the imprudence it found in the
  1994 rate case.  Finally,  we remand for further proceedings on whether the
  Board may determine if the power purchased from  HQ is useful.  In all
  other respects, the order of the Board is affirmed.

       A brief history of the HQ contract is helpful to understand the
  context in which these issues  come before us.  In 1987, the Vermont Joint
  Owners (VJO) of the Highgate interconnection facilities - a group of nine
  Vermont utilities that included CVPS - entered into a contract to purchase 
  electricity from HQ over a thirty-year period, from 1990 to 2020.   In
  1988, the contract was  amended to extend the time until April 30, 1991,
  for any party to terminate the contract if necessary  regulatory approvals
  were withheld or tendered upon terms unsatisfactory to that party.  In
  1991, the  Board granted interim approval for both the HQ contract and a
  participation agreement between the  nine Vermont utilities.  See 30 V.S.A.
  § 248(a) (requiring Board to issue certificate of public good  before
  utility may purchase energy from outside Vermont for period exceeding five
  years).  We  affirmed the Board's order in In re Petition of Twenty-Four
  Vt. Utilities, 159 Vt. 339, 618 A.2d 1295  (1992) (HQ I).

       In early 1991, HQ informed VJO that it was not satisfied with a
  condition of the regulatory 

 

  approval it obtained from the National Energy Board of Canada and was
  appealing that condition to  the Canadian Federal Court of Appeals. 
  Consequently, HQ sought to extend the deadline for  terminating the
  contract based on its dissatisfaction with a regulatory requirement.  In
  April 1991, the  parties signed a waiver and release, extending the
  parties' right to terminate the contract on the basis  of unsatisfactory
  regulatory approvals until December 1, 1991.  On April 30, 1991, the Board 
  approved the waiver and release, and this Court affirmed the Board's order
  in In re Petition of  Twenty-Four Vt. Utilities, 159 Vt. 363, 618 A.2d 1309
  (1992) (HQ II).

       In July 1991, the Canadian Federal Court of Appeals affirmed the
  export license to HQ and  struck down the condition to which HQ had
  objected, and HQ informed VJO that it was willing to  commit to the
  contract at that time despite the uncertainty of an appeal to the Canadian
  Supreme  Court.  On August 28, 1991, HQ agreed to forego its regulatory
  termination right, thereby waiving  any right to terminate the agreement in
  the event the Supreme Court of Canada reinstated the  unsatisfactory
  regulatory condition.  VJO responded on August 29, agreeing to waive any
  right to  terminate the contract based on unsatisfactory regulatory
  conditions.  As do the parties and the  Board, we refer to the action of
  waiving the termination right as locking into the contract. The Board  did
  not review the early lock-in decision at the time because it concluded that
  it did not have  jurisdiction to review the matter while HQ I and HQ II
  were pending in this Court.

       In February 1992, the Board approved the allocation of HQ electricity
  to the individual  utilities, a condition of its earlier contract approval,
  and this Court affirmed that decision in In re  Twenty-Four Electric
  Utilities, 160 Vt. 227,